Graham Holdings Co Valuation – July 2018 $GHC

Company Profile (excerpt from Reuters): Graham Holdings Company, incorporated on July 21, 2003, is a diversified education and media company. The Company’s operations include educational services; television broadcasting; online, print and local television (TV) news; social-media advertising services; home health and hospice care, and manufacturing. The Company’s segments include Kaplan Higher Education (KHE), Kaplan Test Preparation (KTP), Kaplan International, television broadcasting and other businesses.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GHC – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,172,039,297 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.32 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 126.11% Pass
6. Moderate PEmg Ratio PEmg < 20 18.94 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.11 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 0.25 Pass
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 $30.95
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $448.78
MG Value based on 0% Growth $263.08
Market Implied Growth Rate 5.22%
Current Price $586.10
% of Intrinsic Value N/A

Graham Holdings Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the low current ratio, 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 $81.06 in 2014 to an estimated $30.95 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.22% 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 Graham Holdings Co revealed the company was trading above its Graham Number of $0. The company pays a dividend of $5.08 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 18.94, which was below the industry average of 38.81, 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 $-64.79.

Graham Holdings Co 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) -$64.79
Graham Number $0.00
PEmg 18.94
Current Ratio 1.32
PB Ratio 1.11
Current Dividend $5.08
Dividend Yield 0.87%
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 3/1/2018
Total Current Assets $1,521,436,000
Total Current Liabilities $1,152,583,000
Long-Term Debt $91,079,000
Total Assets $4,760,958,000
Intangible Assets $1,636,074,000
Total Liabilities $1,876,045,000
Shares Outstanding (Diluted Average) 5,473,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate
Dec2017 $53.89
Dec2016 $29.80
Dec2015 -$17.87
Dec2014 $195.03
Dec2013 $32.05
Dec2012 $17.39
Dec2011 $14.70
Dec2010 $31.04
Dec2009 $9.78
Dec2008 $6.87
Dec2007 $30.19
Dec2006 $33.68
Dec2005 $32.59
Dec2004 $34.59
Dec2003 $25.12
Dec2002 $21.34
Dec2001 $24.06
Dec2000 $14.32
Dec1999 $22.30
Dec1998 $41.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $30.95
Dec2017 $50.48
Dec2016 $49.61
Dec2015 $55.76
Dec2014 $81.06
Dec2013 $23.05
Dec2012 $17.69
Dec2011 $18.06
Dec2010 $20.60
Dec2009 $17.79
Dec2008 $23.73
Dec2007 $31.85
Dec2006 $31.61
Dec2005 $29.56
Dec2004 $26.66
Dec2003 $22.27
Dec2002 $22.11

Recommended Reading:

Other ModernGraham posts about the company

7 Best Undervalued Stocks of the Week – 9/3/16
Graham Holdings Co Valuation – August 2016 $GHC
10 Undervalued Stocks for the Enterprising Investor – August 2016
10 Most Undervalued Companies for the Enterprising Investor – July 2016
10 Most Undervalued Companies for the Enterprising Investor – June 2016

Other ModernGraham posts about related companies

News Corp Valuation – June 2018 $NWS
Netflix Inc Valuation – June 2018 $NFLX
CBS Corporation Valuation – April 2018 $CBS
Discovery Inc Valuation – April 2018 $DISCA
Time Warner Inc Valuation – March 2018 $TWX
Viacom Inc Valuation – March 2018 $VIAB
Twenty-First Century Fox Inc Valuation – March 2018 $FOXA
Walt Disney Co Valuation – February 2018 $DIS
Live Nation Entertainment Inc Valuation – Initial Coverage $LYV
Walt Disney Co Valuation – March 2017 $DIS

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.

Graham Holdings Co Valuation – August 2016 $GHC

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 Graham Holdings Co (GHC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Graham Holdings Company is a diversified education and media company. The Company’s operations include educational services; television broadcasting; online, print and local television news; social-media advertising services; home health and hospice care, and manufacturing. The Company’s segments include Kaplan Higher Education, which provides a range of certificate, diploma and degree programs; Kaplan Test Preparation, which includes the Company’s test preparation businesses in pre-college, graduate, health and bar review, as well as new businesses in new economy skills training and in career advising; Kaplan International, which operates businesses in Europe and the Asia Pacific region; television broadcasting, which include operations that are conducted through over five very high frequency television stations serving the Detroit, Houston, San Antonio, Orlando and Jacksonville television markets, and other businesses, which include The Slate Group, The FP Group and SocialCode.

