Entergy Corp Valuation – March 2019 #ETR

Company Profile (excerpt from Reuters): Entergy Corporation, incorporated on August 19, 1992, is a holding company. The Company is an integrated energy company engaged in electric power production and retail electric distribution operations. The Company operates through two segments: Utility and Entergy Wholesale Commodities. As of December 31, 2016, the Company owned and operated power plants with over 30,000 megawatts of aggregate electric generating capacity, including approximately 10,000 megawatts of nuclear-fueled capacity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ETR – 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 $18,067,984,316 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.54 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -35.85% Fail
6. Moderate PEmg Ratio PEmg < 20 32.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.99 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.54 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.24 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.94
MG Growth Estimate -0.27%
MG Value $23.41
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $42.68
MG Value based on 0% Growth $25.02
Market Implied Growth Rate 11.86%
Current Price $94.86
% of Intrinsic Value 405.24%

Entergy 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 $3 in 2015 to an estimated $2.94 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.86% 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 Entergy Corporation revealed the company was trading above its Graham Number of $74.62. The company pays a dividend of $3.58 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 32.23, which was above the industry average of 23.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-196.69.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$196.69
Graham Number $74.62
PEmg 32.23
Current Ratio 0.54
PB Ratio 1.99
Current Dividend $3.58
Dividend Yield 3.77%
Number of Consecutive Years of Dividend Growth 4

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ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,958,064,000
Total Current Liabilities $5,443,544,000
Long-Term Debt $15,518,303,000
Total Assets $48,275,066,000
Intangible Assets $377,172,000
Total Liabilities $39,430,761,000
Shares Outstanding (Diluted Average) 185,437,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.26
Dec2018 $4.63
Dec2017 $2.28
Dec2016 -$3.26
Dec2015 -$0.99
Dec2014 $5.22
Dec2013 $3.99
Dec2012 $4.76
Dec2011 $7.55
Dec2010 $6.66
Dec2009 $6.30
Dec2008 $6.20
Dec2007 $5.60
Dec2006 $5.36
Dec2005 $4.19
Dec2004 $3.93
Dec2003 $4.01
Dec2002 $2.64
Dec2001 $3.23
Dec2000 $2.97
Dec1999 $2.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.94
Dec2018 $1.72
Dec2017 $0.65
Dec2016 $0.54
Dec2015 $3.00
Dec2014 $5.21
Dec2013 $5.42
Dec2012 $6.19
Dec2011 $6.75
Dec2010 $6.24
Dec2009 $5.87
Dec2008 $5.45
Dec2007 $4.93
Dec2006 $4.40
Dec2005 $3.81
Dec2004 $3.54
Dec2003 $3.23

Recommended Reading:

Other ModernGraham posts about the company

Entergy Corp Valuation – June 2018 $ETR
Entergy Corp Valuation – April 2017 $ETR
Entergy Corp Valuation – January 2016 Update $ETR
5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14

Other ModernGraham posts about related companies

Pinnacle West Capital Corp Valuation – March 2019 #PNW
NiSource Inc Valuation – March 2019 #NI
American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE
Ameren Corp Valuation – March 2019 #AEE
NextEra Energy Inc Valuation – February 2019 $NEE

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.

Anadarko Petroleum Corp Valuation – March 2019 #APC

Company Profile (excerpt from Reuters): Anadarko Petroleum Corporation (Anadarko), incorporated on June 12, 1985, is an independent exploration and production company. The Company is engaged in developing, acquiring, and exploring for oil and natural-gas resources. The Company’s segments include Oil and Gas Exploration and Production; Midstream, and Marketing. The Company’s geographical segments include the United States and International. The Oil and Gas Exploration and Production segment explores for and produces oil, condensate, natural gas and natural gas liquids (NGLs), and focuses on the development and operation of the Company’s liquefied natural gas (LNG) project in Mozambique. The Midstream segment engages in gathering, processing, treating and transporting Anadarko and third-party oil, natural-gas and NGLs production. The Marketing segment sells Anadarko’s oil, natural-gas and NGLs production, as well as third-party purchased volumes. As of December 31, 2016, the Company had approximately 1.7 billion barrels of oil equivalent (BOE) of proved reserves.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APC – 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 $22,116,234,175 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -160.64% Fail
6. Moderate PEmg Ratio PEmg < 20 -24.30 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.00 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 0.81 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -17.93 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.82
MG Growth Estimate 9.22%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$26.42
MG Value based on 0% Growth -$15.49
Market Implied Growth Rate -16.40%
Current Price $44.27
% of Intrinsic Value N/A

