DowDuPont Inc Valuation – April 2019 #DWDP

Company Profile (excerpt from Reuters): Robert Half International Inc. is engaged in providing specialized staffing and risk consulting services. The Company provides staffing and risk consulting services through the divisions: Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group and Protiviti. The Company operates through three segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services. The temporary and consultant segment provides specialized staffing in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and Web design fields. The permanent placement segment provides full-time personnel in the accounting, finance, administrative and office, and information technology fields. The risk consulting segment provides business and technology risk consulting and internal audit services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DWDP – April 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 $85,135,304,027 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.01 Pass
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 -8.50% Fail
6. Moderate PEmg Ratio PEmg < 20 18.84 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.90 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 2.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.51 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 $2.01
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $29.16
MG Value based on 0% Growth $17.10
Market Implied Growth Rate 5.17%
Current Price $37.90
% of Intrinsic Value N/A

DowDuPont Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.78 in 2015 to an estimated $2.01 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.17% 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 DowDuPont Inc revealed the company was trading above its Graham Number of $37.88. The company pays a dividend of $1.52 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.84, which was below the industry average of 23.27, 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 $-18.43.

DowDuPont Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.43
Graham Number $37.88
PEmg 18.84
Current Ratio 2.01
PB Ratio 0.90
Current Dividend $1.52
Dividend Yield 4.01%
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 12/1/2018
Total Current Assets $49,603,000,000
Total Current Liabilities $24,715,000,000
Long-Term Debt $37,662,000,000
Total Assets $188,030,000,000
Intangible Assets $89,997,000,000
Total Liabilities $91,851,000,000
Shares Outstanding (Diluted Average) 2,292,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.53
Dec2018 $1.65
Dec2017 $0.91
Dec2016 $3.52
Dec2015 $6.15
Dec2014 $2.87
Dec2013 $3.68
Dec2012 $0.70
Dec2011 $2.05
Dec2010 $1.72
Dec2009 $0.32
Dec2008 $0.62
Dec2007 $2.99
Dec2006 $3.82
Dec2005 $4.62
Dec2004 $2.93
Dec2003 $1.87
Dec2002 -$0.37
Dec2001 -$0.43
Dec2000 $2.22
Dec1999 $0.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.01
Dec2018 $2.51
Dec2017 $3.10
Dec2016 $3.92
Dec2015 $3.78
Dec2014 $2.47
Dec2013 $2.07
Dec2012 $1.21
Dec2011 $1.49
Dec2010 $1.44
Dec2009 $1.69
Dec2008 $2.58
Dec2007 $3.45
Dec2006 $3.32
Dec2005 $2.62
Dec2004 $1.49
Dec2003 $0.78

Recommended Reading:

Other ModernGraham posts about the company

DowDuPont Inc Valuation – November 2018 $DWDP
DowDuPont Inc Valuation – February 2018 $DWDP

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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.

5 Overvalued Dow Components – April 2019

There are so many great companies in the market today, but there are also many overvalued companies. By using the ModernGraham Valuation Model, I’ve selected five overvalued Dow Components reviewed by ModernGraham according to the ModernGraham approach.

Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.  Only speculators should pursue companies not suitable for either the Defensive Investor or the Enterprising Investor.

Chevron Corp (CVX)

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-.  (Read the full valuation)

Exxon Mobil Corp (XOM)

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+.  (Read the full valuation)

The Coca-Cola Company (KO)

The Coca-Cola Co 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, 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 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 $1.85 in 2014 to an estimated $1.36 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.04% 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 The Coca-Cola Co revealed the company was trading above its Graham Number of $13.29. The company pays a dividend of $1.48 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 36.58, which was above the industry average of 25.8. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.75.

The Coca-Cola Co receives an average overall rating in the ModernGraham grading system, scoring a C-.  (Read the full valuation)

Merck & Co (MRK)

Merck & Co., 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 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 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 $2.44 in 2014 to an estimated $1.86 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.16% 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 Merck & Co., Inc. revealed the company was trading above its Graham Number of $27.34. The company pays a dividend of $1.89 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 40.82, which was above the industry average of 36.89. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.57.

Merck & Co., Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.  (Read the full valuation)

Caterpillar Inc. (CAT)

Caterpillar 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 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 $5.79 in 2014 to an estimated $4.86 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.81% 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 Caterpillar Inc. revealed the company was trading above its Graham Number of $75.93. The company pays a dividend of $3.1 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 26.12, which was below the industry average of 31.29, 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 $-39.81.

Caterpillar Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.  (Read the full valuation)

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.