GHC Chart

GHC data by YCharts

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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. 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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ModernGraham Valuation of GHC – 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 $2,746,400,528 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.19 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 247.10% Pass
6. Moderate PEmg Ratio PEmg < 20 14.08 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.11 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 2.19 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.45 Pass
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

GHC value chart August 2016

EPSmg $34.81
MG Growth Estimate 14.53%
MG Value $1,307.25
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $504.79
MG Value based on 0% Growth $295.91
Market Implied Growth Rate 2.79%
Current Price $490.32
% of Intrinsic Value 37.51%

Graham Holdings Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor is only concerned with the lack of earnings stability over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $17.69 in 2012 to an estimated $34.81 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.79% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Graham Holdings Co revealed the company was trading above its Graham Number of $0. The company pays a dividend of $6.22 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 14.08, which was below the industry average of 40.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-41.04.

Graham Holdings Co performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

GHC charts August 2016

Net Current Asset Value (NCAV) -$41.04
Graham Number $0.00
PEmg 14.08
Current Ratio 2.19
PB Ratio 1.11
Current Dividend $6.22
Dividend Yield 1.27%
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 $1,627,413,000
Total Current Liabilities $744,343,000
Long-Term Debt $400,028,000
Total Assets $4,328,639,000
Intangible Assets $1,324,822,000
Total Liabilities $1,856,159,000
Shares Outstanding (Diluted Average) 5,574,000

Earnings Per Share History

Next Fiscal Year Estimate -$14.58
Dec2015 -$17.87
Dec2014 $195.03
Dec2013 $32.05
Dec2012 $17.39
Dec2011 $14.70
Dec2010 $31.04
Dec2009 $9.78
Dec2008 $6.87
Dec2007 $30.19
Dec2006 $33.68
Dec2005 $32.59
Dec2004 $34.59
Dec2003 $25.12
Dec2002 $21.34
Dec2001 $24.06
Dec2000 $14.32
Dec1999 $22.30
Dec1998 $41.10
Dec1997 $26.15
Dec1996 $20.05

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $34.81
Dec2015 $55.76
Dec2014 $81.06
Dec2013 $23.05
Dec2012 $17.69
Dec2011 $18.06
Dec2010 $20.60
Dec2009 $17.79
Dec2008 $23.73
Dec2007 $31.85
Dec2006 $31.61
Dec2005 $29.56
Dec2004 $26.66
Dec2003 $22.27
Dec2002 $22.11
Dec2001 $23.52
Dec2000 $23.76

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – August 2016
10 Most Undervalued Companies for the Enterprising Investor – July 2016
10 Most Undervalued Companies for the Enterprising Investor – June 2016
10 Most Undervalued Companies for the Enterprising Investor – May 2016
10 Low PE Stocks for the Enterprising Investor – May 2016

Other ModernGraham posts about related companies

Twenty-First Century Fox Inc Valuation – August 2016 $FOXA
Discovery Communications Inc Valuation – August 2016 $DISCA
Scripps Networks Valuation – July 2016 $SNI
Cablevision Systems Corp Valuation – July 2016 $CVC
Time Warner Inc Valuation – July 2016 $TWX
Comcast Corporation Valuation – June 2016 $CMCSA
Viacom Inc Valuation – June 2016 $VIAB
CBS Corporation Valuation – May 2016 $CBS
Graham Holdings Company Valuation – May 2016 $GHC
Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA

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.