Anadarko Petroleum Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability 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 growing its EPSmg (normalized earnings) from $-4.73 in 2015 to an estimated $-1.82 for 2019. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Anadarko Petroleum Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.05 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 -24.3, which was below the industry average of 58.42, 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 $-51.79.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$51.79
Graham Number $0.00
PEmg -24.30
Current Ratio 0.81
PB Ratio 2.00
Current Dividend $1.05
Dividend Yield 2.37%
Number of Consecutive Years of Dividend Growth 1

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 $3,795,000,000
Total Current Liabilities $4,658,000,000
Long-Term Debt $15,470,000,000
Total Assets $40,376,000,000
Intangible Assets $5,630,000,000
Total Liabilities $29,433,000,000
Shares Outstanding (Diluted Average) 495,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.92
Dec2018 $1.20
Dec2017 -$0.85
Dec2016 -$5.90
Dec2015 -$13.18
Dec2014 -$3.47
Dec2013 $1.58
Dec2012 $4.74
Dec2011 -$5.32
Dec2010 $1.52
Dec2009 -$0.28
Dec2008 $6.91
Dec2007 $8.08
Dec2006 $10.24
Dec2005 $2.45
Dec2004 $1.59
Dec2003 $2.55
Dec2002 $0.81
Dec2001 -$0.38
Dec2000 $2.08
Dec1999 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.82
Dec2018 -$3.00
Dec2017 -$4.85
Dec2016 -$5.65
Dec2015 -$4.73
Dec2014 -$0.40
Dec2013 $0.91
Dec2012 $0.89
Dec2011 $0.04
Dec2010 $3.57
Dec2009 $4.89
Dec2008 $6.94
Dec2007 $6.30
Dec2006 $4.78
Dec2005 $1.83
Dec2004 $1.46
Dec2003 $1.27

Recommended Reading:

Other ModernGraham posts about the company

Anadarko Petroleum Corp Valuation – June 2018 $APC
Anadarko Petroleum Co Valuation – April 2017 $APC
Anadarko Petroleum Corp Valuation – January 2016 Update $APC
32 Companies in the Spotlight This Week – 12/6/14
Anadarko Petroleum Corporation Annual Valuation – 2014 $APC

Other ModernGraham posts about related companies

Cabot Oil & Gas Corp Valuation – March 2019 #COG
Concho Resources Inc Valuation – March 2019 #CXO
Valero Energy Corp Valuation – March 2019 #VLO
Occidental Petroleum Corp Valuation – March 2019 #OXY
Phillips 66 Valuation – March 2019 #PSX
Halliburton Co Valuation – March 2019 #HAL
Kinder Morgan Inc Valuation – February 2019 $KMI
National Oilwell Varco Inc Valuation – February 2019 $NOV
Diamondback Energy Inc Valuation – February 2019 $FANG
TechnipFMC PLC Valuation – February 2019 $FTI

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.

Occidental Petroleum Corp Valuation – March 2019 #OXY

Company Profile (excerpt from Reuters): Occidental Petroleum Corporation (Occidental), incorporated on April 9, 1986, is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental’s domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of OXY – 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 $48,967,841,552 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -55.40% Fail
6. Moderate PEmg Ratio PEmg < 20 42.46 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 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 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.05 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.54
MG Growth Estimate 15.00%
MG Value $59.24
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $22.31
MG Value based on 0% Growth $13.08
Market Implied Growth Rate 16.98%
Current Price $65.33
% of Intrinsic Value 110.28%

Occidental Petroleum 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 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 growing its EPSmg (normalized earnings) from $-0.42 in 2015 to an estimated $1.54 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.98% 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 Occidental Petroleum Corporation revealed the company was trading above its Graham Number of $32.19. The company pays a dividend of $3.1 per share, for a yield of 4.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 42.46, which was below the industry average of 58.42, 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 $-16.66.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.66
Graham Number $32.19
PEmg 42.46
Current Ratio 1.34
PB Ratio 2.31
Current Dividend $3.10
Dividend Yield 4.75%
Number of Consecutive Years of Dividend Growth 17

