Equifax Inc Valuation – March 2019 #EFX

Company Profile (excerpt from Reuters): Equifax Inc., incorporated on December 20, 1913, is a global provider of information solutions and human resources business process outsourcing services for businesses, governments and consumers. The Company operates in four segments: U.S. Information Solutions (USIS), International, Workforce Solutions and Global Consumer Solutions. Its products and services are based on databases of consumer and business information derived from various sources, including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. It uses statistical techniques and software tools to analyze all available data, creating customized insights, decision-making solutions and processing services for its clients. It helps consumers understand, manage and protect their personal information and make more informed financial decisions. It also provides information, technology and services to support debt collections and recovery management.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EFX – March 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 $13,221,478,110 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.09 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 107.89% Pass
6. Moderate PEmg Ratio PEmg < 20 25.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.20 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 1.09 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 34.84 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 $4.27
MG Growth Estimate 6.60%
MG Value $92.70
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $61.92
MG Value based on 0% Growth $36.30
Market Implied Growth Rate 8.57%
Current Price $109.49
% of Intrinsic Value 118.12%

Equifax 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, high PEmg and PB ratios. 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 Overvalued after growing its EPSmg (normalized earnings) from $2.96 in 2015 to an estimated $4.27 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.57% 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 Equifax Inc. revealed the company was trading above its Graham Number of $56.85. The company pays a dividend of $1.56 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 25.64, which was above the industry average of 21.22. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-25.56.

Equifax Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.56
Graham Number $56.85
PEmg 25.64
Current Ratio 1.09
PB Ratio 4.20
Current Dividend $1.56
Dividend Yield 1.42%
Number of Consecutive Years of Dividend Growth 9

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 $902,300,000
Total Current Liabilities $826,800,000
Long-Term Debt $2,630,600,000
Total Assets $7,153,200,000
Intangible Assets $5,323,700,000
Total Liabilities $3,997,500,000
Shares Outstanding (Diluted Average) 121,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.61
Dec2018 $2.47
Dec2017 $4.83
Dec2016 $4.04
Dec2015 $3.55
Dec2014 $2.97
Dec2013 $2.84
Dec2012 $2.22
Dec2011 $1.88
Dec2010 $2.11
Dec2009 $1.83
Dec2008 $2.09
Dec2007 $2.02
Dec2006 $2.12
Dec2005 $1.86
Dec2004 $1.76
Dec2003 $1.20
Dec2002 $1.25
Dec2001 $0.85
Dec2000 $1.68
Dec1999 $1.55

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.27
Dec2018 $3.59
Dec2017 $3.98
Dec2016 $3.41
Dec2015 $2.96
Dec2014 $2.58
Dec2013 $2.32
Dec2012 $2.05
Dec2011 $1.97
Dec2010 $2.02
Dec2009 $1.98
Dec2008 $2.02
Dec2007 $1.93
Dec2006 $1.80
Dec2005 $1.55
Dec2004 $1.38
Dec2003 $1.23

Recommended Reading:

Other ModernGraham posts about the company

Equifax Inc Valuation – May 2018 $EFX
Equifax Inc Valuation – February 2017 $EFX
Equifax Inc Valuation – August 2016 $EFX
27 Companies in the Spotlight This Week – 4/4/15
Equifax Inc. Annual Valuation – 2015 $EFX

Other ModernGraham posts about related companies

CME Group Inc Valuation – March 2019 #CME
Northern Trust Corp Valuation – March 2019 #NTRS
Affiliated Managers Group Inc Valuation – February 2019 $AMG
Bank of New York Mellon Corp Valuation – February 2019 $BK
Western Union Co Valuation – February 2019 $WU
Raymond James Financial Valuation – February 2019 $RJF
Nasdaq Inc Valuation – February 2019 $NDAQ
E*Trade Financial Corp Valuation – January 2019 $ETFC
Marsh & McLennan Companies Inc Valuation – January 2019 $MMC
Intercontinental Exchange Inc Valuation – January 2019 $ICE

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.

