TechnipFMC PLC Valuation – February 2019 $FTI

Company Profile (excerpt from Reuters): TechnipFMC plc is engaged in the business of oil and gas projects, technologies, systems and services. The Company offers a portfolio of solutions for production and transformation of oil and gas. The Company’s integrated offerings range from individual products and services to integrated solutions with a single interface to ensure execution. The Company provides services across three distinct segments: subsea, onshore/offshore, and surface projects. The Company’s Subsea products include trees, manifolds, controls, templates, flowline systems, umbilicals, flexibles and subsea processing. The Company’s Subsea projects include front end to decommissioning; field architecture, integrated design, and engineering, procurement, construction and installation. The Company’s Subsea services include drilling; installation, completion, and life of field; asset management; well intervention and inspection maintenance and repair (IMR), and remotely operated underwater vehicles (ROVs) and manipulator systems.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FTI – 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 $10,238,581,459 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.33 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -68.38% Fail
6. Moderate PEmg Ratio PEmg < 20 18.06 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.81 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 1.33 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.40 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.25
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.16
MG Value based on 0% Growth $10.65
Market Implied Growth Rate 4.78%
Current Price $22.62
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.5 in 2014 to an estimated $1.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.78% 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 TechnipFMC PLC revealed the company was trading above its Graham Number of $21.74. The company pays a dividend of $0.13 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 18.06, 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 $-4.95.

TechnipFMC PLC 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) -$4.95
Graham Number $21.74
PEmg 18.06
Current Ratio 1.33
PB Ratio 0.81
Current Dividend $0.13
Dividend Yield 0.57%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $11,563,200,000
Total Current Liabilities $8,702,800,000
Long-Term Debt $4,017,100,000
Total Assets $26,660,000,000
Intangible Assets $10,226,500,000
Total Liabilities $13,835,700,000
Shares Outstanding (Diluted Average) 459,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.73
Dec2017 $0.24
Dec2016 $3.16
Dec2015 $0.13
Dec2014 $4.44
Dec2013 $6.46
Dec2012 $5.99
Dec2011 $5.72
Dec2010 $5.07
Dec2009 $2.28
Dec2008 $5.92
Dec2007 $1.75
Dec2006 $2.48
Dec2005 $1.13
Dec2004 $1.37
Dec2003 -$0.26
Dec2002 -$0.30
Dec2001 $6.03
Dec2000 $12.07
Dec1999 $10.82
Dec1998 $51.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.25
Dec2017 $1.97
Dec2016 $3.24
Dec2015 $3.70
Dec2014 $5.50
Dec2013 $5.72
Dec2012 $5.23
Dec2011 $4.62
Dec2010 $3.88
Dec2009 $3.09
Dec2008 $3.18
Dec2007 $1.64
Dec2006 $1.35
Dec2005 $1.05
Dec2004 $1.93
Dec2003 $3.37
Dec2002 $8.79

Recommended Reading:

Other ModernGraham posts about the company

TechnipFMC PLC Valuation – April 2018 $FTI
FMC Technologies Inc Valuation – August 2016 $FTI
FMC Technologies Inc Valuation – March 2016 $FTI
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016
12 Best Stocks For Value Investors This Week – 11/14/15

Other ModernGraham posts about related companies

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
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

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.

TechnipFMC PLC Valuation – April 2018 $FTI

Company Profile (excerpt from Reuters): TechnipFMC plc is engaged in the business of oil and gas projects, technologies, systems and services. The Company offers a portfolio of solutions for production and transformation of oil and gas. The Company’s integrated offerings range from individual products and services to integrated solutions with a single interface to ensure execution. The Company provides services across three distinct segments: subsea, onshore/offshore, and surface projects. The Company’s Subsea products include trees, manifolds, controls, templates, flowline systems, umbilicals, flexibles and subsea processing. The Company’s Subsea projects include front end to decommissioning; field architecture, integrated design, and engineering, procurement, construction and installation. The Company’s Subsea services include drilling; installation, completion, and life of field; asset management; well intervention and inspection maintenance and repair (IMR), and remotely operated underwater vehicles (ROVs) and manipulator systems.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FTI – 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 $14,073,802,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.32 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -65.93% Fail
6. Moderate PEmg Ratio PEmg < 20 23.07 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.12 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 1.32 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.20 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $19.71
MG Value based on 0% Growth $11.55
Market Implied Growth Rate 7.29%
Current Price $31.36
% of Intrinsic Value N/A

TechnipFMC plc Ordinary Share does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the 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 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 $5.5 in 2014 to an estimated $1.36 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.29% 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 below the price.