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 $9,932,000,000
Total Current Liabilities $7,412,000,000
Long-Term Debt $10,201,000,000
Total Assets $43,854,000,000
Intangible Assets $0
Total Liabilities $22,524,000,000
Shares Outstanding (Diluted Average) 755,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.63
Dec2018 $5.39
Dec2017 $1.70
Dec2016 -$0.75
Dec2015 -$10.23
Dec2014 $0.79
Dec2013 $7.32
Dec2012 $5.67
Dec2011 $8.32
Dec2010 $5.56
Dec2009 $3.58
Dec2008 $8.34
Dec2007 $6.44
Dec2006 $4.87
Dec2005 $6.48
Dec2004 $2.80
Dec2003 $1.98
Dec2002 $1.31
Dec2001 $1.55
Dec2000 $2.13
Dec1999 $0.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.54
Dec2018 $0.79
Dec2017 -$1.09
Dec2016 -$1.47
Dec2015 -$0.42
Dec2014 $4.83
Dec2013 $6.60
Dec2012 $6.25
Dec2011 $6.51
Dec2010 $5.66
Dec2009 $5.79
Dec2008 $6.52
Dec2007 $5.25
Dec2006 $4.26
Dec2005 $3.58
Dec2004 $2.07
Dec2003 $1.64

Recommended Reading:

Other ModernGraham posts about the company

Occidental Petroleum Corp Valuation – June 2018 $OXY
Most Overvalued Stocks of the S&P 500 – March 2017
Occidental Petroleum Corp Valuation – February 2017 $OXY
Occidental Petroleum Corp Valuation – August 2016 $OXY
Occidental Petroleum Corporation – 2015 Update $OXY

Other ModernGraham posts about related companies

Phillips 66 Valuation – March 2019 #PSX
Halliburton Co Valuation – March 2019 #HAL
Kinder Morgan Inc Valuation – February 2019 $KMI
National Oilwell Varco Inc Valuation – February 2019 $NOV
Diamondback Energy Inc Valuation – February 2019 $FANG
TechnipFMC PLC Valuation – February 2019 $FTI
Marathon Petroleum Corp Valuation – February 2019 $MPC
Baker Hughes, a GE Co Valuation – February 2019 $BHGE
EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP

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.

Marathon Petroleum Corp Valuation – February 2019 $MPC

Company Profile (excerpt from Reuters): Marathon Petroleum Corporation, incorporated on November 9, 2009, is engaged in petroleum product refining, marketing, retail and transportation businesses in the United States and the east of the Mississippi. The Company’s segments include Refining & Marketing, Speedway, and Midstream.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MPC – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $43,458,170,026 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.65 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 206.78% Pass
6. Moderate PEmg Ratio PEmg < 20 13.82 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.51 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 1.65 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.95 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 $4.55
MG Growth Estimate 2.78%
MG Value $64.03
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $66.01
MG Value based on 0% Growth $38.70
Market Implied Growth Rate 2.66%
Current Price $62.91
% of Intrinsic Value 98.25%

Marathon Petroleum Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.84 in 2014 to an estimated $4.55 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 2.66% 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 Marathon Petroleum Corp revealed the company was trading above its Graham Number of $50.91. The company pays a dividend of $1.52 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 13.82, which was below the industry average of 43.92, 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 $-39.75.

Marathon Petroleum Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$39.75
Graham Number $50.91
PEmg 13.82
Current Ratio 1.65
PB Ratio 1.51
Current Dividend $1.52
Dividend Yield 2.42%
Number of Consecutive Years of Dividend Growth 7

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 $15,873,000,000
Total Current Liabilities $9,634,000,000
Long-Term Debt $18,423,000,000
Total Assets $53,031,000,000
Intangible Assets $3,713,000,000
Total Liabilities $34,000,000,000
Shares Outstanding (Diluted Average) 456,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.99
Dec2017 $6.70
Dec2016 $2.21
Dec2015 $5.26
Dec2014 $4.39
Dec2013 $3.32
Dec2012 $4.95
Dec2011 $3.34
Dec2010 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.55
Dec2017 $4.68
Dec2016 $3.79
Dec2015 $4.47
Dec2014 $3.84
Dec2013 $3.21
Dec2012 $2.71
Dec2011 $1.34
Dec2010 $0.29

