California Resources Corp Valuation – August 2018 $CRC

Company Profile (excerpt from Reuters): California Resources Corporation, incorporated on April 23, 2014, is an independent oil and natural gas exploration and production company, with operating properties within the State of California. The Company produced approximately 140 thousand barrels of oil equivalent per day (MBoe/d), as of December 31, 2016. As of December 31, 2016, the Company had net proved reserves of 568 million barrels of oil equivalent (MMBoe). As of December 31, 2016, it drilled 42 development wells with 37 wells in the San Joaquin basin and five in the Los Angeles basin, which included over 30 steamflood and eight waterflood wells. As of December 31, 2016, the Company produced 36 billion barrels of oil equivalent (BBoe), including approximately 20 BBoe in the San Joaquin basin, 11 BBoe in the Los Angeles basin, three BBoe in the Ventura basin and 10 trillion cubic feet (Tcf) of natural gas in the Sacramento basin. Its operations included 135 fields with 8,837 gross active wellbores, as of December 31, 2016. The Company sells its crude oil, natural gas and natural gas liquids (NGLs) production to marketers, California refineries and other purchasers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CRC – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,752,820,390 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.63 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -5866.67% Fail
6. Moderate PEmg Ratio PEmg < 20 -2.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -2.61 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.63 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -15.19 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$15.94
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$231.06
MG Value based on 0% Growth -$135.45
Market Implied Growth Rate -5.35%
Current Price $34.99
% of Intrinsic Value N/A

California Resources Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-2.94 in 2014 to an estimated $-15.94 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into California Resources Corp revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -2.2, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-145.77.

California Resources Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$145.77
Graham Number $0.00
PEmg -2.20
Current Ratio 0.63
PB Ratio -2.61
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $559,000,000
Total Current Liabilities $893,000,000
Long-Term Debt $5,075,000,000
Total Assets $6,940,000,000
Intangible Assets $0
Total Liabilities $7,585,000,000
Shares Outstanding (Diluted Average) 48,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$2.23
Dec2017 -$6.26
Dec2016 $6.76
Dec2015 -$92.79
Dec2014 -$37.54
Dec2013 $22.40
Dec2012 $18.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$15.94
Dec2017 -$22.35
Dec2016 -$25.81
Dec2015 -$34.06
Dec2014 -$2.94
Dec2013 $12.27
Dec2012 $6.00

Recommended Reading:

Other ModernGraham posts about the company

California Resources Corp Valuation – Initial Coverage $CRC

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

California Resources Corp Valuation – Initial Coverage $CRC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how California Resources Corp (CRC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): California Resources Corporation is an independent oil and natural gas exploration and production company, with operating properties within the State of California. The Company produces approximately 160 thousand barrels of oil equivalent per day (MBoe/d). It has net proved reserves of over 640 million barrels of oil equivalent (MMBoe). It operates approximately three drilling rigs across the state with over two located in the San Joaquin basin (steamflood activities) and approximately one in the Los Angeles basin (waterflood activities). It has drilled over 290 gross development wells with over 250 wells in the San Joaquin basin and approximately 30 wells in the Los Angeles basin. It has also drilled approximately three exploration wells in the San Joaquin basin. Its operations include approximately 140 fields with over 9,070 gross active wellbores. It sells its crude oil, natural gas and natural gas liquids production to marketers, California refineries and other purchasers.

CRC Chart

CRC data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CRC – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $767,784,474 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.54 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -413333.33% Fail
6. Moderate PEmg Ratio PEmg < 20 -0.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -1.60 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.54 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -17.13 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$25.96
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$376.37
MG Value based on 0% Growth -$220.63
Market Implied Growth Rate -4.61%
Current Price $18.85
% of Intrinsic Value N/A

California Resources Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $6 in 2012 to an estimated $-25.96 for 2016. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into California Resources Corp revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.1 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was -0.73, which was below the industry average of 69.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-154.76.