At the time of valuation, further research into TechnipFMC plc Ordinary Share revealed the company was trading above its Graham Number of $26.06. The company pays a dividend of $0.13 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 23.07, 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 $-4.71.

TechnipFMC plc Ordinary Share 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) -$4.71
Graham Number $26.06
PEmg 23.07
Current Ratio 1.32
PB Ratio 1.12
Current Dividend $0.13
Dividend Yield 0.41%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $12,977,100,000
Total Current Liabilities $9,829,400,000
Long-Term Debt $3,777,900,000
Total Assets $28,263,700,000
Intangible Assets $10,263,600,000
Total Liabilities $15,183,000,000
Shares Outstanding (Diluted Average) 468,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.05
Dec2017 $0.24
Dec2016 $3.16
Dec2015 $0.13
Dec2014 $4.44
Dec2013 $6.46
Dec2012 $5.99
Dec2011 $5.72
Dec2010 $5.07
Dec2009 $2.28
Dec2008 $5.92
Dec2007 $1.75
Dec2006 $2.48
Dec2005 $1.13
Dec2004 $1.37
Dec2003 -$0.26
Dec2002 -$0.30
Dec2001 $6.03
Dec2000 $12.07
Dec1999 $10.82
Dec1998 $51.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.36
Dec2017 $1.97
Dec2016 $3.24
Dec2015 $3.70
Dec2014 $5.50
Dec2013 $5.72
Dec2012 $5.23
Dec2011 $4.62
Dec2010 $3.88
Dec2009 $3.09
Dec2008 $3.18
Dec2007 $1.64
Dec2006 $1.35
Dec2005 $1.05
Dec2004 $1.93
Dec2003 $3.37
Dec2002 $8.79

Recommended Reading:

Other ModernGraham posts about the company

FMC Technologies Inc Valuation – March 2016 $FTI
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016
12 Best Stocks For Value Investors This Week – 11/14/15
FMC Technologies Inc. Valuation – November 2015 Update $FTI
The Best Companies of the Oil & Gas Industry – August 2015

Other ModernGraham posts about related companies

EOG Resources Inc Valuation – April 2018 $EOG
ConocoPhillips Valuation – April 2018 $COP
Devon Energy Corp Valuation – March 2018 $DVN
Noble Energy Inc Valuation – March 2018 $NBL
ONEOK Inc Valuation – March 2018 $OKE
Marathon Oil Corp Valuation – March 2018 $MRO
Hess Corp Valuation – March 2018 $HES
Cimarex Energy Co Valuation – Initial Coverage $XEC
EQT Corporation Valuation – March 2018 $EQT
Helmerich & Payne Inc Valuation – March 2018 $HP

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.

FMC Technologies Inc Valuation – August 2016 $FTI

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 – August 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 FMC Technologies Inc (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. is a global provider of technology solutions for the energy industry. The Company designs, manufactures and services a range of systems and products, including subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions and marine loading systems. Its segments include Subsea Technologies, Surface Technologies and Energy Infrastructure. The Subsea Technologies segment designs and manufactures products and systems, and provides services used by oil and gas companies involved in deepwater exploration and production of crude oil and natural gas. The Surface Technologies segment designs and manufactures products and systems, and provides services used by oil and gas companies involved in land and offshore exploration, and production of crude oil and natural gas. The Energy Infrastructure segment’s products and services include Measurement Solutions, Loading Systems and Separation Systems.

FTI Chart

FTI 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.