Recommended Reading:

Other ModernGraham posts about the company

Marathon Petroleum Corp Valuation – April 2018 $MPC
10 Best Dividend Paying Stocks for the Enterprising Investor – December 2016
10 Best Dividend Paying Stocks for the Enterprising Investor – September 2016
7 Best Undervalued Stocks of the Week – 9/3/16
Marathon Petroleum Corp Valuation – August 2016 $MPC

Other ModernGraham posts about related companies

EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP
Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL
ONEOK Inc Valuation – January 2019 $OKE
Marathon Oil Corp Valuation – January 2019 $MRO
HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES
Cimarex Energy Co Valuation – January 2019 $XEC
EQT Corp Valuation – January 2019 $EQT

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.

CareTrust REIT Inc Valuation – August 2018 $CTRE

Company Profile (excerpt from Reuters): CareTrust REIT, Inc., incorporated on October 29, 2013, is a self-administered, self-managed real estate investment trust (REIT). The Company is primarily engaged in the ownership, acquisition and leasing of healthcare-related properties. It makes investments in healthcare-related real estate assets. As of December 31, 2016, the Company’s real estate portfolio consisted of 154 skilled nursing facilities (SNFs), SNF Campuses, assisted living facilities (ALFs) and independent living facilities (ILFs). As of December 31, 2016, the 93 facilities leased to The Ensign Group, Inc. (Ensign) had a total of 9,916 beds and units and are located in Arizona, California, Colorado, Idaho, Iowa, Nebraska, Nevada, Texas, Utah and Washington; the 16 facilities leased to affiliates of Pristine Senior Living, LLC (Pristine) had a total of 1,488 beds and units and are located in Ohio; and the 42 remaining leased properties had a total of 3,515 beds and units and are located in California, Colorado, Florida, Georgia, Idaho, Indiana, Iowa, Maryland, Michigan, Minnesota, North Carolina, Texas, Virginia, Washington and Wisconsin.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTRE – August 2018

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,476,340,335 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.89 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 5133.33% Pass
6. Moderate PEmg Ratio PEmg < 20 41.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.20 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.89 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -169.63 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.44
MG Growth Estimate 15.00%
MG Value $16.99
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $6.40
MG Value based on 0% Growth $3.75
Market Implied Growth Rate 16.64%
Current Price $18.44
% of Intrinsic Value 108.53%

Caretrust REIT Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability 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 Fairly Valued after growing its EPSmg (normalized earnings) from $-0.12 in 2014 to an estimated $0.44 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 16.64% 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 Caretrust REIT Inc revealed the company was trading above its Graham Number of $11.14. The company pays a dividend of $0.74 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 41.78, which was below the industry average of 47.15, 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 $-7.17.

Caretrust REIT 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) -$7.17
Graham Number $11.14
PEmg 41.78
Current Ratio 0.89
PB Ratio 2.20
Current Dividend $0.74
Dividend Yield 4.01%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

 

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $25,555,000
Total Current Liabilities $28,764,000
Long-Term Debt $544,338,000
Total Assets $1,211,840,000
Intangible Assets $0
Total Liabilities $573,102,000
Shares Outstanding (Diluted Average) 76,374,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.70
Dec2017 $0.35
Dec2016 $0.52
Dec2015 $0.26
Dec2014 -$0.36
Dec2013 -$0.02
Dec2012 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.44
Dec2017 $0.26
Dec2016 $0.17
Dec2015 -$0.01
Dec2014 -$0.12
Dec2013 -$0.01

Recommended Reading:

Other ModernGraham posts about the company

Caretrust REIT Inc Valuation – Initial Coverage $CTRE

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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.