5 Overvalued Dow Components – January 2019

5 Worst Dow Components (3)There are so many great companies in the market today, but there are also many overvalued companies. By using the ModernGraham Valuation Model, I’ve selected five overvalued Dow Components reviewed by ModernGraham according to the ModernGraham approach.

Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.  Only speculators should pursue companies not suitable for either the Defensive Investor or the Enterprising Investor.

Chevron Corp (CVX)

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-.  (Read the full valuation)

Exxon Mobil Corp (XOM)

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+.  (Read the full valuation)

The Coca-Cola Company (KO)

The Coca-Cola Co 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, 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 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 $1.85 in 2014 to an estimated $1.36 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.04% 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 The Coca-Cola Co revealed the company was trading above its Graham Number of $13.29. The company pays a dividend of $1.48 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 36.58, which was above the industry average of 25.8. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.75.

The Coca-Cola Co receives an average overall rating in the ModernGraham grading system, scoring a C-.  (Read the full valuation)

Merck & Co (MRK)

Merck & Co., 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 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 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 $2.44 in 2014 to an estimated $1.86 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.16% 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 Merck & Co., Inc. revealed the company was trading above its Graham Number of $27.34. The company pays a dividend of $1.89 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 40.82, which was above the industry average of 36.89. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.57.

Merck & Co., Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.  (Read the full valuation)

Caterpillar Inc. (CAT)

Caterpillar 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 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 $5.79 in 2014 to an estimated $4.86 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.81% 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 Caterpillar Inc. revealed the company was trading above its Graham Number of $75.93. The company pays a dividend of $3.1 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 26.12, which was below the industry average of 31.29, 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 $-39.81.

Caterpillar Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.  (Read the full valuation)

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.

DowDuPont Inc Valuation – November 2018 $DWDP

Company Profile (excerpt from Reuters): DowDuPont Inc., incorporated on December 9, 2015, is a holding company formed through the merger of equals between The Dow Chemical Company and E. I. du Pont de Nemours and Company (DuPont). The Company’s business divisions include Agriculture division and a Specialty Products division.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DWDP – 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 $134,626,274,767 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.64 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 99.02% Pass
6. Moderate PEmg Ratio PEmg < 20 18.37 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.36 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 1.64 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.54 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 $3.19
MG Growth Estimate 4.43%
MG Value $55.47
Opinion Fairly Valued
MG Grade A-
MG Value based on 3% Growth $46.32
MG Value based on 0% Growth $27.15
Market Implied Growth Rate 4.93%
Current Price $58.68
% of Intrinsic Value 105.78%

DowDuPont Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.47 in 2014 to an estimated $3.19 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.93% 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 within a margin of safety relative to the price.

At the time of valuation, further research into DowDuPont Inc revealed the company was trading below its Graham Number of $59.99. The company pays a dividend of $1.76 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.37, which was below the industry average of 27.01, 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 $-17.01.

DowDuPont Inc fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.01
Graham Number $59.99
PEmg 18.37
Current Ratio 1.64
PB Ratio 1.36
Current Dividend $1.76
Dividend Yield 3.00%
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 9/1/2018
Total Current Assets $45,405,000,000
Total Current Liabilities $27,680,000,000
Long-Term Debt $27,293,000,000
Total Assets $184,453,000,000
Intangible Assets $90,870,000,000
Total Liabilities $84,709,000,000
Shares Outstanding (Diluted Average) 2,311,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.71
Dec2017 $0.91
Dec2016 $3.52
Dec2015 $6.15
Dec2014 $2.87
Dec2013 $3.68
Dec2012 $0.70
Dec2011 $2.05
Dec2010 $1.72
Dec2009 $0.32
Dec2008 $0.62
Dec2007 $2.99
Dec2006 $3.82
Dec2005 $4.62
Dec2004 $2.93
Dec2003 $1.87
Dec2002 -$0.37
Dec2001 -$0.43
Dec2000 $2.22
Dec1999 $0.66
Dec1998 $0.64

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.19
Dec2017 $3.10
Dec2016 $3.92
Dec2015 $3.78
Dec2014 $2.47
Dec2013 $2.07
Dec2012 $1.21
Dec2011 $1.49
Dec2010 $1.44
Dec2009 $1.69
Dec2008 $2.58
Dec2007 $3.45
Dec2006 $3.32
Dec2005 $2.62
Dec2004 $1.49
Dec2003 $0.78
Dec2002 $0.34

Recommended Reading:

Other ModernGraham posts about the company

DowDuPont Inc Valuation – February 2018 $DWDP

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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.

5 Overvalued Dow Components – June 2018

5 Worst Dow Components (3)There are so many great companies in the market today, but there are also many overvalued companies. By using the ModernGraham Valuation Model, I’ve selected five overvalued Dow Components reviewed by ModernGraham according to the ModernGraham approach.

Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.  Only speculators should pursue companies not suitable for either the Defensive Investor or the Enterprising Investor.

Caterpillar Inc. (CAT)

Caterpillar 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 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 $5.79 in 2014 to an estimated $3.73 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.01% 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 Caterpillar Inc. revealed the company was trading above its Graham Number of $63.57. The company pays a dividend of $3.1 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 42.51, which was above the industry average of 25.98. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-44.46.  (See the full valuation)

Chevron Corp (CVX)

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 $3.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.98% 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 above its Graham Number of $0. The company pays a dividend of $4.32 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.47, which was below the industry average of 63.11, 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 $-41.7.  (See the full valuation)

General Electric Co (GE)

General Electric Company 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 $1.33 in 2014 to an estimated $0.3 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.17% 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 General Electric Company revealed the company was trading above its Graham Number of $12.12. The company pays a dividend of $0.84 per share, for a yield of 5.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 48.84, which was above the industry average of 26.48. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.17.  (See the full valuation)

Exxon Mobil Corp (XOM)

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 $7.82 in 2013 to an estimated $3.97 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% 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 $56.92. The company pays a dividend of $2.98 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.55, which was below the industry average of 63.11, 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 $-28.42.  (See the full valuation)

The Coca-Cola Company (KO)

The Coca-Cola Co 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, 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 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 $1.85 in 2014 to an estimated $1.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.81% 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 The Coca-Cola Co revealed the company was trading above its Graham Number of $13.43. The company pays a dividend of $1.48 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 32.11, which was below the industry average of 34.94, 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 $-7.94.  (See the full valuation)

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.

5 Overvalued Dow Components – February 2018

5 Worst Dow Components (3)There are so many great companies in the market today, but there are also many overvalued companies. By using the ModernGraham Valuation Model, I’ve selected five overvalued Dow Components reviewed by ModernGraham according to the ModernGraham approach.

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.  Only speculators should pursue companies not suitable for either the Defensive Investor or the Enterprising Investor.

Caterpillar Inc. (CAT)

Caterpillar 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 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 $5.79 in 2014 to an estimated $3.73 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.01% 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 Caterpillar Inc. revealed the company was trading above its Graham Number of $63.57. The company pays a dividend of $3.1 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 42.51, which was above the industry average of 25.98. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-44.46.  (See the full valuation)

Chevron Corp (CVX)

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 $3.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.98% 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 above its Graham Number of $0. The company pays a dividend of $4.32 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.47, which was below the industry average of 63.11, 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 $-41.7.  (See the full valuation)

Exxon Mobil Corp (XOM)

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 $7.82 in 2013 to an estimated $3.97 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% 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 $56.92. The company pays a dividend of $2.98 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.55, which was below the industry average of 63.11, 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 $-28.42.  (See the full valuation)

General Electric Co (GE)

General Electric Company 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 $1.33 in 2014 to an estimated $0.3 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.17% 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 General Electric Company revealed the company was trading above its Graham Number of $12.12. The company pays a dividend of $0.84 per share, for a yield of 5.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 48.84, which was above the industry average of 26.48. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.17.  (See the full valuation)

The Coca-Cola Company (KO)

The Coca-Cola Co 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, 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 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 $1.85 in 2014 to an estimated $1.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.81% 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 The Coca-Cola Co revealed the company was trading above its Graham Number of $13.43. The company pays a dividend of $1.48 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 32.11, which was below the industry average of 34.94, 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 $-7.94.  (See the full valuation)

 

 

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.

DowDuPont Inc Valuation – February 2018 $DWDP

Company Profile (obtained from Marketwatch): DowDuPont, Inc. operates as a holding company, which develops specialty materials, chemicals, and agricultural products. It operates through the following divisions: Agriculture, Materials Science and Specialty Products divisions. The Agriculture division offers a complete portfolio of products and technologies, and a robust pipeline of germplasm, traits and crop protection. The Materials Science division focuses to its market segments, offering a broad and deep portfolio of products and technologies to help customers. The Specialty Products division operates through the five businesses: Electronic Technologies, Protection Solutions, Nutrition & Health, Industrial Biosciences and Sustainable Solutions. The company is headquartered in Midland, MI.

DWDP Chart

DWDP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DWDP – February 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 $171,427,692,032 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.91 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 101.71% Pass
6. Moderate PEmg Ratio PEmg < 20 22.67 Fail
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 1.91 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.26 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 $3.23
MG Growth Estimate 4.66%
MG Value $57.55
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $46.85
MG Value based on 0% Growth $27.47
Market Implied Growth Rate 7.09%
Current Price $73.26
% of Intrinsic Value 127.29%

DowDuPont Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.47 in 2014 to an estimated $3.23 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.09% 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 DowDuPont Inc revealed the company was trading above its Graham Number of $60.71. The company pays a dividend of $1.76 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 22.67, which was below the industry average of 30.04, 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 $-17.88.