Graham Holdings Company Valuation – May 2016 $GHC

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 – March 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 Graham Holdings Company (GHC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Graham Holdings Company is a diversified education and media company. The Company’s operations include educational services; television broadcasting; online, print and local television news; social-media advertising services; home health and hospice care, and manufacturing. The Company’s segments include Kaplan Higher Education, which provides a range of certificate, diploma and degree programs; Kaplan Test Preparation, which includes the Company’s test preparation businesses in pre-college, graduate, health and bar review, as well as new businesses in new economy skills training and in career advising; Kaplan International, which operates businesses in Europe and the Asia Pacific region; television broadcasting, which include operations that are conducted through over five very high frequency television stations serving the Detroit, Houston, San Antonio, Orlando and Jacksonville television markets, and other businesses, which include The Slate Group, The FP Group and SocialCode.

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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. 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 GHC – May 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 $2,663,504,889 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.18 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 330.64% Pass
6. Moderate PEmg Ratio PEmg < 20 10.03 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.11 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 2.18 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.46 Pass
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

GHC value Chart May 2016

EPSmg $47.86
MG Growth Estimate 15.00%
MG Value $1,842.48
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $693.92
MG Value based on 0% Growth $406.78
Market Implied Growth Rate 0.77%
Current Price $480.08
% of Intrinsic Value 26.06%

Graham Holdings Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor is only concerned with the lack of earnings stability over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $17.69 in 2012 to an estimated $47.86 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.77% 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.

Graham Holdings Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

GHC Charts May 2016

Net Current Asset Value (NCAV) -$47.22
Graham Number $65.05
PEmg 10.03
Current Ratio 2.18
PB Ratio 1.11
Dividend Yield 2.43%
Number of Consecutive Years of Dividend Growth 1

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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 Mar2016
Total Current Assets $1,605,489,000
Total Current Liabilities $735,832,000
Long-Term Debt $398,710,000
Total Assets $4,312,525,000
Intangible Assets $1,361,624,000
Total Liabilities $1,872,392,000
Shares Outstanding (Diluted Average) 5,652,000

Earnings Per Share History

Next Fiscal Year Estimate $24.55
Dec2015 -$17.87
Dec2014 $195.03
Dec2013 $32.05
Dec2012 $17.39
Dec2011 $14.70
Dec2010 $31.04
Dec2009 $9.78
Dec2008 $6.87
Dec2007 $30.19
Dec2006 $33.68
Dec2005 $32.59
Dec2004 $34.59
Dec2003 $25.12
Dec2002 $21.34
Dec2001 $24.06
Dec2000 $14.32
Dec1999 $22.30
Dec1998 $41.10
Dec1997 $26.15
Dec1996 $20.05

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $47.86
Dec2015 $55.76
Dec2014 $81.06
Dec2013 $23.05
Dec2012 $17.69
Dec2011 $18.06
Dec2010 $20.60
Dec2009 $17.79
Dec2008 $23.73
Dec2007 $31.85
Dec2006 $31.61
Dec2005 $29.56
Dec2004 $26.66
Dec2003 $22.27
Dec2002 $22.11
Dec2001 $23.52
Dec2000 $23.76

Recommended Reading:

Other ModernGraham posts about the company

10 Most Undervalued Companies for the Defensive Investor – February 2016
10 Low PE Stocks for the Defensive Investor – February 2016
10 Companies Benjamin Graham Would Invest In Today – February 2016
10 Low PE Stocks for the Defensive Investor – January 2016
10 Low PE Stocks for the Defensive Investor – December 2015

Other ModernGraham posts about related companies

Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA
Scripps Networks Interactive Inc Valuation – February 2016 Update $SNI
Walt Disney Co Valuation – December 2015 Update $DIS
Twenty-First Century Fox Inc Valuation – February 2016 Update $FOXA
Scripps Networks Interactive Inc Valuation – February 2016 Update $SNI
Walt Disney Co Valuation – December 2015 Update $DIS
Wal-Mart Stores Inc. Valuation – November 2015 Update $WMT
CBS Corporation Valuation – November 2015 Update $CBS
Time Warner Cable Inc. Valuation – November 2015 Update $TWC
News Corporation Valuation – November 2015 Update $NWSA

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.