Anadarko Petroleum Corp Valuation – June 2018 $APC

Company Profile (excerpt from Reuters): Anadarko Petroleum Corporation (Anadarko), incorporated on June 12, 1985, is an independent exploration and production company. The Company is engaged in developing, acquiring, and exploring for oil and natural-gas resources. The Company’s segments include Oil and Gas Exploration and Production; Midstream, and Marketing. The Company’s geographical segments include the United States and International. The Oil and Gas Exploration and Production segment explores for and produces oil, condensate, natural gas and natural gas liquids (NGLs), and focuses on the development and operation of the Company’s liquefied natural gas (LNG) project in Mozambique. The Midstream segment engages in gathering, processing, treating and transporting Anadarko and third-party oil, natural-gas and NGLs production. The Marketing segment sells Anadarko’s oil, natural-gas and NGLs production, as well as third-party purchased volumes. As of December 31, 2016, the Company had approximately 1.7 billion barrels of oil equivalent (BOE) of proved reserves.

APC Chart

APC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APC – June 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 $38,173,194,376 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.17 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 47.30% Pass
6. Moderate PEmg Ratio PEmg < 20 -23.54 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.27 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 1.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 19.65 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$3.15
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$45.66
MG Value based on 0% Growth -$26.76
Market Implied Growth Rate -16.02%
Current Price $74.11
% of Intrinsic Value N/A

Anadarko Petroleum 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 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 $-0.4 in 2014 to an estimated $-3.15 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Anadarko Petroleum Corporation revealed the company was trading above its Graham Number of $18.32. The company pays a dividend of $0.2 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was -23.54, which was below the industry average of 87.76, 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 $-45.84.

Anadarko Petroleum Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$45.84
Graham Number $18.32
PEmg -23.54
Current Ratio 1.17
PB Ratio 3.27
Current Dividend $0.20
Dividend Yield 0.27%
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 3/1/2018
Total Current Assets $5,530,000,000
Total Current Liabilities $4,734,000,000
Long-Term Debt $15,643,000,000
Total Assets $41,076,000,000
Intangible Assets $5,654,000,000
Total Liabilities $29,320,000,000
Shares Outstanding (Diluted Average) 519,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.74
Dec2017 -$0.85
Dec2016 -$5.90
Dec2015 -$13.18
Dec2014 -$3.47
Dec2013 $1.58
Dec2012 $4.74
Dec2011 -$5.32
Dec2010 $1.52
Dec2009 -$0.28
Dec2008 $6.91
Dec2007 $8.08
Dec2006 $10.24
Dec2005 $4.90
Dec2004 $3.18
Dec2003 $2.55
Dec2002 $1.61
Dec2001 -$0.38
Dec2000 $2.08
Dec1999 $0.13
Dec1998 -$0.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$3.15
Dec2017 -$4.85
Dec2016 -$5.65
Dec2015 -$4.73
Dec2014 -$0.40
Dec2013 $0.91
Dec2012 $0.89
Dec2011 $0.04
Dec2010 $3.57
Dec2009 $5.06
Dec2008 $7.37
Dec2007 $7.00
Dec2006 $5.80
Dec2005 $3.18
Dec2004 $2.15
Dec2003 $1.49
Dec2002 $0.86

Recommended Reading:

Other ModernGraham posts about the company

Anadarko Petroleum Co Valuation – April 2017 $APC
Anadarko Petroleum Corp Valuation – January 2016 Update $APC
32 Companies in the Spotlight This Week – 12/6/14
Anadarko Petroleum Corporation Annual Valuation – 2014 $APC

Other ModernGraham posts about related companies

Cabot Oil & Gas Corp Valuation – June 2018 $COG
Concho Resources Inc Valuation – June 2018 $CXO
Vlaero Energy Corp Valuation – June 2018 $VLO
Occidental Petroleum Corp Valuation – June 2018 $OXY
Andeavor Valuation – May 2018 $ANDV
Halliburton Co Valuation – May 2018 $HAL
National Oilwell Varco Inc Valuation – May 2018 $NOV
Newfield Exploration Co Valuation – May 2018 $NFX
Kinder Morgan Inc Valuation – May 2018 $KMI
Range Resources Corp Valuation – May 2018 $RRC

Disclaimer:

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

Entergy Corp Valuation – June 2018 $ETR

Company Profile (excerpt from Reuters): Entergy Corporation, incorporated on August 19, 1992, is a holding company. The Company is an integrated energy company engaged in electric power production and retail electric distribution operations. The Company operates through two segments: Utility and Entergy Wholesale Commodities. As of December 31, 2016, the Company owned and operated power plants with over 30,000 megawatts of aggregate electric generating capacity, including approximately 10,000 megawatts of nuclear-fueled capacity.