DowDuPont Inc receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.88
Graham Number $60.71
PEmg 22.67
Current Ratio 1.91
PB Ratio 1.71
Current Dividend $1.76
Dividend Yield 2.40%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $49,893,000,000
Total Current Liabilities $26,128,000,000
Long-Term Debt $30,056,000,000
Total Assets $192,164,000,000
Intangible Assets $92,801,000,000
Total Liabilities $91,834,000,000
Shares Outstanding (Diluted Average) 2,346,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.82
Dec2017 $0.91
Dec2016 $3.52
Dec2015 $6.15
Dec2014 $2.87
Dec2013 $3.68
Dec2012 $0.70
Dec2011 $2.05
Dec2010 $1.72
Dec2009 $0.32
Dec2008 $0.62
Dec2007 $2.99
Dec2006 $3.82
Dec2005 $4.62
Dec2004 $2.93
Dec2003 $1.87
Dec2002 -$0.37
Dec2001 -$0.43
Dec2000 $2.22
Dec1999 $1.97
Dec1998 $1.92

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.23
Dec2017 $3.10
Dec2016 $3.92
Dec2015 $3.78
Dec2014 $2.47
Dec2013 $2.07
Dec2012 $1.21
Dec2011 $1.49
Dec2010 $1.44
Dec2009 $1.69
Dec2008 $2.58
Dec2007 $3.45
Dec2006 $3.32
Dec2005 $2.62
Dec2004 $1.49
Dec2003 $0.87
Dec2002 $0.60

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2016
10 Companies Benjamin Graham Would Invest In Today – February 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
18 Best Stocks For Value Investors This Week – 1/30/16
Dow Chemical Co Valuation – January 2016 Update $DOW

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Air Products & Chemicals Inc Valuation – January 2017 $APD

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.

Mr. Market and a Valuation of the Dow For Value Investors – July 2017

 

Mr. Market’s Mental State

Legendary value investor Benjamin Graham is probably most famous for his Mr. Market parable.  In the story, an investor is greeted each day by Mr. Market, who offers to purchase the investor’s stocks.  Every offer is different, and sometimes the price is insanely high, sometimes it seems fair, and other times it is clearly too low.  But one thing remains the same – the intrinsic value of the investments does not change.  As a result, the investor is left to decide when to buy and sell based on the relationship between the intrinsic value and the price Mr. Market is offering.

All value investors today should keep the analogy in mind, and implement the overall concept.  To assist in that goal, ModernGraham has various tools available, and the infographic shown above is one of them, displaying a summary of the valuations of 878 companies reviewed by ModernGraham.

This month, out of the 878 companies reviewed by ModernGraham, the average PEmg ratio (price over normalized earnings) is 26.72 and the average company is trading at 121.83% of its intrinsic value.  Last month, the average PEmg ratio was 26.78 and the average company was trading at 122.1% of its intrinsic value.

The highest PEmg average we have seen while tracking this information was 26.78 in July 2017 while the lowest PEmg average was 22.25 in February 2016.  The highest average intrinsic value was 122.1% in July 2017 and the lowest average intrinsic value was 103.19% in February 2016.