Graham Holdings Company Analysis – September 2015 Update $GHC

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 – August 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 Graham Holdings Company (GHC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Graham Holdings Company is a diversified education and media company whose principal operations include educational services, television broadcasting, cable systems and online services, print and local television news. The Company owns Kaplan, which is a provider of educational services; Graham Media Group (WDIV-Detroit, KPRC-Houston, WKMG-Orlando, KSAT-San Antonio, WJXT-Jacksonville); Cable ONE, serving small-city subscribers in 19 Midwestern, western and southern states; The Slate Group (Slate and Slate V); and Foreign Policy. The Company also owns Trove, a digital team focused on innovation and experimentation with emerging technologies; SocialCode, a leading social marketing solutions company; Celtic Healthcare; Forney Corporation; Joyce/Dayton Corp; and Residential Healthcare Group. Kaplan conducts its operations through three segments: Kaplan Higher Education, Kaplan Test Preparation and Kaplan International.

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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. 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]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of GHC – September 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 $3,478,004,903 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.34 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 257.12% Pass
6. Moderate PEmg Ratio PEmg < 20 8.38 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.08 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 2.34 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.78 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

GHC value Chart September 2015

EPSmg $70.23
MG Growth Estimate 15.00%
MG Value $2,703.98
Opinion Undervalued
MG Value based on 3% Growth $1,018.38
MG Value based on 0% Growth $596.98
Market Implied Growth Rate -0.06%
Current Price $588.71
% of Intrinsic Value 21.77%

Graham Holdings Company qualifies for both the Defensive Investor and for the Enterprising Investor.  The Defensive Investor is only concerned with the inconsistent dividend history.  The Enterprising Investor has no initial concerns.  As a result, all value 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 $18.06 in 2011 to an estimated $70.23 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.06% annual earnings loss 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 Graham  Holdings Company (GHC)?  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

GHC Charts September 2015

Net Current Asset Value (NCAV) -$153.32
Graham Number $559.87
PEmg 8.38
Current Ratio 2.34
PB Ratio 1.08
Dividend Yield 1.77%
Number of Consecutive Years of Dividend Growth 2

 

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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

Total Current Assets $2,113,034,000
Total Current Liabilities $903,744,000
Long-Term Debt $947,219,000
Total Assets $6,181,940,000
Intangible Assets $1,923,547,000
Total Liabilities $3,003,080,000
Shares Outstanding (Diluted Average) 5,805,000

Earnings Per Share History

Next Fiscal Year Estimate $25.55
Dec14 $195.03
Dec13 $32.05
Dec12 $17.39
Dec11 $14.70
Dec10 $31.04
Dec09 $9.78
Dec08 $6.87
Dec07 $30.19
Dec06 $33.68
Dec05 $32.59
Dec04 $34.59
Dec03 $25.12
Dec02 $21.34
Dec01 $24.06
Dec00 $14.32
Dec99 $22.30
Dec98 $41.10
Dec97 $26.15
Dec96 $20.05
Dec95 $17.15

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $70.23
Dec14 $81.06
Dec13 $23.05
Dec12 $17.69
Dec11 $18.06
Dec10 $20.60
Dec09 $17.79
Dec08 $23.73
Dec07 $31.85
Dec06 $31.61
Dec05 $29.56
Dec04 $26.66
Dec03 $22.27
Dec02 $22.11
Dec01 $23.52
Dec00 $23.76
Dec99 $27.44

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – October 2014
17 Companies in the Spotlight This Week – 9/20/2014
Graham Holdings Company Annual Stock Valuation – 2014 $GHC
17 Companies in the Spotlight This Week – June 21, 2014
Graham Holdings Company Quarterly Valuation – June 2014 $GHC

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Twenty-First Century Fox Analysis – July 2015 Update $FOXA
Discovery Communications Analysis – 2015 Annual Update $DISCA
CBS Corporation Quarterly Valuation – May 2015 $CBS
Twenty-First Century Fox Inc. Quarterly Valuation – April 2015 $FOXA
Time Warner Inc. Annual Valuation – 2015 $TWX
Comcast Corporation Annual Valuation – 2015 $CMCSA
Cablevision Systems Corporation Annual Valuation – 2015 $CVC

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.