California Resources Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$154.76
Graham Number $0.00
PEmg -0.73
Current Ratio 0.54
PB Ratio -1.60
Current Dividend $0.10
Dividend Yield 0.53%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $356,000,000
Total Current Liabilities $658,000,000
Long-Term Debt $5,173,000,000
Total Assets $6,332,000,000
Intangible Assets $0
Total Liabilities $6,825,000,000
Shares Outstanding (Diluted Average) 41,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.23
Dec2015 -$92.70
Dec2014 -$37.50
Dec2013 $22.40
Dec2012 $18.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$25.96
Dec2015 -$34.02
Dec2014 -$2.93
Dec2013 $12.27
Dec2012 $6.00

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

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Kinder Morgan Inc Valuation – January 2017 $KMI
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Surge Energy Inc Valuation – Initial Coverage $TSE:SGY
Range Resources Corp Valuation – January 2017 $RRC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Kansas City Southern Valuation – February 2019 $KSU

Company Profile (excerpt from Reuters): Kansas City Southern (KCS), incorporated on January 29, 1962, is a holding company. The Company has domestic and international rail operations in North America that are focused on the north/south freight corridor connecting commercial and industrial markets in the central United States with industrial cities in Mexico. Its subsidiaries include The Kansas City Southern Railway Company (KCSR), Kansas City Southern de Mexico, S.A. de C.V. (KCSM), Mexrail, Inc. (Mexrail), KCSM Servicios, S.A. de C.V. (KCSM Servicios), Meridian Speedway, LLC (MSLLC) and Panama Canal Railway Company (PCRC). KCSR serves a 10-state region in the midwest and southeast regions of the United States and has the north/south rail route between Kansas City, Missouri and various ports along the Gulf of Mexico in Alabama, Louisiana, Mississippi and Texas. KCSM operates a commercial corridor of the Mexican railroad system. KCSM’s rail lines provide rail access to the United States and Mexico border crossing at Nuevo Laredo, Tamaulipas, the rail freight interchange point between the United States and Mexico. As of December 31, 2016, KCSM served its Mexico’s industrial cities and three of its seaports. KCSM also provides rail access to the Port of Lazaro Cardenas on the Pacific Ocean.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KSU – February 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,271,128,259 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.42 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 168.77% Pass
6. Moderate PEmg Ratio PEmg < 20 17.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.21 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.42 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 14.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.51
MG Growth Estimate 9.58%
MG Value $180.07
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $94.40
MG Value based on 0% Growth $55.34
Market Implied Growth Rate 4.33%
Current Price $111.66
% of Intrinsic Value 62.01%

Kansas City Southern does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.97 in 2015 to an estimated $6.51 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.33% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Kansas City Southern revealed the company was trading above its Graham Number of $83.02. The company pays a dividend of $1.44 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 17.15, which was below the industry average of 19.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-36.47.

Kansas City Southern receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$36.47
Graham Number $83.02
PEmg 17.15
Current Ratio 1.42
PB Ratio 2.21
Current Dividend $1.44
Dividend Yield 1.29%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $635,400,000
Total Current Liabilities $447,000,000
Long-Term Debt $2,679,300,000
Total Assets $9,469,800,000
Intangible Assets $0
Total Liabilities $4,337,100,000
Shares Outstanding (Diluted Average) 101,508,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.48
Dec2018 $6.13
Dec2017 $9.16
Dec2016 $4.43
Dec2015 $4.40
Dec2014 $4.55
Dec2013 $3.18
Dec2012 $3.43
Dec2011 $3.00
Dec2010 $1.67
Dec2009 $0.60
Dec2008 $1.86
Dec2007 $1.57
Dec2006 $1.08
Dec2005 $1.10
Dec2004 $0.25
Dec2003 $0.10
Dec2002 $0.91
Dec2001 $0.51
Dec2000 $6.42
Dec1999 $5.58

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.51
Dec2018 $6.26
Dec2017 $5.93
Dec2016 $4.21
Dec2015 $3.97
Dec2014 $3.56
Dec2013 $2.84
Dec2012 $2.48
Dec2011 $1.92
Dec2010 $1.37
Dec2009 $1.23
Dec2008 $1.42
Dec2007 $1.07
Dec2006 $0.78
Dec2005 $0.61
Dec2004 $0.79
Dec2003 $1.61