Month Average PEmg Average % of value, 200% outlier Average % of value, 500% outlier Defensive % Enterprising % Speculative % Undervalued % Fairly Valued % Overvalued %
August 2014 24.36 90.57% 120.87% n/a n/a n/a n/a n/a n/a
September 2014 25.37 93.37% 120.58% n/a n/a n/a n/a n/a n/a
October 2014 24.29 90.24% 116.67% 12% 35% 53% 31% 21% 48%
November 2014 25.32 90.61% 117.38% 12% 35% 53% 29% 21% 50%
December 2014 26.17 92.28% 117.00% 11% 34% 55% 28% 23% 49%
January 2015 25.63 93.48% 119.68% 10% 34% 55% 30% 20% 50%
February 2015 25.79 92.72% 115.81% 10% 35% 55% 33% 19% 49%
March 2015 25.79 88.03% 114.81% 10% 35% 55% 31% 19% 49%
April 2015 25.64 86.18% 112.23% 9.9% 35.2% 54.9% 32.1% 19.4% 48.5%
May 2015 25.17 86.64% 112.99% 9.1% 36.1% 54.8% 32.1% 20.4% 47.4%
June 2015 25.47 86.43% 112.50% 8.7% 34.7% 56.5% 30.0% 21.2% 48.8%
July 2015 25.24 85.65% 118.11% 9.6% 33.1% 57.3% 30.9% 19.3% 49.6%
August 2015 25.08 86.79% 116.39% 9.8% 32.7% 57.5% 29.5% 21.0% 49.5%
September 2015 23.2 82.45% 103.59% 9.4% 32.6% 57.9% 35.7% 18.9% 45.5%
October 2015 22.95 81.80% 101.69% 10.5% 31.7% 57.8% 35.5% 18.7% 45.8%
November 2015 23.97 84.84% 110.89% 10.1% 32.2% 57.7% 32.0% 19.2% 48.7%
December 2015 23.27 84.55% 115.56% 10.6% 31.5% 57.8% 33.0% 17.8% 49.2%
January 2016 22.87 82.61% 110.62% 10.9% 30.8% 58.3% 35.9% 16.8% 47.3%
February 2016 22.25 79.54% 103.19% 10.9% 30.7% 58.4% 36.7% 16.3% 47.0%
March 2016 23.07 83.92% 106.76% 11.3% 29.9% 58.8% 33.4% 19.0% 47.6%
April 2016 23.37 83.65% 110.61% 11.3% 29.9% 58.8% 32.5% 18.8% 48.7%
May 2016 23.78 82.90% 112.17% 11.4% 29.9% 58.8% 31.3% 18.5% 50.2%
June 2016 24.21 84.77% 115.18% 11.6% 30.0% 58.5% 30.7% 17.3% 52.0%
July 2016 23.83 86.40% 117.49% 11.8% 29.9% 58.2% 30.1% 19.0% 50.8%
August 2016 24.68 89.40% 117.12% 11.9% 30.7% 57.4% 29.6% 19.3% 51.1%
September 2016 23.86 91.21% 115.16% 11.2% 30.1% 58.7% 28.6% 18.4% 53.0%
October 2016 24.07 91.41% 117.93% 11.2% 30.2% 58.6% 28.4% 18.5% 53.2%
November 2016 24.2 92.55% 119.16% 11.0% 30.3% 58.7% 28.0% 17.8% 54.2%
December 2016 24.56 93.20% 121.14% 10.5% 31.1% 58.4% 28.0% 17.6% 54.4%
January 2017 24.8 93.57% 121.72% 9.5% 32.8% 57.7% 26.5% 17.0% 56.5%
February 2017 25.54 80.97% 111.6% 8.9% 33.4% 57.7% 25.1% 17.9% 57.0%
March 2017 26.4 82.96% 118.0% 8.2% 33.8% 58.0% 24.6% 17.0% 58.4%
April 2017 26.48 82.59% 119.2% 8.1% 33.5% 58.4% 24.6% 17.6% 57.8%
May 2017 26.08 81.70% 117.4% 8.1% 33.5% 58.4% 25.8% 16.0% 58.2%
June 2017 26.78 83.33% 122.1% 8.1% 33.5% 58.4% 24.2% 16.3% 59.5%
July 2017 26.72 81.97% 121.8% 8.2% 33.3% 58.5% 23.7% 16.6% 59.7%

Valuation of the Dow

Each month ModernGraham takes a look at the Dow Jones Industrial Average, listing out each individual component in an easy to read table, and calculates a value for the index that is based on the ModernGraham valuation model’s estimates for intrinsic values for each component.  Over time this figure can be useful for determining whether the market as a whole is undervalued or overvalued.
^DJI Chart

^DJI data by YCharts

At the time of writing, the Dow Jones Industrial Average (DJIA) was at 21,574.73. The ModernGraham Valuation of the DJIA was 18,787.53. As a result, the DJIA was trading at 114.84% of its estimated value. This figure is above the ModernGraham margin of error, and therefore it appears the DJIA is presently overvalued.