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[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FTI – 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 $6,220,129,296 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.07 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 25.51% Fail
6. Moderate PEmg Ratio PEmg < 20 18.10 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.43 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.07 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.68 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

FTI value chart August 2016

EPSmg $1.55
MG Growth Estimate -0.67%
MG Value $11.08
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $22.46
MG Value based on 0% Growth $13.16
Market Implied Growth Rate 4.80%
Current Price $28.03
% of Intrinsic Value 252.95%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.62 in 2012 to an estimated $1.55 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.8% 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 FMC Technologies, Inc. revealed the company was trading above its Graham Number of $9.16. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 18.1, which was below the industry average of 55.24, 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 $0.76.

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

Stage 3: Information for Further Research

FTI charts August 2016

Net Current Asset Value (NCAV) $0.76
Graham Number $9.16
PEmg 18.10
Current Ratio 2.07
PB Ratio 2.43
Current Dividend $0.00
Dividend Yield 0.00%
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 6/1/2016
Total Current Assets $3,705,200,000
Total Current Liabilities $1,787,700,000
Long-Term Debt $1,298,700,000
Total Assets $6,160,800,000
Intangible Assets $753,300,000
Total Liabilities $3,532,600,000
Shares Outstanding (Diluted Average) 228,300,000

Earnings Per Share History

Next Fiscal Year Estimate $0.32
Dec2015 $1.70
Dec2014 $2.95
Dec2013 $2.10
Dec2012 $1.78
Dec2011 $1.64
Dec2010 $1.53
Dec2009 $1.44
Dec2008 $1.39
Dec2007 $1.13
Dec2006 $0.99
Dec2005 $0.38
Dec2004 $0.42
Dec2003 $0.26
Dec2002 -$0.51
Dec2001 $0.13
Dec2000 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.55
Dec2015 $2.12
Dec2014 $2.22
Dec2013 $1.80
Dec2012 $1.62
Dec2011 $1.50
Dec2010 $1.39
Dec2009 $1.23
Dec2008 $1.04
Dec2007 $0.79
Dec2006 $0.51
Dec2005 $0.23
Dec2004 $0.14
Dec2003 $0.01
Dec2002 -$0.09
Dec2001 $0.11
Dec2000 $0.08

Recommended Reading:

Other ModernGraham posts about the company

FMC Technologies Inc Valuation – March 2016 $FTI
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016
12 Best Stocks For Value Investors This Week – 11/14/15
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016
FMC Technologies Inc. Valuation – November 2015 Update $FTI

Other ModernGraham posts about related companies

Magellan Midstream Partners LP Valuation – August 2016 $MMP
Ensco PLC Valuation – August 2016 $ESV
Enterprise Products Partners LP Valuation – August 2016 $EPD
Tidewater Inc Valuation – August 2016 $TDW
Occidental Petroleum Corp Valuation – August 2016 $OXY
Valero Energy Corporation – August 2016 $VLO
Chevron Corp Valuation – August 2016 $CVX
Exxon Mobil Corporation Valuation – August 2016 $XOM
National-Oilwell Varco Inc Valuation – August 2016 $NOV
Newfield Exploration Co Valuation – August 2016 $NFX

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.

FMC Technologies Inc Valuation – March 2016 $FTI

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 – February 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 FMC Technologies Inc (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. is a provider of technology solutions for the energy industry. The Company’s segments include Subsea Technologies, Surface Technologies and Energy Infrastructure. Subsea Technologies designs and manufactures products and systems and provides services used by oil and gas companies involved in deepwater exploration and production of crude oil and natural gas. Surface Technologies designs and manufactures systems and provides services used by oil and gas companies involved in land and offshore exploration and production of crude oil and gas; designs, manufactures and supplies high pressure valves and fittings for oilfield service companies, and also provides flowback and wireline services for exploration companies. Energy Infrastructure manufactures and supplies liquid and gas measurement and transportation equipment and systems for the production, transportation and processing of crude oil, natural gas and petroleum-based refined products and the mining industry.

[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 FTI

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 $6,235,415,412 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 44.19% Pass
6. Moderate PEmg Ratio PEmg < 20 15.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.54 Pass
Score
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 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.71 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FTI value chart March 2016

EPSmg $1.80
MG Growth Estimate 1.61%
MG Value $21.04
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $26.03
MG Value based on 0% Growth $15.26
Market Implied Growth Rate 3.42%
Current Price $27.54
% of Intrinsic Value 130.89%

FMC Technologies, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, and the poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. 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 $1.62 in 2012 to an estimated $1.80 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.42% 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 below the price.