Equifax Inc Valuation – May 2018 $EFX

Company Profile (excerpt from Reuters): Equifax Inc., incorporated on December 20, 1913, is a global provider of information solutions and human resources business process outsourcing services for businesses, governments and consumers. The Company operates in four segments: U.S. Information Solutions (USIS), International, Workforce Solutions and Global Consumer Solutions. Its products and services are based on databases of consumer and business information derived from various sources, including credit, financial assets, telecommunications and utility payments, employment, income, demographic and marketing data. It uses statistical techniques and software tools to analyze all available data, creating customized insights, decision-making solutions and processing services for its clients. It helps consumers understand, manage and protect their personal information and make more informed financial decisions. It also provides information, technology and services to support debt collections and recovery management.

EFX Chart

EFX data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EFX – May 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 $13,662,980,946 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.60 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 153.78% Pass
6. Moderate PEmg Ratio PEmg < 20 23.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.20 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 0.60 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.80 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 $4.73
MG Growth Estimate 12.49%
MG Value $158.54
Opinion Undervalued
MG Grade D+
MG Value based on 3% Growth $68.64
MG Value based on 0% Growth $40.24
Market Implied Growth Rate 7.74%
Current Price $113.49
% of Intrinsic Value 71.58%

Equifax 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, high PEmg and PB ratios. 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 $2.58 in 2014 to an estimated $4.73 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.74% 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 Equifax Inc. revealed the company was trading above its Graham Number of $59.23. The company pays a dividend of $1.56 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 23.97, which was above the industry average of 22.78. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.77.

Equifax 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) -$24.77
Graham Number $59.23
PEmg 23.97
Current Ratio 0.60
PB Ratio 4.20
Current Dividend $1.56
Dividend Yield 1.37%
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 3/1/2018
Total Current Assets $917,400,000
Total Current Liabilities $1,538,900,000
Long-Term Debt $1,739,600,000
Total Assets $7,196,100,000
Intangible Assets $5,535,500,000
Total Liabilities $3,921,400,000
Shares Outstanding (Diluted Average) 121,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.90
Dec2017 $4.83
Dec2016 $4.04
Dec2015 $3.55
Dec2014 $2.97
Dec2013 $2.84
Dec2012 $2.22
Dec2011 $1.88
Dec2010 $2.11
Dec2009 $1.83
Dec2008 $2.09
Dec2007 $2.02
Dec2006 $2.12
Dec2005 $1.86
Dec2004 $1.76
Dec2003 $1.20
Dec2002 $1.25
Dec2001 $0.85
Dec2000 $1.68
Dec1999 $1.55
Dec1998 $1.34

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.73
Dec2017 $3.98
Dec2016 $3.41
Dec2015 $2.96
Dec2014 $2.58
Dec2013 $2.32
Dec2012 $2.05
Dec2011 $1.97
Dec2010 $2.02
Dec2009 $1.98
Dec2008 $2.02
Dec2007 $1.93
Dec2006 $1.80
Dec2005 $1.55
Dec2004 $1.38
Dec2003 $1.23
Dec2002 $1.27

Recommended Reading:

Other ModernGraham posts about the company

Equifax Inc Valuation – February 2017 $EFX
Equifax Inc Valuation – August 2016 $EFX
27 Companies in the Spotlight This Week – 4/4/15
Equifax Inc. Annual Valuation – 2015 $EFX
14 Companies in the Spotlight This Week – 4/5/14

Other ModernGraham posts about related companies

Affiliated Managers Group Inc Valuation – May 2018 $AMG
The Western Union Co Valuation – April 2018 $WU
Northern Trust Corp Valuation – April 2018 $NTRS
Nasdaq Inc Valuation – April 2018 $NDAQ
Leucadia National Corp Valuation – March 2018 $LUK
E*Trade Financial Corp Valuation – March 2018 $ETFC
Cboe Global Markets Inc Valuation – Initial Coverage $CBOE
Raymond James Financial Inc Valuation – March 2018 $RJF
Marsh & McLennan Companies Inc Valuation – March 2018 $MMC
Fidelity National Information Services Inc Valuation – March 2018 $FIS

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.

Equifax Inc Valuation – February 2017 $EFX

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 – January 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 Equifax Inc (EFX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Equifax Inc. is a provider of information solutions and human resources business process outsourcing services for businesses, governments and consumers. The Company operates through four segments: U.S. Information Solutions (USIS), International, Workforce Solutions and Personal Solutions. USIS provides consumer and commercial information solutions to businesses in the United States, including online information, decisioning technology solutions, fraud and identity management services, portfolio management services, mortgage reporting and financial marketing services. International includes Canada, Europe and Latin America business units. Workforce Solutions provides services enabling clients to verify income and employment, as well as to outsource and automate the performance of certain payroll-related and human resources management business processes. Personal Solutions provides products to consumers in the United States, Canada and the United Kingdom.