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Kansas City Southern Valuation – May 2018 $KSU
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Kansas City Southern Valuation – December 2016 $KSU
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Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
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Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Exxon Mobil Corp Valuation – November 2018 $XOM

Company Profile (excerpt from Reuters): Exxon Mobil Corporation, incorporated on August 5, 1882, is engaged in energy business. The Company is engaged in the exploration, production, transportation and sale of crude oil and natural gas, and the manufacture, transportation and sale of petroleum products. The Company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products. The Company’s segments include Upstream, Downstream, Chemical, and Corporate and Financing. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company has exploration and development activities in projects located in the United States, Canada/South America, Europe, Africa, Asia and Australia/Oceania.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XOM – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $334,301,427,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -40.71% Fail
6. Moderate PEmg Ratio PEmg < 20 19.07 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.71 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.82 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $60.04
MG Value based on 0% Growth $35.20
Market Implied Growth Rate 5.28%
Current Price $78.96
% of Intrinsic Value N/A

Exxon Mobil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.98 in 2014 to an estimated $4.14 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.28% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Exxon Mobil Corporation revealed the company was trading above its Graham Number of $67.18. The company pays a dividend of $3.06 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.07, which was below the industry average of 50.98, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.31.

Exxon Mobil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.31
Graham Number $67.18
PEmg 19.07
Current Ratio 0.83
PB Ratio 1.71
Current Dividend $3.06
Dividend Yield 3.88%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $53,975,000,000
Total Current Liabilities $65,288,000,000
Long-Term Debt $20,624,000,000
Total Assets $354,628,000,000
Intangible Assets $0
Total Liabilities $157,797,000,000
Shares Outstanding (Diluted Average) 4,271,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.53
Dec2017 $4.63
Dec2016 $1.88
Dec2015 $3.85
Dec2014 $7.60
Dec2013 $7.37
Dec2012 $9.70
Dec2011 $8.42
Dec2010 $6.22
Dec2009 $3.98
Dec2008 $8.66
Dec2007 $7.26
Dec2006 $6.62
Dec2005 $5.71
Dec2004 $3.89
Dec2003 $3.23
Dec2002 $1.68
Dec2001 $2.21
Dec2000 $2.52
Dec1999 $1.13
Dec1998 $1.14

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.14
Dec2017 $4.32
Dec2016 $4.80
Dec2015 $6.64
Dec2014 $7.98
Dec2013 $7.82
Dec2012 $7.83
Dec2011 $6.90
Dec2010 $6.28
Dec2009 $6.35
Dec2008 $7.17
Dec2007 $6.06
Dec2006 $5.05
Dec2005 $3.96
Dec2004 $2.96
Dec2003 $2.38
Dec2002 $1.88

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5 Overvalued Dow Components – June 2018
5 Overvalued Dow Components – February 2018
Exxon Mobil Corp Valuation – February 2018 $XOM
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California Resources Corp Valuation – August 2018 $CRC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Chevron Corp Valuation – November 2018 $CVX

Company Profile (excerpt from Reuters): Chevron Corporation (Chevron), incorporated on January 27, 1926, manages its investments in subsidiaries and affiliates, and provides administrative, financial, management and technology support to the United States and international subsidiaries that engage in integrated energy and chemicals operations. The Company operates through two business segments: Upstream and Downstream. Upstream operations consist primarily of exploring for, developing and producing crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transporting crude oil by international oil export pipelines; processing, transporting, storage and marketing of natural gas, and a gas-to-liquids plant. Downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil and refined products; transporting of crude oil and refined products by pipeline, marine vessel, motor equipment and rail car, and manufacturing and marketing of commodity petrochemicals, plastics for industrial uses, and fuel and lubricant additives.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CVX – November 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $228,998,726,088 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.22 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -53.76% Fail
6. Moderate PEmg Ratio PEmg < 20 23.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.48 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.22 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.66 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.06
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $73.30
MG Value based on 0% Growth $42.97
Market Implied Growth Rate 7.57%
Current Price $119.51
% of Intrinsic Value N/A

Chevron Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $11.43 in 2014 to an estimated $5.06 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.57% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Chevron Corporation revealed the company was trading below its Graham Number of $121.52. The company pays a dividend of $4.32 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.64, which was below the industry average of 60.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-34.6.