ETR Chart

ETR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ETR – June 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 $14,503,866,886 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.70 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -76.45% Fail
6. Moderate PEmg Ratio PEmg < 20 38.04 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.82 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.70 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.89 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.11
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $30.58
MG Value based on 0% Growth $17.92
Market Implied Growth Rate 14.77%
Current Price $80.21
% of Intrinsic Value N/A

Entergy 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 $5.21 in 2014 to an estimated $2.11 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.77% 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 Entergy Corporation revealed the company was trading above its Graham Number of $76.08. The company pays a dividend of $3.5 per share, for a yield of 4.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 38.04, which was above the industry average of 22.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-196.5.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$196.50
Graham Number $76.08
PEmg 38.04
Current Ratio 0.70
PB Ratio 1.82
Current Dividend $3.50
Dividend Yield 4.36%
Number of Consecutive Years of Dividend Growth 3

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 $3,655,734,000
Total Current Liabilities $5,232,672,000
Long-Term Debt $15,591,628,000
Total Assets $47,281,525,000
Intangible Assets $377,172,000
Total Liabilities $39,306,582,000
Shares Outstanding (Diluted Average) 181,432,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.81
Dec2017 $2.28
Dec2016 -$3.26
Dec2015 -$0.99
Dec2014 $5.22
Dec2013 $3.99
Dec2012 $4.76
Dec2011 $7.55
Dec2010 $6.66
Dec2009 $6.30
Dec2008 $6.20
Dec2007 $5.60
Dec2006 $5.36
Dec2005 $4.19
Dec2004 $3.93
Dec2003 $4.01
Dec2002 $2.64
Dec2001 $3.23
Dec2000 $2.97
Dec1999 $2.25
Dec1998 $3.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.11
Dec2017 $0.65
Dec2016 $0.54
Dec2015 $3.00
Dec2014 $5.21
Dec2013 $5.42
Dec2012 $6.19
Dec2011 $6.75
Dec2010 $6.24
Dec2009 $5.87
Dec2008 $5.45
Dec2007 $4.93
Dec2006 $4.40
Dec2005 $3.81
Dec2004 $3.54
Dec2003 $3.23
Dec2002 $2.84

Recommended Reading:

Other ModernGraham posts about the company

Entergy Corp Valuation – April 2017 $ETR
Entergy Corp Valuation – January 2016 Update $ETR
5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14
Entergy Corporation Annual Valuation – 2014 $ETR

Other ModernGraham posts about related companies

NiSource Inc Valuation – June 2018 $NI
American Electric Power Co Valuation – June 2018 $AEP
American Water Works Co Inc Valuation – June 2018 $AWK
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Consolidated Edison Inc Valuation – June 2018 $ED
Duke Energy Corp Valuation – May 2018 $DUK
Sempra Energy Valuation – May 2018 $SRE
Ameren Corp Valuation – May 2018 $AEE
NextEra Energy Inc Valuation – May 2018 $NEE
PG&E Corp Valuation – April 2018 $PCG

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.

Occidental Petroleum Corp Valuation – June 2018 $OXY

Company Profile (excerpt from Reuters): Occidental Petroleum Corporation (Occidental), incorporated on April 9, 1986, is an oil and gas exploration and production company. The Company operates through three segments: oil and gas, chemical (OxyChem), and midstream and marketing. The oil and gas segment explores for, develops and produces oil and condensate, natural gas liquids (NGLs) and natural gas. The OxyChem segment manufactures and markets basic chemicals and vinyls. The midstream and marketing segment gathers, processes, transports, stores, purchases and markets oil, condensate, NGLs, natural gas, carbon dioxide (CO2) and power. It also trades around its assets, including transportation and storage capacity. Additionally, the midstream and marketing segment invests in entities that conduct similar activities. Occidental’s domestic upstream oil and gas operations are located in New Mexico and Texas. Its international operations are located in Bolivia, Colombia, Oman, Qatar and the United Arab Emirates (UAE).