To see the individual valuation articles, please click on the company name in the table below.  For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Dividend Yield
AXP American Express Company D 5/19/2016 $117.34 $85.52 72.88% 16.80 1.36%
AAPL Apple Inc. S 1/24/2017 $231.48 $150.08 64.83% 18.81 1.45%
BA Boeing Co E 6/13/2016 $201.69 $208.24 103.25% 28.33 1.83%
CAT Caterpillar Inc. S 8/27/2016 $0.00 $107.07 N/A 24.28 2.88%
CSCO Cisco Systems, Inc. D 1/11/2017 $37.19 $31.51 84.73% 15.76 3.14%
CVX Chevron Corporation S 3/15/2017 $0.00 $103.72 N/A 28.11 4.14%
DD E I Du Pont De Nemours And Co E 8/28/2016 $36.35 $84.00 231.09% 25.53 1.81%
DIS Walt Disney Co S 3/17/2017 $174.08 $105.75 60.75% 20.26 1.41%
GE General Electric Company S 7/21/2016 $0.26 $26.89 10342.31% 30.21 3.42%
GS Goldman Sachs Group Inc S 6/20/2016 $174.21 $223.31 128.18% 16.52 1.16%
HD Home Depot Inc S 2/22/2017 $203.38 $152.17 74.82% 28.82 1.75%
IBM International Business Machines Corp. S 3/13/2017 $94.03 $154.00 163.78% 11.81 3.57%
INTC Intel Corporation D 5/20/2016 $26.44 $34.53 130.60% 16.06 2.84%
JNJ Johnson & Johnson E 1/16/2017 $105.81 $134.46 127.08% 24.40 2.31%
JPM JPMorgan Chase & Co. D 7/24/2016 $96.69 $91.07 94.19% 16.86 1.98%
KO The Coca-Cola Co S 7/28/2016 $10.76 $44.67 415.15% 25.10 3.00%
MCD McDonald’s Corporation S 11/20/2016 $49.98 $153.96 308.04% 30.13 2.31%
MMM 3M Co E 12/13/2016 $135.24 $211.31 156.25% 27.99 2.06%
MRK Merck & Co., Inc. E 8/29/2016 $26.80 $62.41 232.87% 25.58 2.93%
MSFT Microsoft Corporation E 2/2/2017 $15.97 $73.30 458.99% 33.02 2.01%
NKE Nike Inc E 11/19/2016 $59.52 $57.65 96.86% 28.97 1.11%
PFE Pfizer Inc. S 3/9/2017 $7.21 $33.36 462.69% 19.06 3.60%
PG Procter & Gamble Co S 7/8/2016 $17.20 $88.64 515.35% 25.77 2.99%
TRV Travelers Companies Inc D 12/1/2016 $320.65 $125.53 39.15% 12.72 1.55%
UNH UnitedHealth Group Inc S 2/28/2017 $173.14 $186.85 107.92% 25.22 1.27%
UTX United Technologies Corporation D 5/18/2016 $174.94 $122.63 70.10% 16.03 2.09%
V Visa Inc E 6/26/2016 $89.37 $97.58 109.19% 42.06 1.41%
VZ Verizon Communications Inc. S 7/28/2016 $124.10 $43.36 34.94% 13.47 5.21%
WMT Wal-Mart Stores Inc S 5/20/2016 $39.55 $76.20 192.67% 16.82 2.57%
XOM Exxon Mobil Corporation S 2/9/2017 $0.00 $80.60 N/A 16.62 3.67%

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Disclaimer:

The author held a long position in Apple Inc (AAPL), Home Depot (HD) and Walt Disney Co. (DIS) but did not hold a position in any other 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 read our full disclaimer.

Mr. Market and a Valuation of the Dow For Value Investors – March 2017

Mr. Market’s Mental State

Legendary value investor Benjamin Graham is probably most famous for his Mr. Market parable.  In the story, an investor is greeted each day by Mr. Market, who offers to purchase the investor’s stocks.  Every offer is different, and sometimes the price is insanely high, sometimes it seems fair, and other times it is clearly too low.  But one thing remains the same – the intrinsic value of the investments does not change.  As a result, the investor is left to decide when to buy and sell based on the relationship between the intrinsic value and the price Mr. Market is offering.

All value investors today should keep the analogy in mind, and implement the overall concept.  To assist in that goal, ModernGraham has various tools available, and the infographic shown above is one of them, displaying a summary of the valuations of 808 companies reviewed by ModernGraham.

This month, out of the 808 companies reviewed by ModernGraham, the average PEmg ratio (price over normalized earnings) is 26.40 and the average company is trading at 118.02% of its intrinsic value.  Last month, the average PEmg ratio was 25.54 and the average company was trading at 111.6% of its intrinsic value.

The highest PEmg average we have seen while tracking this information was 26.40 in March 2017 while the lowest PEmg average was 22.25 in February 2016.  The highest average intrinsic value was 121.72% in January 2017 and the lowest average intrinsic value was 103.19% in February 2016.