Chevron Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$34.60
Graham Number $121.52
PEmg 23.64
Current Ratio 1.22
PB Ratio 1.48
Current Dividend $4.32
Dividend Yield 3.61%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $35,583,000,000
Total Current Liabilities $29,183,000,000
Long-Term Debt $29,854,000,000
Total Assets $256,606,000,000
Intangible Assets $4,518,000,000
Total Liabilities $101,933,000,000
Shares Outstanding (Diluted Average) 1,917,474,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.44
Dec2017 $4.85
Dec2016 -$0.27
Dec2015 $2.45
Dec2014 $10.14
Dec2013 $11.09
Dec2012 $13.32
Dec2011 $13.44
Dec2010 $9.48
Dec2009 $5.24
Dec2008 $11.67
Dec2007 $8.77
Dec2006 $7.80
Dec2005 $6.54
Dec2004 $6.28
Dec2003 $3.48
Dec2002 $0.53
Dec2001 $1.55
Dec2000 $3.99
Dec1999 $1.57
Dec1998 $1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.06
Dec2017 $4.13
Dec2016 $4.96
Dec2015 $8.41
Dec2014 $11.43
Dec2013 $11.55
Dec2012 $11.40
Dec2011 $10.20
Dec2010 $8.58
Dec2009 $8.09
Dec2008 $9.08
Dec2007 $7.38
Dec2006 $6.10
Dec2005 $4.72
Dec2004 $3.60
Dec2003 $2.25
Dec2002 $1.66

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Dow Components – June 2018
5 Overvalued Dow Components – February 2018
Chevron Corp Valuation – February 2018 $CVX
Chevron Corporation Valuation – March 2017 $CVX
5 Overvalued Dow Components – February 2017

Other ModernGraham posts about related companies

Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Cenovus Energy Inc Valuation – October 2018 $TSE-CVE

Company Profile (excerpt from Reuters): Cenovus Energy Inc is a Canada-based integrated oil and natural gas company. The Company’s operations, include oil sands projects in northern Alberta and oil production in Alberta and British Columbia. The Company is owner of two projects that are producing oil, Christina Lake and Foster Creek. The oil sands projects use a drilling method called steam-assisted gravity drainage or SAGD for short. The SAGD process uses natural gas to heat water into steam, which helps The Company to extract the oil out of the oil sands. The company also holds interest in two United States refineries, Wood River located in Roxana Illinois and Borger located in Borger Texas.

CVE Chart

CVE data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CVE – October 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $16,400,000,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.17 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -57.49% Fail
6. Moderate PEmg Ratio PEmg < 20 19.02 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.84 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 15.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $9.89
MG Value based on 0% Growth $5.80
Market Implied Growth Rate 5.26%
Current Price $12.97
% of Intrinsic Value N/A

Cenovus Energy Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.18 in 2014 to an estimated $0.68 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cenovus Energy Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.2 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 19.02, which was below the industry average of 60.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.61.

Cenovus Energy Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.61
Graham Number $0.00
PEmg 19.02
Current Ratio 1.17
PB Ratio 0.84
Current Dividend $0.20
Dividend Yield 1.54%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $4,566,000,000
Total Current Liabilities $3,916,000,000
Long-Term Debt $9,992,000,000
Total Assets $40,299,000,000
Intangible Assets $2,272,000,000
Total Liabilities $21,296,000,000
Shares Outstanding (Diluted Average) 1,229,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.50
Dec2017 $3.05
Dec2016 -$0.65
Dec2015 $0.75
Dec2014 $0.98
Dec2013 $0.87
Dec2012 $1.31
Dec2011 $1.95
Dec2010 $1.43
Dec2009 $1.09
Dec2008 $3.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.68
Dec2017 $1.18
Dec2016 $0.38
Dec2015 $0.99
Dec2014 $1.18
Dec2013 $1.29
Dec2012 $1.64
Dec2011 $1.76
Dec2010 $1.53
Dec2009 $1.39
Dec2008 $1.28