Graham Holdings Company Annual Stock Valuation – 2014 $GHC

GrahamHoldingsBenjamin 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 Undervalued Companies for the Defensive Investor Near 52 Week Lows – September 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 Graham Holdings Company (GHC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Graham Holdings Company, formerly The Washington Post Company is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). In July 2014, Berkshire Hathaway Inc acquired wholly owned subsidiary of Graham Holdings, including WPLG, a Miami-based television station. In July 2014, Graham Holdings Co acquired majority interest in Residential Healthcare Group Inc.
GHC Chart

GHC data by YCharts

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

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

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

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

Valuation Summary

Key Data:

Recent Price $726.28
MG Value $182.57
MG Opinion Overvalued
Value Based on 3% Growth $314.03
Value Based on 0% Growth $184.09
Market-Implied Growth Rate 12.52%
NCAV -$178.92
PEmg 33.54
Current Ratio 1.24
PB Ratio 1.90

Balance Sheet – 6/30/2014

Current Assets $1,135,600,000
Current Liabilities $915,800,000
Total Debt $398,200,000
Total Assets $5,289,700,000
Intangible Assets $1,945,800,000
Total Liabilities $2,457,800,000
Outstanding Shares 7,390,000

Earnings Per Share

2014 (estimate) $27.75
2013 $25.78
2012 $6.09
2011 $15.23
2010 $34.26
2009 $9.78
2008 $6.87
2007 $30.19
2006 $34.21
2005 $32.59
2004 $34.59

Earnings Per Share – ModernGraham

2014 (estimate) $21.66
2013 $18.48
2012 $14.71
2011 $19.10
2010 $21.71
2009 $17.86

Dividend History
GHC Dividend Chart

GHC Dividend data by YCharts

Conclusion:

Graham Holdings does not qualify for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor has concerns with the low current ratio, the insufficient earnings growth over the last ten years, and the high PEmg ratio.  The Enterprising Investor is concerned by the high level of debt relative to the current assets as well as the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation perspective, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $21.71 in 2010 to an estimated $21.66 for 2014.  This demonstrated lack of growth does not support the market’s implied estimate of 12.52% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

Be sure to check out the previous ModernGraham valuations of Graham Holdings Company (GHC) for more 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 Graham Holdings Company (GHC)?  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 Graham Holdings Company (GHC) 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.

Graham Holdings Company Quarterly Valuation – June 2014 $GHC

GrahamHoldingsBenjamin 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 Undervalued Companies for the Defensive Investor.  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 Graham Holdings Company (GHC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Graham Holdings Company, formerly The Washington Post Company, is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC),WPLG-Miami (ABC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). In May 2014, the Company acquired Joyce/Dayton Corp., a manufacturer of screw jacks and other linear motion systems.

GHC Chart

GHC data by YCharts

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

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

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 – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $699.00
MG Value $182.57
MG Opinion Overvalued
Value Based on 3% Growth $314.03
Value Based on 0% Growth $184.09
Market-Implied Growth Rate 11.89%
NCAV -$91.69
PEmg 32.28
Current Ratio 1.87
PB Ratio 1.51

Balance Sheet – 3/31/2014

Current Assets $1,830,800,000
Current Liabilities $981,400,000
Total Debt $403,200,000
Total Assets $5,920,600,000
Intangible Assets $1,797,600,000
Total Liabilities $2,508,400,000
Outstanding Shares 7,390,000

Earnings Per Share

2014 (estimate) $27.75
2013 $25.78
2012 $6.09
2011 $15.23
2010 $34.26
2009 $9.78
2008 $6.87
2007 $30.19
2006 $34.21
2005 $32.59
2004 $34.59

Earnings Per Share – ModernGraham

2014 (estimate) $21.66
2013 $18.48
2012 $14.71
2011 $19.10
2010 $21.71
2009 $17.86

Dividend History
GHC Dividend Chart

GHC Dividend data by YCharts

Conclusion:

Graham Holdings Company is suitable for Enterprising Investors but does not qualify for Defensive Investors.  The Defensive Investor has concerns about the low current ratio, the lack of sufficient earnings growth over the last ten years, and the high PEmg ratio.  The Enterprising Investor’s only concern is the lack of earnings growth over the last five years.  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 overvalued after seeing its EPSmg (normalized earnings) drop from $21.71 in 2010 to an estimated $21.66 for 2014.  This lack of earnings growth does not support the market’s implied estimate of 11.89% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s methods, to return an estimate of intrinsic value that is well above the market price at this time.