Month Average PEmg Average % of value, 200% outlier Average % of value, 500% outlier Defensive % Enterprising % Speculative % Undervalued % Fairly Valued % Overvalued %
August 2014 24.36 90.57% 120.87% n/a n/a n/a n/a n/a n/a
September 2014 25.37 93.37% 120.58% n/a n/a n/a n/a n/a n/a
October 2014 24.29 90.24% 116.67% 12% 35% 53% 31% 21% 48%
November 2014 25.32 90.61% 117.38% 12% 35% 53% 29% 21% 50%
December 2014 26.17 92.28% 117.00% 11% 34% 55% 28% 23% 49%
January 2015 25.63 93.48% 119.68% 10% 34% 55% 30% 20% 50%
February 2015 25.79 92.72% 115.81% 10% 35% 55% 33% 19% 49%
March 2015 25.79 88.03% 114.81% 10% 35% 55% 31% 19% 49%
April 2015 25.64 86.18% 112.23% 9.9% 35.2% 54.9% 32.1% 19.4% 48.5%
May 2015 25.17 86.64% 112.99% 9.1% 36.1% 54.8% 32.1% 20.4% 47.4%
June 2015 25.47 86.43% 112.50% 8.7% 34.7% 56.5% 30.0% 21.2% 48.8%
July 2015 25.24 85.65% 118.11% 9.6% 33.1% 57.3% 30.9% 19.3% 49.6%
August 2015 25.08 86.79% 116.39% 9.8% 32.7% 57.5% 29.5% 21.0% 49.5%
September 2015 23.2 82.45% 103.59% 9.4% 32.6% 57.9% 35.7% 18.9% 45.5%
October 2015 22.95 81.80% 101.69% 10.5% 31.7% 57.8% 35.5% 18.7% 45.8%
November 2015 23.97 84.84% 110.89% 10.1% 32.2% 57.7% 32.0% 19.2% 48.7%
December 2015 23.27 84.55% 115.56% 10.6% 31.5% 57.8% 33.0% 17.8% 49.2%
January 2016 22.87 82.61% 110.62% 10.9% 30.8% 58.3% 35.9% 16.8% 47.3%
February 2016 22.25 79.54% 103.19% 10.9% 30.7% 58.4% 36.7% 16.3% 47.0%
March 2016 23.07 83.92% 106.76% 11.3% 29.9% 58.8% 33.4% 19.0% 47.6%
April 2016 23.37 83.65% 110.61% 11.3% 29.9% 58.8% 32.5% 18.8% 48.7%
May 2016 23.78 82.90% 112.17% 11.4% 29.9% 58.8% 31.3% 18.5% 50.2%
June 2016 24.21 84.77% 115.18% 11.6% 30.0% 58.5% 30.7% 17.3% 52.0%
July 2016 23.83 86.40% 117.49% 11.8% 29.9% 58.2% 30.1% 19.0% 50.8%
August 2016 24.68 89.40% 117.12% 11.9% 30.7% 57.4% 29.6% 19.3% 51.1%
September 2016 23.86 91.21% 115.16% 11.2% 30.1% 58.7% 28.6% 18.4% 53.0%
October 2016 24.07 91.41% 117.93% 11.2% 30.2% 58.6% 28.4% 18.5% 53.2%
November 2016 24.2 92.55% 119.16% 11.0% 30.3% 58.7% 28.0% 17.8% 54.2%
December 2016 24.56 93.20% 121.14% 10.5% 31.1% 58.4% 28.0% 17.6% 54.4%
January 2017 24.8 93.57% 121.72% 9.5% 32.8% 57.7% 26.5% 17.0% 56.5%
February 2017 25.54 80.97% 111.6% 8.9% 33.4% 57.7% 25.1% 17.9% 57.0%
March 2017 26.4 82.96% 118.0% 8.2% 33.8% 58.0% 24.6% 17.0% 58.4%

Valuation of the Dow

Each month ModernGraham takes a look at the Dow Jones Industrial Average, listing out each individual component in an easy to read table, and calculates a value for the index that is based on the ModernGraham valuation model’s estimates for intrinsic values for each component.  Over time this figure can be useful for determining whether the market as a whole is undervalued or overvalued.
^DJI Chart

^DJI data by YCharts

At the time of writing, the Dow Jones Industrial Average (DJIA) was at 20,855.73. The ModernGraham Valuation of the DJIA was 19,539.14. As a result, the DJIA was trading at 106.74% of its estimated value. This figure is within the ModernGraham margin of error, and therefore it appears the DJIA is presently fairly valued.