Recommended Reading:

Other ModernGraham posts about the company

Cenovus Energy Inc Valuation – Initial Coverage $TSE:CVE

Other ModernGraham posts about related companies

CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

CNX Resources Corp Valuation – September 2018 $CNX

Company Profile (excerpt from Reuters): CNX Resources Corp., formerly CONSOL Energy Inc., incorporated on October 31, 1991, is an integrated energy company. The Company’s divisions include Exploration and Production (E&P), Pennsylvania (PA) Mining Operations and Other. The E&P division operates through three segments: Marcellus Shale, Coalbed Methane (CBM) and Other Gas, which produce pipeline quality natural gas for sale primarily to gas wholesalers. Its E&P division focuses on Appalachian area natural gas and liquids activities, including production, gathering, processing and acquisition of natural gas properties in the Appalachian Basin. The Company’s E&P operations are located throughout Appalachia. Its Other Gas properties include Shallow Oil and Gas, Chattanooga and Huron. The Other Gas segment is primarily related to shallow oil and gas production and the Chattanooga Shale in Tennessee. The principal activities of the PA Mining Operations division are mining, preparation and marketing of thermal coal, sold primarily to power generators. The PA Mining Operations division focuses on the extraction and preparation of coal in the Appalachian Basin. The Other division includes business activities, such as coal terminal operations and water operations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CNX – September 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,178,842,385 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.67 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -93.16% Fail
6. Moderate PEmg Ratio PEmg < 20 39.47 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.65 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.67 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.96 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.38
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $5.48
MG Value based on 0% Growth $3.21
Market Implied Growth Rate 15.49%
Current Price $14.92
% of Intrinsic Value N/A

CNX Resources Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.81 in 2014 to an estimated $0.38 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.49% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into CNX Resources Corp revealed the company was trading below its Graham Number of $31.62. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 39.47, which was below the industry average of 58.86, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.02.

CNX Resources Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.02
Graham Number $31.62
PEmg 39.47
Current Ratio 0.67
PB Ratio 0.65
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $319,146,000
Total Current Liabilities $474,991,000
Long-Term Debt $2,330,780,000
Total Assets $8,207,758,000
Intangible Assets $902,835,000
Total Liabilities $3,168,835,000
Shares Outstanding (Diluted Average) 218,930,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.55
Dec2017 $1.65
Dec2016 -$3.70
Dec2015 -$1.64
Dec2014 $0.70
Dec2013 $2.87
Dec2012 $1.70
Dec2011 $2.76
Dec2010 $1.60
Dec2009 $2.95
Dec2008 $2.40
Dec2007 $1.45
Dec2006 $2.20
Dec2005 $3.13
Dec2004 $1.09
Dec2003 -$0.05
Dec2002 $0.08
Jun2001 $1.17
Jun2000 $0.68
Jun1999 $0.31
Dec1998 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.38
Dec2017 -$0.48
Dec2016 -$1.03
Dec2015 $0.62
Dec2014 $1.81
Dec2013 $2.37
Dec2012 $2.18
Dec2011 $2.35
Dec2010 $2.14
Dec2009 $2.42
Dec2008 $2.12
Dec2007 $1.84
Dec2006 $1.78
Dec2005 $1.41
Dec2004 $0.57
Dec2003 $0.35
Dec2002 $0.57

Recommended Reading:

Other ModernGraham posts about the company

Consol Energy Inc Valuation – March 2017 $CNX
Consol Energy Inc Valuation – November 2015 Update $CNX
22 Companies in the Spotlight This Week – 11/29/14
Consol Energy Inc. Annual Valuation – 2014 $CNX

Other ModernGraham posts about related companies

Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN
Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Carbo Ceramics Inc Valuation – August 2018 $CRR

Company Profile (excerpt from Reuters): CARBO Ceramics Inc., incorporated on June 23, 1987, is a technology company that provides products and services to the global oil and gas and industrial markets. The Company operates through two segments: Oilfield Technologies and Services, and Environmental Products and Services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CRR – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $239,417,748 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.82 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -231.71% Fail
6. Moderate PEmg Ratio PEmg < 20 -2.00 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.63 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.53 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$4.36
MG Growth Estimate -4.25%
MG Value $1.81
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$63.21
MG Value based on 0% Growth -$37.05
Market Implied Growth Rate -5.25%
Current Price $8.70
% of Intrinsic Value 481.17%

CARBO Ceramics Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.68 in 2014 to an estimated $-4.36 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into CARBO Ceramics Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -2, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.81.