OXY Chart

OXY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of OXY – June 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 $65,167,048,809 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.26 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -85.11% Fail
6. Moderate PEmg Ratio PEmg < 20 -185.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.15 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 1.26 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.65 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.46
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$6.64
MG Value based on 0% Growth -$3.89
Market Implied Growth Rate -97.15%
Current Price $85.10
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.83 in 2014 to an estimated $-0.46 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Occidental Petroleum Corporation revealed the company was trading above its Graham Number of $31.59. The company pays a dividend of $3.06 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 -185.81, which was below the industry average of 87.76, 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 $-17.2.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.20
Graham Number $31.59
PEmg -185.81
Current Ratio 1.26
PB Ratio 3.15
Current Dividend $3.06
Dividend Yield 3.60%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $8,894,000,000
Total Current Liabilities $7,070,000,000
Long-Term Debt $10,309,000,000
Total Assets $42,808,000,000
Intangible Assets $0
Total Liabilities $22,086,000,000
Shares Outstanding (Diluted Average) 767,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.65
Dec2017 $1.70
Dec2016 -$0.75
Dec2015 -$10.23
Dec2014 $0.79
Dec2013 $7.32
Dec2012 $5.67
Dec2011 $8.32
Dec2010 $5.56
Dec2009 $3.58
Dec2008 $8.34
Dec2007 $6.44
Dec2006 $4.87
Dec2005 $6.48
Dec2004 $2.80
Dec2003 $1.98
Dec2002 $1.31
Dec2001 $1.55
Dec2000 $2.13
Dec1999 $0.62
Dec1998 $0.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.46
Dec2017 -$1.09
Dec2016 -$1.47
Dec2015 -$0.42
Dec2014 $4.83
Dec2013 $6.60
Dec2012 $6.25
Dec2011 $6.51
Dec2010 $5.66
Dec2009 $5.79
Dec2008 $6.52
Dec2007 $5.25
Dec2006 $4.26
Dec2005 $3.58
Dec2004 $2.07
Dec2003 $1.64
Dec2002 $1.39

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Occidental Petroleum Corp Valuation – February 2017 $OXY
Occidental Petroleum Corp Valuation – August 2016 $OXY
Occidental Petroleum Corporation – 2015 Update $OXY
21 Companies in the Spotlight This Week – June 14, 2014

Other ModernGraham posts about related companies

Andeavor Valuation – May 2018 $ANDV
Halliburton Co Valuation – May 2018 $HAL
National Oilwell Varco Inc Valuation – May 2018 $NOV
Newfield Exploration Co Valuation – May 2018 $NFX
Kinder Morgan Inc Valuation – May 2018 $KMI
Range Resources Corp Valuation – May 2018 $RRC
Phillips 66 Valuation – April 2018 $PSX
Baker Hughes, a GE Co Valuation – April 2018 $BHGE
Marathon Petroleum Corp Valuation – April 2018 $MPC
TechnipFMC PLC Valuation – April 2018 $FTI

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.

Marathon Petroleum Corp Valuation – April 2018 $MPC

Company Profile (excerpt from Reuters): Marathon Petroleum Corporation, incorporated on November 9, 2009, is engaged in petroleum product refining, marketing, retail and transportation businesses in the United States and the east of the Mississippi. The Company’s segments include Refining & Marketing, Speedway, and Midstream.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MPC – April 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 $35,114,403,425 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.28 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 182.05% Pass
6. Moderate PEmg Ratio PEmg < 20 17.60 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.61 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 1.28 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.21
MG Growth Estimate 1.43%
MG Value $47.77
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $60.99
MG Value based on 0% Growth $35.75
Market Implied Growth Rate 4.55%
Current Price $74.02
% of Intrinsic Value 154.97%

Marathon Petroleum Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $3.84 in 2014 to an estimated $4.21 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.55% 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 Marathon Petroleum Corp revealed the company was trading above its Graham Number of $43.78. The company pays a dividend of $1.52 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.6, which was below the industry average of 85.36, 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 $-43.75.