EFX Chart

EFX data by YCharts

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of EFX – 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 $14,799,394,422 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.51 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 83.16% Pass
6. Moderate PEmg Ratio PEmg < 20 34.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.32 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 0.51 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.36 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 $3.52
MG Growth Estimate 10.80%
MG Value $105.99
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $51.05
MG Value based on 0% Growth $29.93
Market Implied Growth Rate 12.84%
Current Price $120.35
% of Intrinsic Value 113.55%

Equifax 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, high PEmg and PB ratios. 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 Overvalued after growing its EPSmg (normalized earnings) from $2.05 in 2012 to an estimated $3.52 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.84% 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 Equifax Inc. revealed the company was trading above its Graham Number of $47.46. The company pays a dividend of $1.28 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 34.18, which was above the industry average of 21.33. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.02.

Equifax Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.02
Graham Number $47.46
PEmg 34.18
Current Ratio 0.51
PB Ratio 5.32
Current Dividend $1.28
Dividend Yield 1.06%
Number of Consecutive Years of Dividend Growth 7

[/not-level-free]

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 $661,800,000
Total Current Liabilities $1,297,700,000
Long-Term Debt $2,136,300,000
Total Assets $6,806,600,000
Intangible Assets $5,572,800,000
Total Liabilities $4,060,500,000
Shares Outstanding (Diluted Average) 121,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.36
Dec2015 $3.55
Dec2014 $2.97
Dec2013 $2.84
Dec2012 $2.22
Dec2011 $1.88
Dec2010 $2.11
Dec2009 $1.83
Dec2008 $2.09
Dec2007 $2.02
Dec2006 $2.12
Dec2005 $1.86
Dec2004 $1.76
Dec2003 $1.20
Dec2002 $1.38
Dec2001 $0.90
Dec2000 $1.68
Dec1999 $1.55
Dec1998 $1.34
Dec1997 $1.24
Dec1996 $1.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.52
Dec2015 $2.96
Dec2014 $2.58
Dec2013 $2.32
Dec2012 $2.05
Dec2011 $1.97
Dec2010 $2.02
Dec2009 $1.98
Dec2008 $2.02
Dec2007 $1.93
Dec2006 $1.81
Dec2005 $1.57
Dec2004 $1.41
Dec2003 $1.28
Dec2002 $1.33
Dec2001 $1.32
Dec2000 $1.49

Recommended Reading:

Other ModernGraham posts about the company

Equifax Inc Valuation – August 2016 $EFX
27 Companies in the Spotlight This Week – 4/4/15
Equifax Inc. Annual Valuation – 2015 $EFX
14 Companies in the Spotlight This Week – 4/5/14
Equifax Inc. (EFX) Annual Valuation – 2014

Other ModernGraham posts about related companies

Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
Sun Life Financial Inc Valuation – Initial Coverage $TSE:SLF
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Affiliated Managers Group Inc Valuation – January 2017 $AMG
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Corelogic Inc Valuation – Initial Coverage $CLGX
CI Financial Corp Valuation – Initial Coverage $TSE-CIX
Stifel Financial Corp Valuation – Initial Coverage $SF

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.

Equifax Inc Valuation – August 2016 $EFX

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 Companies Benjamin Graham Would Invest In Today – July 2016.  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 Equifax Inc (EFX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Equifax Inc. is a provider of information solutions and human resources business process outsourcing services for businesses, governments and consumers. The Company operates through four segments: U.S. Information Solutions (USIS), International, Workforce Solutions and Personal Solutions. USIS provides consumer and commercial information solutions to businesses in the United States, including online information, decisioning technology solutions, fraud and identity management services, portfolio management services, mortgage reporting and financial marketing services. International includes Canada, Europe and Latin America business units. Workforce Solutions provides services enabling clients to verify income and employment, as well as to outsource and automate the performance of certain payroll-related and human resources management business processes. Personal Solutions provides products to consumers in the United States, Canada and the United Kingdom.