CARBO Ceramics Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.81
Graham Number $0.00
PEmg -2.00
Current Ratio 2.82
PB Ratio 0.63
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $179,498,000
Total Current Liabilities $63,668,000
Long-Term Debt $61,039,000
Total Assets $503,957,000
Intangible Assets $10,628,000
Total Liabilities $130,804,000
Shares Outstanding (Diluted Average) 26,931,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$2.09
Dec2017 -$9.49
Dec2016 -$3.29
Dec2015 -$4.76
Dec2014 $2.41
Dec2013 $3.67
Dec2012 $4.59
Dec2011 $5.62
Dec2010 $3.40
Dec2009 $2.27
Dec2008 $4.51
Dec2007 $2.20
Dec2006 $2.22
Dec2005 $1.93
Dec2004 $1.73
Dec2003 $1.25
Dec2002 $0.85
Dec2001 $1.16
Dec2000 $0.67
Dec1999 $0.47
Dec1998 $0.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$4.36
Dec2017 -$4.43
Dec2016 -$1.09
Dec2015 $0.78
Dec2014 $3.68
Dec2013 $4.18
Dec2012 $4.31
Dec2011 $3.98
Dec2010 $3.08
Dec2009 $2.82
Dec2008 $2.91
Dec2007 $2.03
Dec2006 $1.82
Dec2005 $1.55
Dec2004 $1.28
Dec2003 $1.00
Dec2002 $0.85

Recommended Reading:

Other ModernGraham posts about the company

CARBO Ceramics Inc Valuation – Initial Coverage $CRR

Other ModernGraham posts about related companies

Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN
Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG
Kelt Exploration Ltd Valuation – August 2018 $TSE-KEL

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Murphy Oil Corp Valuation – August 2018 $MUR

Company Profile (excerpt from Reuters): Murphy Oil Corporation (Murphy), incorporated on June 29, 1964, is an oil and gas exploration and production company. The Company’s exploration and production business explores for and produces crude oil, natural gas and natural gas liquids across the world. The Company’s exploration and production activities are subdivided into four geographic segments: the United States, Canada, Malaysia and all other countries. The Company explores for and produces crude oil, natural gas and natural gas liquids around the world. This business maintains upstream operating offices in several locations around the world, including Houston, Texas, Calgary, Alberta, and Kuala Lumpur, Malaysia.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MUR – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,542,518,868 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -114.11% Fail
6. Moderate PEmg Ratio PEmg < 20 -18.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.16 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 7.04 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$24.33
MG Value based on 0% Growth -$14.26
Market Implied Growth Rate -13.57%
Current Price $31.27
% of Intrinsic Value N/A

Murphy Oil Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.13 in 2014 to an estimated $-1.68 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Murphy Oil Corporation revealed the company was trading above its Graham Number of $30.85. The company pays a dividend of $1 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -18.64, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.75.