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

Stage 3: Information for Further Research

FTI charts March 2016

Net Current Asset Value (NCAV) $0.10
Graham Number $16.25
PEmg 15.34
Current Ratio 1.69
PB Ratio 2.54
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/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 Dec2015
Total Current Assets $3,948,700,000
Total Current Liabilities $2,343,300,000
Long-Term Debt $1,134,100,000
Total Assets $6,437,900,000
Intangible Assets $761,000,000
Total Liabilities $3,926,100,000
Shares Outstanding (Diluted Average) 231,700,000

Earnings Per Share History

Next Fiscal Year Estimate $1.06
Dec2015 $1.70
Dec2014 $2.95
Dec2013 $2.10
Dec2012 $1.78
Dec2011 $1.64
Dec2010 $1.53
Dec2009 $1.44
Dec2008 $1.39
Dec2007 $1.13
Dec2006 $0.99
Dec2005 $0.38
Dec2004 $0.42
Dec2003 $0.26
Dec2002 -$0.51
Dec2001 $0.13
Dec2000 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.80
Dec2015 $2.12
Dec2014 $2.22
Dec2013 $1.80
Dec2012 $1.62
Dec2011 $1.50
Dec2010 $1.39
Dec2009 $1.23
Dec2008 $1.04
Dec2007 $0.79
Dec2006 $0.51
Dec2005 $0.23
Dec2004 $0.14
Dec2003 $0.01
Dec2002 -$0.09
Dec2001 $0.11
Dec2000 $0.08

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016
FMC Technologies Inc. Valuation – November 2015 Update $FTI
The Best Companies of the Oil & Gas Industry – August 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
FMC Technologies Inc. Analysis – August 2015 Update $FTI

Other ModernGraham posts about related companies

Valero Energy Corp Valuation – February 2016 $VLO
Schlumberger Ltd Valuation – February 2016 $SLB
National Oilwell Varco Inc Valuation – February 2016 Update $NOV
Southwestern Energy Company Valuation – February 2016 Update $SWN
Apache Corporation Valuation – January 2016 Update $APA
Anadarko Petroleum Corp Valuation – January 2016 Update $APC
Cabot Oil & Gas Corp Valuation – December 2015 Update $COG
Helmerich & Payne Inc Valuation – November 2015 Update $HP
Murphy Oil Corporation Valuation – November 2015 Update $MUR
Denbury Resources Inc. Valuation – November 2015 Update $DNR

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.

FMC Technologies Inc. Valuation – November 2015 Update $FTI

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 Most Undervalued Companies for the Defensive Investor – October 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 stock analysis showing a specific look at how FMC Technologies Inc. (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. is a provider of technology solutions for the energy industry. The Company’s segments include Subsea Technologies, Surface Technologies and Energy Infrastructure. Subsea Technologies designs and manufactures products and systems and provides services used by oil and gas companies involved in deepwater exploration and production of crude oil and natural gas. Surface Technologies designs and manufactures systems and provides services used by oil and gas companies involved in land and offshore exploration and production of crude oil and gas; designs, manufactures and supplies high pressure valves and fittings for oilfield service companies, and also provides flowback and wireline services for exploration companies. Energy Infrastructure manufactures and supplies liquid and gas measurement and transportation equipment and systems for the production, transportation and processing of crude oil, natural gas and petroleum-based refined products and the mining industry.

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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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of FTI – November 2015

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 $7,865,562,513 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.77 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 96.29% Pass
6. Moderate PEmg Ratio PEmg < 20 15.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.10 Pass
Score
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 1.77 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.69 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

FTI value Chart November 2015

EPSmg $2.16
MG Growth Estimate 6.59%
MG Value $46.88
Opinion Undervalued
MG Value based on 3% Growth $31.37
MG Value based on 0% Growth $18.39
Market Implied Growth Rate 3.52%
Current Price $33.62
% of Intrinsic Value 71.71%

FMC Technologies Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio and lack of dividends.  The Enterprising Investor is only initially concerned by the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.50 in 2011 to an estimated $2.16 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.52% 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.