EFX Chart

EFX data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of EFX – August 2016

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 $15,482,032,620 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.65 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 87.04% Pass
6. Moderate PEmg Ratio PEmg < 20 36.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.24 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 0.65 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.47 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

EFX value chart August 2016

EPSmg $3.60
MG Growth Estimate 11.36%
MG Value $112.34
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $52.16
MG Value based on 0% Growth $30.58
Market Implied Growth Rate 13.96%
Current Price $130.98
% of Intrinsic Value 116.59%

Equifax 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, high PEmg and PB ratios. 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 Overvalued after growing its EPSmg (normalized earnings) from $2.05 in 2012 to an estimated $3.6 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.96% 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 Equifax Inc. revealed the company was trading above its Graham Number of $46.9. The company pays a dividend of $1.24 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 36.41, which was above the industry average of 19.87. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.67.

Equifax Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

EFX charts August 2016

Net Current Asset Value (NCAV) -$28.67
Graham Number $46.90
PEmg 36.41
Current Ratio 0.65
PB Ratio 6.24
Current Dividend $1.24
Dividend Yield 0.95%
Number of Consecutive Years of Dividend Growth 7

[/not-level-free]

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 6/1/2016
Total Current Assets $627,200,000
Total Current Liabilities $961,900,000
Long-Term Debt $2,498,700,000
Total Assets $6,640,800,000
Intangible Assets $5,471,400,000
Total Liabilities $4,099,300,000
Shares Outstanding (Diluted Average) 121,100,000

Earnings Per Share History

Next Fiscal Year Estimate $4.59
Dec2015 $3.55
Dec2014 $2.97
Dec2013 $2.84
Dec2012 $2.22
Dec2011 $1.88
Dec2010 $2.11
Dec2009 $1.83
Dec2008 $2.09
Dec2007 $2.02
Dec2006 $2.12
Dec2005 $1.86
Dec2004 $1.76
Dec2003 $1.20
Dec2002 $1.38
Dec2001 $0.90
Dec2000 $1.68
Dec1999 $1.55
Dec1998 $1.34
Dec1997 $1.24
Dec1996 $1.19

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.60
Dec2015 $2.96
Dec2014 $2.58
Dec2013 $2.32
Dec2012 $2.05
Dec2011 $1.97
Dec2010 $2.02
Dec2009 $1.98
Dec2008 $2.02
Dec2007 $1.93
Dec2006 $1.81
Dec2005 $1.57
Dec2004 $1.41
Dec2003 $1.28
Dec2002 $1.33
Dec2001 $1.32
Dec2000 $1.49

Recommended Reading:

Other ModernGraham posts about the company

27 Companies in the Spotlight This Week – 4/4/15
Equifax Inc. Annual Valuation – 2015 $EFX
14 Companies in the Spotlight This Week – 4/5/14
Equifax Inc. (EFX) Annual Valuation – 2014

Other ModernGraham posts about related companies

Northern Trust Corp Valuation – July 2016 $NTRS
O’Reilly Automotive Inc Valuation – July 2016 $ORLY
Invesco Ltd Valuation – July 2016 $IVZ
Nasdaq Inc Valuation – July 2016 $NDAQ
Leucadia National Corp Valuation – July 2016 $LUK
E*Trade Financial Corp Valuation – July 2016 $ETFC
CBRE Group Inc Valuation – July 2016 $CBG
Fidelity National Information Services Valuation – July 2016 $FIS
Capital One Financial Corp Valuation – July 2016 $COF
Intercontinental Exchange Inc Valuation – July 2016 $ICE

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.

Equifax Inc. Annual Valuation – 2015 $EFX

500px-Equifax.svgBenjamin 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 5 Most Undervalued Companies for the Defensive Investor – March 2015.  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 specific look at how Equifax Inc. (EFX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Equifax Inc. is a provider of information solutions and human resources business process outsourcing services. The Company provides services for diversified group of clients, including financial institutions, corporations, governments and individuals. The Company’s products and services are based on databases of consumer and business information derived from numerous types of credit, financial assets, telecommunications and utility payment, employment, income, public record, demographic and marketing data. The Company operates in three global regions: North America (United States and Canada), Europe (the United Kingdom, Spain and Portugal) and Latin America (Argentina, Chile, Costa Rica, Ecuador, El Salvador, Honduras, Mexico, Paraguay, Peru and Uruguay). The Company operates in five segments: U.S. Consumer Information Solutions (USCIS), International, Workforce Solutions, North America Personal Solutions and North America Commercial Solutions.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $93.47
MG Value $43.53
MG Opinion Overvalued
Value Based on 3% Growth $37.45
Value Based on 0% Growth $21.95
Market Implied Growth Rate 13.85%
Net Current Asset Value (NCAV) -$15.36
PEmg 36.19
Current Ratio 0.74
PB Ratio 5.17