Be sure to review the previous ModernGraham Valuations of Graham Holdings Co. (GHC)!

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 Graham Holdings Company (GHC)?  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 Graham Holdings Company 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; this article is not affiliated with the company in any manner.

Graham Holdings Company (GHC) Quarterly Valuation – March 2014

GrahamHoldingsBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Graham Holdings Company fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Graham Holdings Company, formerly The Washington Post Company, is a diversified education and media company whose principal operations include educational services, television broadcasting, cable television systems, and online, print and local TV news. The Company owns Kaplan, a provider of educational services to individuals, schools and businesses, serving over one million students annually with operations in more than 30 countries. Its programs include higher education, test preparation, language instruction and professional training. Its Post-Newsweek Stations, Inc owns six television stations which include WDIV-Detroit (NBC), KPRC-Houston (NBC),WPLG-Miami (ABC), WKMG-Orlando (CBS), KSAT-San Antonio (ABC) and WJXT-Jacksonville (independent). The stations also broadcast digital channels focusing on classic television and lifestyle programming, in addition to operating mobile sites and mobile applications delivering breaking news, weather and community news.

GHC Chart

GHC data by YCharts

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

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

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

  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 – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $717.95
MG Value $175.69
MG Opinion Overvalued
Value Based on 3% Growth $268.01
Value Based on 0% Growth $157.11
Market-Implied Growth Rate 15.17%
NCAV -$109.42
PEmg 38.84
Current Ratio 1.82
PB Ratio 1.61

Balance Sheet – 12/31/2013

Current Assets $1,702,400,000
Current Liabilities $934,100,000
Total Debt $447,600,000
Total Assets $5,811,000,000
Intangible Assets $1,869,500,000
Total Liabilities $2,511,000,000
Outstanding Shares 7,390,000

Earnings Per Share

2013 $25.78
2012 $6.09
2011 $15.23
2010 $34.26
2009 $9.78
2008 $6.87
2007 $30.19
2006 $34.21
2005 $32.59
2004 $34.59

Earnings Per Share – ModernGraham

2013 $18.48
2012 $14.71
2011 $19.10
2010 $21.71
2009 $17.86
2008 $23.83

Dividend History

GHC Dividend Chart

GHC Dividend data by YCharts

Conclusion:

Graham Holdings Company is suitable for the Enterprising Investor but not the Defensive Investor.  For the Defensive Investor, the company has a current ratio that is too low, a PEmg ratio that is too high, and has shown insufficient earnings growth over the ten year period.  The company passes all requirements of the Enterprising Investor.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research, including a review of 5 Undervalued Companies for the Defensive Investor and a Glance at the Dow.  As for the valuation, the company appears significantly overvalued as the earnings have not kept up with the recent rise in price.  EPSmg (normalized earnings) have gone from $17.86 in 2009 to only $18.48, a level of demonstrated growth that does not support the market’s current implied estimate of 15.17% earnings growth.  This leads the ModernGraham valuation model to return an estimate for intrinsic value that is well below the market price at this time.

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 Deere & Co. (DE)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

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

Disclaimer:  The author held a position in Deere & Co. (DE) but none of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.

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

Viacom Inc Valuation – January 2019 $VIAB

Company Profile (excerpt from Reuters): Viacom Inc., incorporated on September 22, 2005, offers global media brands that create television programs, motion pictures, short-form content, applications, games, consumer products, social media experiences and other entertainment content. As of September 30, 2016, the Company offered its services for audiences in more than 180 countries. The Company operates through two segments: Media Networks and Filmed Entertainment. The Company’s Media Networks segment provides entertainment content and related branded products for advertisers, content distributors and retailers. The Company’s Filmed Entertainment segment produces, finances, acquires and distributes motion pictures, television programming and other entertainment content under the Paramount Pictures, Paramount Vantage, Paramount Classics, Paramount Animation, Insurge Pictures, Nickelodeon Movies, MTV Films and Paramount Television brands.