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 FMC Technologies Inc. (FTI)?  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.

Stage 3: Information for Further Research

FTI Charts November 2015

Net Current Asset Value (NCAV) -$0.04
Graham Number $21.26
PEmg 15.54
Current Ratio 1.77
PB Ratio 3.10
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

[/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

Total Current Assets $4,195,600,000
Total Current Liabilities $2,371,400,000
Long-Term Debt $1,261,200,000
Total Assets $6,711,200,000
Intangible Assets $773,200,000
Total Liabilities $4,205,700,000
Shares Outstanding (Diluted Average) 231,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.83
Dec14 $2.95
Dec13 $2.10
Dec12 $1.78
Dec11 $1.64
Dec10 $1.53
Dec09 $1.44
Dec08 $1.39
Dec07 $1.13
Dec06 $0.99
Dec05 $0.38
Dec04 $0.42
Dec03 $0.26
Dec02 -$0.51
Dec01 $0.13
Dec00 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.16
Dec14 $2.22
Dec13 $1.80
Dec12 $1.62
Dec11 $1.50
Dec10 $1.39
Dec09 $1.23
Dec08 $1.04
Dec07 $0.79
Dec06 $0.51
Dec05 $0.23
Dec04 $0.14
Dec03 $0.01
Dec02 -$0.09
Dec01 $0.11
Dec00 $0.08

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Oil & Gas Industry – August 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
FMC Technologies Inc. Analysis – August 2015 Update $FTI
47 Companies in the Spotlight This Week – 5/16/15
FMC Technologies Inc. Quarterly Valuation – May 2015 $FTI

Other ModernGraham posts about related companies

Denbury Resources Inc. Valuation – November 2015 Update $DNR
Western Refining Inc. Valuation – October 2015 Update $WNR
Valero Energy Corporation Valuation – October 2015 Update $VLO
Schlumberger Limited Valuation – October 2015 Update $SLB
National Oilwell Varco Inc. Valuation – October 2015 Update $NOV
Tesoro Corporation Analysis – October 2015 Update $TSO
Cameron International Company Analysis – September 2015 Update $CAM
Halliburton Company Analysis – September 2015 Update $HAL
Kinder Morgan Inc. Analysis – September 2015 Update $KMI
Range Resources Corporation Analysis – August 2015 Update $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.

FMC Technologies Inc. Analysis – August 2015 Update $FTI

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 5 Most Undervalued Companies for the Defensive Investor – July 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 stock analysis showing a specific look at how FMC Technologies Inc. (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. is a provider of technology solutions for the energy industry. The Company’s segments include Subsea Technologies, Surface Technologies and Energy Infrastructure. Subsea Technologies designs and manufactures products and systems and provides services used by oil and gas companies involved in deepwater exploration and production of crude oil and natural gas. Surface Technologies designs and manufactures systems and provides services used by oil and gas companies involved in land and offshore exploration and production of crude oil and gas; designs, manufactures and supplies high pressure valves and fittings for oilfield service companies, and also provides flowback and wireline services for exploration companies. Energy Infrastructure manufactures and supplies liquid and gas measurement and transportation equipment and systems for the production, transportation and processing of crude oil, natural gas and petroleum-based refined products and the mining industry.

[level-free]

To read the rest 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]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of FTI – August 2015

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 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
6. Moderate PEmg Ratio PEmg < 20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Pass
Score
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 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg 2.29
MG Growth Estimate 7.82%
MG Value $55.18
Opinion Undervalued
MG Value based on 3% Growth $33.16
MG Value based on 0% Growth $19.44
Market Implied Growth Rate 3.03%
Current Price $33.29
% of Intrinsic Value 60.33%

FMC Technologies qualifies for the Enterprising Investor but is not suitable for the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio and the lack of dividends.  The Enterprising Investor is only concerned with the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.50 in 2011 to an estimated $2.29 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.03% 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.

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 FMC Technologies (FTI)?  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.