Balance Sheet – December 2014

Current Assets $605,000,000
Current Liabilities $823,000,000
Total Debt $1,146,000,000
Total Assets $4,674,000,000
Intangible Assets $3,656,000,000
Total Liabilities $2,474,000,000
Outstanding Shares 121,700,000

Earnings Per Share

2014 $2.97
2013 $2.84
2012 $2.22
2011 $1.88
2010 $2.11
2009 $1.83
2008 $2.09
2007 $2.02
2006 $2.12
2005 $1.86
2004 $1.78

Earnings Per Share – ModernGraham

2014 $2.58
2013 $2.32
2012 $2.05
2011 $1.97
2010 $2.02
2009 $1.98

Dividend History

Conclusion:

Equifax Inc. is not suitable for the Enterprising Investor or for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $2.02 in 2010 to only $2.58 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 13.85% annual earnings growth over the next 7-10 years, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Equifax Inc. (EFX)?  Where do you see the company going in the future?  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 Equifax Inc. (EFX) or 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.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Equifax Inc. (EFX) Annual Valuation – 2014

500px-Equifax.svgBenjamin 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.  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 specific look at how Equifax fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Equifax Inc. is a provider of information solutions for businesses and consumers. The Company’s clients and customers include financial institutions, corporations, governments and individuals. Its products and services are based on databases of consumer and business information derived from various types of credit, financial, employment, income, public record, demographic and marketing data. The Company operates in five segments: U.S. Consumer Information Solutions (USCIS), International, Equifax Workforce Solutions, North America Personal Solutions and North America Commercial Solutions. It also provides human resources business process outsourcing services. On February 6, 2013, Nationstar Mortgage Holdings Inc acquired Equifax Settlement Services Holding, LLC from the Company. In July 2013, Equifax Inc. announced it has acquired TrustedID. In January 2014, Equifax Inc announced the acquisition of TDX Group.

EFX Chart

EFX data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $69.13
MG Value $27.60
MG Opinion Overvalued
Value Based on 3% Growth $32.37
Value Based on 0% Growth $18.98
Market Implied Growth Rate 11.23%
Net Current Asset Value (NCAV) -$13.05
PEmg 30.96
Current Ratio 0.98
PB Ratio 3.66

Balance Sheet – 12/31/2013

Current Assets $648,400,000
Current Liabilities $662,500,000
Total Debt $1,145,500,000
Total Assets $4,539,900,000
Intangible Assets $3,463,800,000
Total Liabilities $2,239,200,000
Outstanding Shares 121,900,000

Earnings Per Share

2013 $2.69
2012 $2.22
2011 $1.87
2010 $1.86
2009 $1.83
2008 $2.09
2007 $2.02
2006 $2.12
2005 $1.86
2004 $1.78

Earnings Per Share – ModernGraham

2013 $2.23
2012 $1.99
2011 $1.90
2010 $1.94
2009 $1.98
2008 $2.03

Dividend History

EFX Dividend Chart

EFX Dividend data by YCharts

Conclusion:

Equifax Inc. does not qualify for either the Defensive Investor or the Enterprising Investor.  For the Defensive Investor, the company’s current ratio is too low, it has not demonstrated sufficient earnings growth over the ten year period, and its PEmg and PB ratios are too high.  For the Enterprising Investor, the company holds too much debt relative to its current assets.  As a result, value investors seeking to follow the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities through a review of 5 Outstanding Dow Components and 5 Low PEmg Companies for the Defensive Investor.  From a valuation side of things, the company appears to be overvalued after only growing its EPSmg (normalized earnings) from $1.98 in 2009 to $2.23 in 2013.  This low level of demonstrated growth does not support the market’s implied estimate of 11.23% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that falls below a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Equifax Inc. (EFX)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in Equifax Inc. (EFX) or any other company mentioned in the article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Broadridge Financial Solutions Inc Valuation – April 2019 #BR