Downloadable PDF version of this valuation:

ModernGraham Valuation of VIAB – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,636,179,217 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 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 31.12% Fail
6. Moderate PEmg Ratio PEmg < 20 6.86 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.57 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 1.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.71 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.23
MG Growth Estimate -1.57%
MG Value $22.62
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $61.31
MG Value based on 0% Growth $35.94
Market Implied Growth Rate -0.82%
Current Price $28.99
% of Intrinsic Value 128.16%

Viacom, Inc. Class B 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 $4.72 in 2015 to an estimated $4.23 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 0.82% annual earnings loss 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 Viacom, Inc. Class B revealed the company was trading below its Graham Number of $41.02. The company pays a dividend of $0.8 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 6.86, which was below the industry average of 27.83, 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 $-25.4.

Viacom, Inc. Class B receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.40
Graham Number $41.02
PEmg 6.86
Current Ratio 1.50
PB Ratio 1.57
Current Dividend $0.80
Dividend Yield 2.76%
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 $6,076,000,000
Total Current Liabilities $4,054,000,000
Long-Term Debt $9,515,000,000
Total Assets $23,783,000,000
Intangible Assets $11,922,000,000
Total Liabilities $16,318,000,000
Shares Outstanding (Diluted Average) 403,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.07
Sep2018 $4.27
Sep2017 $4.68
Sep2016 $3.61
Sep2015 $4.73
Sep2014 $5.43
Sep2013 $4.84
Sep2012 $3.69
Sep2011 $3.59
Dec2009 $2.65
Dec2008 $2.00
Dec2007 $2.72
Dec2006 $2.22
Dec2005 $1.73
Dec2004 $1.84
Dec2003 $1.52
Dec2002 $1.19
Dec2001 $0.58

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.23
Sep2018 $4.39
Sep2017 $4.52
Sep2016 $4.44
Sep2015 $4.72
Sep2014 $4.49
Sep2013 $3.80
Sep2012 $3.17
Sep2011 $2.81
Dec2009 $2.37
Dec2008 $2.19
Dec2007 $2.19
Dec2006 $1.85
Dec2005 $1.57
Dec2004 $1.33
Dec2003 $0.94
Dec2002 $0.55

Recommended Reading:

Other ModernGraham posts about the company

Viacom Inc Valuation – March 2018 $VIAB
Viacom Inc Valuation – June 2016 $VIAB
Viacom Inc. Annual Valuation – 2015 $VIAB
5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – November 2014
5 Undervalued Companies for the Enterprising Investor Near 52 Week Lows – October 2014

Other ModernGraham posts about related companies

Twenty-First Century Fox Inc Valuation – January 2019 $FOX
Walt Disney Co Valuation – November 2018 $DIS
Tegna Inc Valuation – August 2018 $TGNA
E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B
AMC Networks Inc Valuation – July 2018 $AMCX
International Speedway Corp Valuation – July 2018 $ISCA
Cineplex Inc Valuation – July 2018 $TSE-CGX
Graham Holdings Co Valuation – July 2018 $GHC

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.

Twenty-First Century Fox Inc Valuation – January 2019 $FOX

Company Profile (excerpt from Reuters): Twenty-First Century Fox, Inc., incorporated on October 23, 2003, is a media and entertainment company. The Company’s segments include Cable Network Programming; Television; Filmed Entertainment, and Other, Corporate and Eliminations. The Company’s activities are conducted principally in the United States, the United Kingdom, Continental Europe, Asia and Latin America.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FOX – January 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 $89,173,519,944 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.45 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 129.44% Pass
6. Moderate PEmg Ratio PEmg < 20 24.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.09 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.45 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.62 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 $1.97
MG Growth Estimate -3.47%
MG Value $3.07
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $28.62
MG Value based on 0% Growth $16.78
Market Implied Growth Rate 7.95%
Current Price $48.18
% of Intrinsic Value 1569.84%

Twenty-First Century Fox Inc Class A does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with 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 growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.57 in 2015 to an estimated $1.97 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.95% 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 Twenty-First Century Fox Inc Class A revealed the company was trading above its Graham Number of $20.1. The company pays a dividend of $0.36 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 24.41, which was below the industry average of 27.83, 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 $-7.22.