To see the individual valuation articles, please click on the company name in the table below.  For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Dividend Yield
AXP American Express Company D 5/19/2016 $117.34 $79.04 67.36% 15.53 1.47%
AAPL Apple Inc. S 1/24/2017 $231.48 $139.00 60.05% 17.42 1.57%
BA Boeing Co E 6/13/2016 $201.69 $181.74 90.11% 24.73 2.10%
CAT Caterpillar Inc. S 8/27/2016 $0.00 $93.23 N/A 21.14 3.30%
CSCO Cisco Systems, Inc. D 1/11/2017 $37.19 $34.02 91.48% 17.01 2.91%
CVX Chevron Corporation S 8/18/2016 $0.00 $109.61 N/A 23.42 3.90%
DD E I Du Pont De Nemours And Co E 8/28/2016 $36.35 $79.77 219.45% 24.25 1.91%
DIS Walt Disney Co S 12/10/2015 $157.29 $110.84 70.47% 23.94 1.24%
GE General Electric Company S 7/21/2016 $0.26 $29.80 11461.54% 33.48 3.09%
GS Goldman Sachs Group Inc S 6/20/2016 $174.21 $250.24 143.64% 18.51 1.04%
HD Home Depot Inc S 2/22/2017 $203.38 $146.92 72.24% 27.83 1.81%
IBM International Business Machines Corp. S 11/10/2015 $200.54 $179.45 89.48% 13.33 2.90%
INTC Intel Corporation D 5/20/2016 $26.44 $35.62 134.72% 16.57 2.75%
JNJ Johnson & Johnson E 1/16/2017 $105.81 $124.10 117.29% 22.52 2.50%
JPM JPMorgan Chase & Co. D 7/24/2016 $96.69 $91.21 94.33% 16.89 1.97%
KO The Coca-Cola Co S 7/28/2016 $10.76 $41.99 390.24% 23.59 3.19%
MCD McDonald’s Corporation S 11/20/2016 $49.98 $128.09 256.28% 25.07 2.78%
MMM 3M Co E 12/13/2016 $135.24 $189.51 140.13% 25.10 2.30%
MRK Merck & Co., Inc. E 8/29/2016 $26.80 $65.80 245.52% 26.97 2.78%
MSFT Microsoft Corporation E 2/2/2017 $15.97 $64.99 406.95% 29.27 2.26%
NKE Nike Inc E 11/19/2016 $59.52 $56.51 94.94% 28.40 1.13%
PFE Pfizer Inc. S 8/16/2016 $27.24 $33.91 124.49% 19.27 3.42%
PG Procter & Gamble Co S 7/8/2016 $17.20 $90.14 524.07% 26.20 2.94%
TRV Travelers Companies Inc D 12/1/2016 $320.65 $121.24 37.81% 12.28 1.61%
UNH UnitedHealth Group Inc S 2/28/2017 $173.14 $167.91 96.98% 22.66 1.42%
UTX United Technologies Corporation D 5/18/2016 $174.94 $111.75 63.88% 14.61 2.29%
V Visa Inc E 6/26/2016 $89.37 $88.96 99.54% 38.34 1.55%
VZ Verizon Communications Inc. S 7/28/2016 $124.10 $49.16 39.61% 15.27 4.60%
WMT Wal-Mart Stores Inc S 5/20/2016 $39.55 $69.80 176.49% 15.41 2.81%
XOM Exxon Mobil Corporation S 2/9/2017 $0.00 $81.03 N/A 16.71 3.65%

If you enjoy this content, please share it with your friends on FacebookPinterest, or Twitter!

Disclaimer:

The author held a long position in Apple Inc (AAPL), Home Depot (HD) and Walt Disney Co. (DIS) but did not hold a position in any other 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 read our full disclaimer.

5 Undervalued Dow Components to Research – March 2017

There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I’ve selected the five most undervalued Dow Components reviewed by ModernGraham which are suitable for the Defensive Investor or the Enterprising Investor according to the ModernGraham approach.

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.

Travelers Companies Inc (TRV)

Travelers Companies Inc qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.48 in 2012 to an estimated $9.87 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.49% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Travelers Companies Inc revealed the company was trading below its Graham Number of $134.38. The company pays a dividend of $1.95 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 11.48, which was below the industry average of 16.56, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

United Technologies Corporation (UTX)

United Technologies Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. 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 feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.17 in 2012 to an estimated $7.65 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.29% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.  (See the full valuation)

American Express Company (AXP)

American Express Company qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.43 in 2012 to an estimated $5.09 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.  (See the full valuation)

Boeing Co (BA)

Boeing Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor is only concerned with the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $4.51 in 2012 to an estimated $7.35 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.  (See the full valuation)

Cisco Systems, Inc. (CSCO)

Cisco Systems, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.5 in 2013 to an estimated $2 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 3.34% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Cisco Systems, Inc. revealed the company was trading above its Graham Number of $25.55. The company pays a dividend of $0.99 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.17, which was below the industry average of 38.63, 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 $4.  (See the full valuation)

What do you think?  Are these companies a good value for Defensive Investors?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

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 read our full disclaimer.

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