Company Profile (excerpt from Reuters): Broadridge Financial Solutions, Inc. (Broadridge), incorporated on December 6, 2006, is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The Company’s segments include Investor Communication Solutions, and Global Technology and Operations. The Company’s services include investor and customer communications, securities processing, and data and analytics solutions. The Company delivers a range of solutions that helps its clients serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing functionality. The Company serves a client base across four client groups: capital markets, asset management, wealth management and corporations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BR – 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 $12,145,347,942 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.02 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 185.25% Pass
6. Moderate PEmg Ratio PEmg < 20 31.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.13 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 1.02 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 78.56 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 $3.37
MG Growth Estimate 11.73%
MG Value $107.83
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $48.93
MG Value based on 0% Growth $28.68
Market Implied Growth Rate 11.29%
Current Price $104.87
% of Intrinsic Value 97.25%

Broadridge Financial Solutions, 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, high PEmg and PB ratios. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.89 in 2015 to an estimated $3.37 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 11.29% 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 Broadridge Financial Solutions, Inc. revealed the company was trading above its Graham Number of $29.75. The company pays a dividend of $1.46 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 31.08, which was above the industry average of 21.66. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.65.

Broadridge Financial Solutions, 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) -$10.65
Graham Number $29.75
PEmg 31.08
Current Ratio 1.02
PB Ratio 11.13
Current Dividend $1.46
Dividend Yield 1.39%
Number of Consecutive Years of Dividend Growth 12

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 $966,400,000
Total Current Liabilities $951,200,000
Long-Term Debt $1,194,100,000
Total Assets $3,357,600,000
Intangible Assets $1,699,700,000
Total Liabilities $2,235,000,000
Shares Outstanding (Diluted Average) 119,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.18
Jun2018 $3.56
Jun2017 $2.70
Jun2016 $2.53
Jun2015 $2.32
Jun2014 $2.12
Jun2013 $1.69
Jun2012 $0.97
Jun2011 $1.32
Jun2010 $1.37
Jun2009 $1.58
Jun2008 $1.36
Jun2007 $1.42
Jun2006 $1.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.37
Jun2018 $2.86
Jun2017 $2.43
Jun2016 $2.18
Jun2015 $1.89
Jun2014 $1.62
Jun2013 $1.37
Jun2012 $1.25
Jun2011 $1.40
Jun2010 $1.42
Jun2009 $1.33
Jun2008 $1.07
Jun2007 $0.79
Jun2006 $0.40

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

T.Rowe Price Group Inc Valuation – March 2019 #TROW
Moody’s Corp Valuation – March 2019 #MCO
Charles Schwab Corp Valuation – March 2019 #SCHW
Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN
S&P Global Inc Valuation – March 2019 #SPGI
Equifax Inc Valuation – March 2019 #EFX

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.

T.Rowe Price Group Inc Valuation – March 2019 #TROW

Company Profile (excerpt from Reuters): T. Rowe Price Group, Inc., incorporated on February 4, 2000, is a financial services holding company. The Company provides global investment management services through its subsidiaries to investors across the world. The Company provides an array of Company sponsored the United States mutual funds, other sponsored pooled investment vehicles, sub advisory services, separate account management, recordkeeping, and related services to individuals, advisors, institutions, financial intermediaries and retirement plan sponsors.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TROW – March 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 $23,699,005,370 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.99 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 119.75% Pass
6. Moderate PEmg Ratio PEmg < 20 16.37 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.97 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 6.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
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 $6.11
MG Growth Estimate 6.95%
MG Value $136.92
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $88.66
MG Value based on 0% Growth $51.97
Market Implied Growth Rate 3.94%
Current Price $100.12
% of Intrinsic Value 73.12%

T. Rowe Price Group Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. 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 $4.18 in 2015 to an estimated $6.11 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.94% 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 T. Rowe Price Group Inc revealed the company was trading above its Graham Number of $59.52. The company pays a dividend of $2.8 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.37, which was below the industry average of 21.22, 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 $1.69.