Marathon Petroleum Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$43.75
Graham Number $43.78
PEmg 17.60
Current Ratio 1.28
PB Ratio 2.61
Current Dividend $1.52
Dividend Yield 2.05%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

ModernGraham tagged articles Morningstar
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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $13,401,000,000
Total Current Liabilities $10,478,000,000
Long-Term Debt $12,322,000,000
Total Assets $49,047,000,000
Intangible Assets $3,586,000,000
Total Liabilities $35,014,000,000
Shares Outstanding (Diluted Average) 494,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.95
Dec2017 $6.70
Dec2016 $2.21
Dec2015 $5.26
Dec2014 $4.39
Dec2013 $3.32
Dec2012 $4.95
Dec2011 $3.34
Dec2010 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.21
Dec2017 $4.68
Dec2016 $3.79
Dec2015 $4.47
Dec2014 $3.84
Dec2013 $3.21
Dec2012 $2.71
Dec2011 $1.34
Dec2010 $0.29

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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.

Anadarko Petroleum Co Valuation – April 2017 $APC

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 – March 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 Anadarko Petroleum Co (APC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Anadarko Petroleum Corporation (Anadarko) is an independent exploration and production company. The Company is engaged in developing, acquiring, and exploring for oil and natural-gas resources. The Company’s segments include Oil and Gas Exploration and Production; Midstream, and Marketing. The Company’s geographical segments include the United States and International. The Oil and Gas Exploration and Production segment explores for and produces oil, condensate, natural gas and natural gas liquids (NGLs), and focuses on the development and operation of the Company’s liquefied natural gas (LNG) project in Mozambique. The Midstream segment engages in gathering, processing, treating and transporting Anadarko and third-party oil, natural-gas and NGLs production. The Marketing segment sells Anadarko’s oil, natural-gas and NGLs production, as well as third-party purchased volumes. As of December 31, 2016, the Company had approximately 1.7 billion barrels of oil equivalent (BOE).

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Downloadable PDF version of this valuation:

ModernGraham Valuation of APC – April 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 $35,074,839,836 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.58 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -350.80% Fail
6. Moderate PEmg Ratio PEmg < 20 -12.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.66 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 1.58 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 7.88 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$5.02
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$72.79
MG Value based on 0% Growth -$42.67
Market Implied Growth Rate -10.46%
Current Price $62.32
% of Intrinsic Value N/A

Anadarko Petroleum Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net 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 $0.91 in 2013 to an estimated $-5.02 for 2017. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Anadarko Petroleum Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.2 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was -12.41, 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 $-53.8.

Anadarko Petroleum Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$53.80
Graham Number $0.00
PEmg -12.41
Current Ratio 1.58
PB Ratio 2.66
Current Dividend $0.20
Dividend Yield 0.32%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $5,266,000,000
Total Current Liabilities $3,328,000,000
Long-Term Debt $15,281,000,000
Total Assets $45,564,000,000
Intangible Assets $5,904,000,000
Total Liabilities $33,352,000,000
Shares Outstanding (Diluted Average) 522,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.36
Dec2016 -$5.90
Dec2015 -$13.18
Dec2014 -$3.47
Dec2013 $1.58
Dec2012 $4.74
Dec2011 -$5.32
Dec2010 $1.52
Dec2009 -$0.28
Dec2008 $6.91
Dec2007 $8.08
Dec2006 $10.24
Dec2005 $4.90
Dec2004 $3.18
Dec2003 $2.55
Dec2002 $1.61
Dec2001 -$0.38
Dec2000 $2.08
Dec1999 $0.13
Dec1998 -$0.21
Dec1997 $0.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$5.02
Dec2016 -$5.65
Dec2015 -$4.73
Dec2014 -$0.40
Dec2013 $0.91
Dec2012 $0.89
Dec2011 $0.04
Dec2010 $3.57
Dec2009 $5.06
Dec2008 $7.37
Dec2007 $7.00
Dec2006 $5.80
Dec2005 $3.18
Dec2004 $2.15
Dec2003 $1.49
Dec2002 $0.86
Dec2001 $0.46

Recommended Reading:

Other ModernGraham posts about the company

Anadarko Petroleum Corp Valuation – January 2016 Update $APC
32 Companies in the Spotlight This Week – 12/6/14
Anadarko Petroleum Corporation Annual Valuation – 2014 $APC

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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.

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