Murphy Oil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.75
Graham Number $30.85
PEmg -18.64
Current Ratio 1.46
PB Ratio 1.16
Current Dividend $1.00
Dividend Yield 3.20%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,315,355,000
Total Current Liabilities $903,557,000
Long-Term Debt $2,897,345,000
Total Assets $9,945,449,000
Intangible Assets $0
Total Liabilities $5,273,811,000
Shares Outstanding (Diluted Average) 173,983,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.58
Dec2017 -$1.81
Dec2016 -$1.60
Dec2015 -$13.03
Dec2014 $5.03
Dec2013 $5.94
Dec2012 $4.99
Dec2011 $4.49
Dec2010 $4.13
Dec2009 $4.35
Dec2008 $9.06
Dec2007 $4.01
Dec2006 $3.41
Dec2005 $4.55
Dec2004 $3.77
Dec2003 $1.59
Dec2002 $0.61
Dec2001 $1.81
Dec2000 $1.64
Dec1999 $0.67
Dec1998 -$0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.68
Dec2017 -$2.57
Dec2016 -$1.88
Dec2015 -$0.85
Dec2014 $5.13
Dec2013 $5.05
Dec2012 $4.87
Dec2011 $4.94
Dec2010 $5.11
Dec2009 $5.43
Dec2008 $5.63
Dec2007 $3.76
Dec2006 $3.36
Dec2005 $3.04
Dec2004 $2.15
Dec2003 $1.32
Dec2002 $1.10

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Murphy Oil Corporation Valuation – March 2017 $MUR
Murphy Oil Corporation Valuation – November 2015 Update $MUR
26 Companies in the Spotlight This Week – 11/22/14
Murphy Oil Corporation Annual Valuation – 2014 $MUR

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Suncor Energy Inc Valuation – August 2018 $TSE:SU

Company Profile (excerpt from Reuters): Suncor Energy Inc. (Suncor), is an integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production (E&P), and Refining and Marketing. In addition, it explores for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. It transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. It also markets third-party petroleum products. Suncor conducts energy trading activities focused principally on the marketing and trading of crude oil, natural gas, power and byproducts.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SU – August 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $87,090,000,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.90 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 0.33% Fail
6. Moderate PEmg Ratio PEmg < 20 30.89 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.94 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.90 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.79 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.75
MG Growth Estimate -2.96%
MG Value $4.51
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $25.34
MG Value based on 0% Growth $14.85
Market Implied Growth Rate 11.19%
Current Price $53.97
% of Intrinsic Value 1195.92%

Suncor Energy Inc. (USA) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.18 in 2014 to an estimated $1.75 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.19% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Suncor Energy Inc. (USA) revealed the company was trading above its Graham Number of $44.06. The company pays a dividend of $1.28 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.89, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.06.

Suncor Energy Inc. (USA) scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.06
Graham Number $44.06
PEmg 30.89
Current Ratio 0.90
PB Ratio 1.94
Current Dividend $1.28
Dividend Yield 2.37%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $10,697,000,000
Total Current Liabilities $11,951,000,000
Long-Term Debt $13,535,000,000
Total Assets $92,434,000,000
Intangible Assets $3,059,000,000
Total Liabilities $46,891,000,000
Shares Outstanding (Diluted Average) 1,641,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.12
Dec2017 $2.68
Dec2016 $0.27
Dec2015 -$1.38
Dec2014 $1.84
Dec2013 $2.60
Dec2012 $1.76
Dec2011 $2.67
Dec2010 $2.43
Dec2009 $0.95
Dec2008 $2.26
Dec2007 $3.17
Dec2006 $3.16
Dec2005 $1.24
Dec2004 $1.17
Dec2003 $1.13
Dec2002 $0.81
Dec2001 $0.39
Dec2000 $0.39
Dec1999 $0.18
Dec1998 $0.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.75
Dec2017 $1.11
Dec2016 $0.55
Dec2015 $0.96
Dec2014 $2.18
Dec2013 $2.26
Dec2012 $2.06
Dec2011 $2.24
Dec2010 $2.15
Dec2009 $2.06
Dec2008 $2.47
Dec2007 $2.38
Dec2006 $1.82
Dec2005 $1.08
Dec2004 $0.93
Dec2003 $0.73
Dec2002 $0.49

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Canadian Stocks for Intelligent Investors – March 2017
Suncor Energy Inc Valuation – Initial Coverage $TSE:SU

Other ModernGraham posts about related companies

Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN
Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG
Kelt Exploration Ltd Valuation – August 2018 $TSE-KEL
Canadian Natural Resources Ltd Valuation – August 2018 $TSE:CNQ
SM Energy Co Valuation – August 2018 $SM
Surge Energy Inc Valuation – July 2018 $TSE:SGY

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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