Stage 3: Information for Further Research

FTI charts August 2015

 

Net Current Asset Value (NCAV) -$0.28
PEmg 14.56
Current Ratio 1.69
PB Ratio 2.98
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $4,231,600,000
Total Current Liabilities $2,501,100,000
Long-Term Debt $1,275,200,000
Total Assets $6,893,900,000
Intangible Assets $807,600,000
Total Liabilities $4,296,300,000
Outstanding Shares 232,900,000

Earnings Per Share History

Next Fiscal Year Estimate $2.20
Dec14 $2.95
Dec13 $2.10
Dec12 $1.78
Dec11 $1.64
Dec10 $1.53
Dec09 $1.44
Dec08 $1.39
Dec07 $1.13
Dec06 $0.99
Dec05 $0.38
Dec04 $0.42
Dec03 $0.26
Dec02 -$0.51
Dec01 $0.13
Dec00 $0.23
Dec99 $0.00
Dec98 $0.00

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.29
Dec14 $2.22
Dec13 $1.80
Dec12 $1.62
Dec11 $1.50
Dec10 $1.39
Dec09 $1.23
Dec08 $1.04
Dec07 $0.79
Dec06 $0.51
Dec05 $0.23
Dec04 $0.14
Dec03 $0.01
Dec02 -$0.09

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.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

FMC Technologies Inc. Quarterly Valuation – May 2015 $FTI

web_logos_fmcBenjamin 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 – April 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 FMC Technologies Inc. (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. designs, manufactures and services systems and products, including subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions and marine loading systems for the energy industry. Its segments are Subsea Technologies, which designs and manufactures products and systems and provides services used by oil and gas companies; Surface Technologies, which designs and manufactures products and systems and provides services used by oil and gas companies involved in land and offshore exploration and production of crude oil and natural gas, and Energy Infrastructure, which offers Measurement Solutions and Loading Systems. In January 2013, it purchased a 173-acre parcel of land in Houston, Texas. In May 2014, the Company completed divestiture of its material handling products business to Syntron Material Handling, LLC.

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 – FAIL
  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 – PASS
  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 = 4/5

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

Valuation Summary

Key Data:

Recent Price $41.59
MG Value $50.17
MG Opinion Fairly Valued
Value Based on 3% Growth $32.09
Value Based on 0% Growth $18.81
Market Implied Growth Rate 5.15%
Net Current Asset Value (NCAV) -$1.15
PEmg 18.79
Current Ratio 1.69
PB Ratio 3.95

Balance Sheet – March 2015

Current Assets $4,243,000,000
Current Liabilities $2,505,000,000
Total Debt $1,302,000,000
Total Assets $6,971,000,000
Intangible Assets $808,000,000
Total Liabilities $4,511,000,000
Outstanding Shares 233,900,000

Earnings Per Share

2015 (estimate) $1.98
2014 $2.95
2013 $2.10
2012 $1.78
2011 $1.64
2010 $1.53
2009 $1.44
2008 $1.39
2007 $1.13
2006 $0.99
2005 $0.38

Earnings Per Share – ModernGraham

2015 (estimate) $2.21
2014 $2.22
2013 $1.80
2012 $1.62
2011 $1.50
2010 $1.39

Dividend History
FMC Technologies does not pay a dividend.

Conclusion:

FMC Technologies Inc. is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, lack of dividends and the high PB ratio, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.50 in 2011 to an estimated $2.21 for 2015.  This level of demonstrated growth supports the market’s implied estimate of 5.15% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value falling within 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 FMC Technologies Inc. (FTI)?  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 any 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.

FMC Technologies Inc. Quarterly Valuation – February 2015 $FTI

FTI Logo_277x38Benjamin 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 – February 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 FMC Technologies Inc. (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. designs, manufactures and services systems and products, including subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions and marine loading systems for the energy industry. Its segments are Subsea Technologies, which designs and manufactures products and systems and provides services used by oil and gas companies; Surface Technologies, which designs and manufactures products and systems and provides services used by oil and gas companies involved in land and offshore exploration and production of crude oil and natural gas, and Energy Infrastructure, which offers Measurement Solutions and Loading Systems. In January 2013, it purchased a 173-acre parcel of land in Houston, Texas. In May 2014, the Company completed divestiture of its material handling products business to Syntron Material Handling, LLC.