T. Rowe Price Group Inc fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.69
Graham Number $59.52
PEmg 16.37
Current Ratio 6.99
PB Ratio 3.97
Current Dividend $2.80
Dividend Yield 2.80%
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 12/1/2018
Total Current Assets $1,974,800,000
Total Current Liabilities $282,700,000
Long-Term Debt $0
Total Assets $7,689,300,000
Intangible Assets $665,700,000
Total Liabilities $1,565,000,000
Shares Outstanding (Diluted Average) 243,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.12
Dec2018 $7.27
Dec2017 $5.97
Dec2016 $4.75
Dec2015 $4.63
Dec2014 $4.55
Dec2013 $3.90
Dec2012 $3.36
Dec2011 $2.92
Dec2010 $2.53
Dec2009 $1.65
Dec2008 $1.82
Dec2007 $2.40
Dec2006 $1.90
Dec2005 $1.58
Dec2004 $1.26
Dec2003 $0.88
Dec2002 $0.76
Dec2001 $0.76
Dec2000 $1.04
Dec1999 $0.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.11
Dec2018 $5.89
Dec2017 $5.05
Dec2016 $4.47
Dec2015 $4.18
Dec2014 $3.79
Dec2013 $3.23
Dec2012 $2.75
Dec2011 $2.38
Dec2010 $2.09
Dec2009 $1.87
Dec2008 $1.92
Dec2007 $1.85
Dec2006 $1.47
Dec2005 $1.19
Dec2004 $0.98
Dec2003 $0.85

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – February 2019
Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
T. Rowe Price Group Inc Valuation – June 2018 $TROW
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Other ModernGraham posts about related companies

Moody’s Corp Valuation – March 2019 #MCO
Charles Schwab Corp Valuation – March 2019 #SCHW
Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN
S&P Global Inc Valuation – March 2019 #SPGI
Equifax Inc Valuation – March 2019 #EFX
CME Group Inc Valuation – March 2019 #CME

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.

Moody’s Corp Valuation – March 2019 #MCO

Company Profile (excerpt from Reuters): Moody’s Corporation (Moody’s), incorporated on June 2, 2000, is a provider of credit ratings; credit, capital markets and economic related research, data and analytical tools; software solutions and related risk management services, quantitative credit risk measures, financial services training and certification services, and research and analytical services to financial institution customers. The Company operates in two segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA). The Company’s MIS segment consists of the Company’s ratings operations. The Company’s MA segment develops a range of products and services that support financial analysis and risk management activities of institutional participants in financial markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCO – March 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 $33,481,677,645 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.61 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 146.68% Pass
6. Moderate PEmg Ratio PEmg < 20 31.24 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 52.53 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 1.61 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.06 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 $5.68
MG Growth Estimate 5.95%
MG Value $115.79
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $82.32
MG Value based on 0% Growth $48.26
Market Implied Growth Rate 11.37%
Current Price $177.38
% of Intrinsic Value 153.19%

Moody’s Corporation 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 and PB ratios. 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 $4.07 in 2015 to an estimated $5.68 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.37% 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 Moody’s Corporation revealed the company was trading above its Graham Number of $19.55. The company pays a dividend of $1.76 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 31.24, which was above the industry average of 21.22. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.2.

Moody’s Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.20
Graham Number $19.55
PEmg 31.24
Current Ratio 1.61
PB Ratio 52.53
Current Dividend $1.76
Dividend Yield 0.99%
Number of Consecutive Years of Dividend Growth 9

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 $3,386,900,000
Total Current Liabilities $2,098,500,000
Long-Term Debt $5,226,100,000
Total Assets $9,526,200,000
Intangible Assets $5,347,400,000
Total Liabilities $8,869,700,000
Shares Outstanding (Diluted Average) 194,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.08
Dec2018 $6.74
Dec2017 $5.15
Dec2016 $1.36
Dec2015 $4.63
Dec2014 $4.61
Dec2013 $3.60
Dec2012 $3.05
Dec2011 $2.49
Dec2010 $2.15
Dec2009 $1.69
Dec2008 $1.87
Dec2007 $2.58
Dec2006 $2.58
Dec2005 $1.84
Dec2004 $1.40
Dec2003 $1.19
Dec2002 $0.92
Dec2001 $0.66
Dec2000 $0.49
Dec1999 $0.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.68
Dec2018 $4.82
Dec2017 $3.86
Dec2016 $3.29
Dec2015 $4.07
Dec2014 $3.58
Dec2013 $2.91
Dec2012 $2.46
Dec2011 $2.16
Dec2010 $2.06
Dec2009 $2.04
Dec2008 $2.17
Dec2007 $2.18
Dec2006 $1.85
Dec2005 $1.39
Dec2004 $1.09
Dec2003 $0.87

Recommended Reading:

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Moody’s Corporation – June 2018 $MCO
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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.