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 – FAIL
  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 – PASS
  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 = 4/5

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

Valuation Summary

Key Data:

Recent Price $41.05
MG Value $58.74
MG Opinion Undervalued
Value Based on 3% Growth $32.19
Value Based on 0% Growth $18.87
Market Implied Growth Rate 5.00%
Net Current Asset Value (NCAV) -$1.20
PEmg 18.49
Current Ratio 1.59
PB Ratio 3.94

Balance Sheet – December 2014

Current Assets $4,436,000,000
Current Liabilities $2,784,000,000
Total Debt $1,297,000,000
Total Assets $7,176,000,000
Intangible Assets $835,000,000
Total Liabilities $4,719,000,000
Outstanding Shares 235,600,000

Earnings Per Share

2014 $2.95
2013 $2.10
2012 $1.78
2011 $1.64
2010 $1.53
2009 $1.44
2008 $1.39
2007 $1.13
2006 $0.99
2005 $0.38
2004 $0.42

Earnings Per Share – ModernGraham

2014 $2.22
2013 $1.80
2012 $1.62
2011 $1.50
2010 $1.39
2009 $1.23

Dividend History
FMC Technologies does not pay a dividend.

Conclusion:

FMC Technologies is suitable for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the low current ratio, lack of dividends, and high PB ratio, while the Enterprising Investor is only concerned by the lack of dividends.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.39 in 2010 to $2.22 for 2014.  This level of demonstrated growth is greater than the market’s implied estimate of 5% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the price.

Be sure to check out previous ModernGraham valuations of FMC Technologies (FMC) for greater perspective!

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 FMC Technologies (FMC)?  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 FMC Technologies (FMC) 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.

FMC Technologies Inc. Quarterly Valuation – October 2014 $FTI

FTI Logo_277x38Benjamin 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 Highest Dividend Yields Among Undervalued Companies for the Defensive Investor – October 2014.  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 FMC Technologies Inc. (FTI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): FMC Technologies, Inc. designs, manufactures and services systems and products, including subsea production and processing systems, surface wellhead production systems, high pressure fluid control equipment, measurement solutions and marine loading systems for the energy industry. Its segments are Subsea Technologies, which designs and manufactures products and systems and provides services used by oil and gas companies; Surface Technologies, which designs and manufactures products and systems and provides services used by oil and gas companies involved in land and offshore exploration and production of crude oil and natural gas, and Energy Infrastructure, which offers Measurement Solutions and Loading Systems. In January 2013, it purchased a 173-acre parcel of land in Houston, Texas. In May 2014, the Company completed divestiture of its material handling products business to Syntron Material Handling, LLC.

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 – FAIL
  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 = 4/5

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

Valuation Summary

Key Data:

Recent Price $54.77
MG Value $54.83
MG Opinion Fairly Valued
Value Based on 3% Growth $31.42
Value Based on 0% Growth $18.42
Market Implied Growth Rate 8.39%
Net Current Asset Value (NCAV) $0.09
PEmg 25.28
Current Ratio 1.63
PB Ratio 4.89

Balance Sheet – September 2014

Current Assets $4,403,000,000
Current Liabilities $2,698,000,000
Total Debt $1,337,000,000
Total Assets $7,034,000,000
Intangible Assets $859,000,000
Total Liabilities $4,381,000,000
Outstanding Shares 237,000,000

Earnings Per Share

2014 (estimate) $2.79
2013 $2.10
2012 $1.78
2011 $1.64
2010 $1.53
2009 $1.44
2008 $1.39
2007 $1.13
2006 $0.99
2005 $0.38
2004 $0.42

Earnings Per Share – ModernGraham

2014 (estimate) $2.17
2013 $1.80
2012 $1.62
2011 $1.50
2010 $1.39
2009 $1.23

Dividend History
FMC Technologies does not pay a dividend.

Conclusion:

FMC Technologies is suitable for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the company’s low current ratio, the lack of dividends, and the high PEmg and PB ratios.  The Enterprising Investor’s only issue is with the lack of dividend payments.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.39 in 2010 to an estimated $2.17 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 8.39% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within 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 FMC Technologies Inc. (FTI)?  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 FMC Technologies Inc. (FTI) 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.

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

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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

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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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