Charles Schwab Corp Valuation – March 2019 #SCHW

Company Profile (excerpt from Reuters): The Charles Schwab Corporation (CSC), incorporated on November 25, 1986, is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, money management and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services and other corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services as well as retirement business services. The Company’s subsidiaries include Charles Schwab & Co., Inc. (Schwab), which is a securities broker-dealer with over 335 domestic branch offices in 46 states, as well as a branch in each of the Commonwealth of Puerto Rico and London, England, and serves clients in Hong Kong through one of the Company’s subsidiaries, as of December 31, 2016; Charles Schwab Bank (Schwab Bank), which is a federal savings bank located in Nevada, and Charles Schwab Investment Management, Inc. (CSIM), which is the investment advisor for Schwab’s mutual funds referred to as the Schwab Funds, and Schwab’s exchange-traded funds (ETFs), referred to as the Schwab ETFs.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SCHW – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $55,714,926,383 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 279.10% Pass
5. Moderate PEmg Ratio PEmg < 20 19.89 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.74 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.10
MG Growth Estimate 15.00%
MG Value $80.93
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $30.48
MG Value based on 0% Growth $17.87
Market Implied Growth Rate 5.69%
Current Price $41.80
% of Intrinsic Value 51.65%

Charles Schwab Corporation Common Stock is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PB ratio. The Enterprising Investor has no initial concerns. 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 Undervalued after growing its EPSmg (normalized earnings) from $0.89 in 2015 to an estimated $2.1 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.69% 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 Charles Schwab Corporation Common Stock revealed the company was trading above its Graham Number of $28.09. The company pays a dividend of $0.46 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 19.89, which was below the industry average of 21.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Charles Schwab Corporation Common Stock performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $28.09
PEmg 19.89
PB Ratio 2.74
Dividend Yield 1.10%
TTM Dividend $0.46
Number of Consecutive Years of Dividend Growth 3

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $6,878,000,000
Total Assets $296,482,000,000
Intangible Assets $1,379,000,000
Total Liabilities $275,812,000,000
Shares Outstanding (Diluted Average) 1,355,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.65
Dec2018 $2.45
Dec2017 $1.61
Dec2016 $1.31
Dec2015 $1.03
Dec2014 $0.95
Dec2013 $0.78
Dec2012 $0.69
Dec2011 $0.70
Dec2010 $0.38
Dec2009 $0.68
Dec2008 $1.05
Dec2007 $1.97
Dec2006 $0.95
Dec2005 $0.55
Dec2004 $0.21
Dec2003 $0.35
Dec2002 $0.08
Dec2001 $0.14
Dec2000 $0.51
Dec1999 $0.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.10
Dec2018 $1.71
Dec2017 $1.27
Dec2016 $1.05
Dec2015 $0.89
Dec2014 $0.78
Dec2013 $0.68
Dec2012 $0.65
Dec2011 $0.74
Dec2010 $0.84
Dec2009 $1.06
Dec2008 $1.15
Dec2007 $1.07
Dec2006 $0.56
Dec2005 $0.33
Dec2004 $0.23
Dec2003 $0.27

Recommended Reading:

Other ModernGraham posts about the company

Charles Schwab Corp Valuation – June 2018 $SCHW
Charles Schwab Corp Valuation – March 2017 $SCHW
Charles Schwab Corp Valuation – August 2016 $SCHW
27 Companies in the Spotlight This Week – 4/4/15
Charles Schwab Corporation Annual Valuation – 2015 $SCHW

Other ModernGraham posts about related companies

Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
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S&P Global Inc Valuation – March 2019 #SPGI
Equifax Inc Valuation – March 2019 #EFX
CME Group Inc Valuation – March 2019 #CME
Northern Trust Corp Valuation – March 2019 #NTRS
Affiliated Managers Group Inc Valuation – February 2019 $AMG

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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