Twenty-First Century Fox Inc Class A 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) -$7.22
Graham Number $20.10
PEmg 24.41
Current Ratio 2.45
PB Ratio 4.09
Current Dividend $0.36
Dividend Yield 0.75%
Number of Consecutive Years of Dividend Growth 5

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 $19,128,000,000
Total Current Liabilities $7,802,000,000
Long-Term Debt $18,379,000,000
Total Assets $54,512,000,000
Intangible Assets $18,787,000,000
Total Liabilities $32,588,000,000
Shares Outstanding (Diluted Average) 1,863,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Jun2018 $2.40
Jun2017 $1.59
Jun2016 $1.42
Jun2015 $3.90
Jun2014 $1.99
Jun2013 $3.03
Jun2012 $0.47
Jun2011 $1.04
Jun2010 $0.97
Jun2009 -$1.29
Jun2008 $1.81
Jun2007 $1.14
Jun2006 $0.76
Jun2005 $0.73
Jun2004 $0.58
Jun2003 $0.31
Jun2002 -$2.74
Jun2001 -$0.56
Jun2000 $0.76
Jun1999 $0.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.97
Jun2018 $2.16
Jun2017 $2.16
Jun2016 $2.35
Jun2015 $2.57
Jun2014 $1.77
Jun2013 $1.39
Jun2012 $0.58
Jun2011 $0.66
Jun2010 $0.54
Jun2009 $0.43
Jun2008 $1.20
Jun2007 $0.83
Jun2006 $0.42
Jun2005 $0.06
Jun2004 -$0.30
Jun2003 -$0.61

Recommended Reading:

Other ModernGraham posts about the company

Twenty-First Century Fox Inc Valuation – March 2018 $FOXA
10 Low PE Stock Picks for the Defensive Investor – February 2017
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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.

Walt Disney Co Valuation – November 2018 $DIS

Company Profile (excerpt from Reuters): The Walt Disney Company, incorporated on July 28, 1995, is a worldwide entertainment company. The Company operates in four business segments: Media Networks, Parks and Resorts, Studio Entertainment, and Consumer Products & Interactive Media. The media networks segment includes cable and broadcast television networks, television production and distribution operations, domestic television stations, and radio networks and stations. The Company’s Walt Disney Imagineering unit designs and develops new theme park concepts and attractions, as well as resort properties. The studio entertainment segment produces and acquires live-action and animated motion pictures, direct-to-video content, musical recordings and live stage plays. The Company also develops and publishes games, primarily for mobile platforms, books, magazines and comic books.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DIS – November 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $168,668,171,474 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.94 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 178.13% Pass
6. Moderate PEmg Ratio PEmg < 20 16.45 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.21 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 0.94 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -16.51 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.89
MG Growth Estimate 10.66%
MG Value $205.58
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $99.97
MG Value based on 0% Growth $58.60
Market Implied Growth Rate 3.98%
Current Price $113.45
% of Intrinsic Value 55.19%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.03 in 2015 to an estimated $6.89 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.98% 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 above the price.

At the time of valuation, further research into Walt Disney Co revealed the company was trading above its Graham Number of $73.44. The company pays a dividend of $1.68 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 16.45, which was below the industry average of 31.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.33.

Walt Disney Co receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.33
Graham Number $73.44
PEmg 16.45
Current Ratio 0.94
PB Ratio 3.21
Current Dividend $1.68
Dividend Yield 1.48%
Number of Consecutive Years of Dividend Growth 2

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $16,825,000,000
Total Current Liabilities $17,860,000,000
Long-Term Debt $17,084,000,000
Total Assets $98,598,000,000
Intangible Assets $38,081,000,000
Total Liabilities $45,766,000,000
Shares Outstanding (Diluted Average) 1,497,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.31
Sep2018 $8.36
Sep2017 $5.69
Sep2016 $5.73
Sep2015 $4.90
Sep2014 $4.26
Sep2013 $3.38
Sep2012 $3.13
Sep2011 $2.52
Sep2010 $2.03
Sep2009 $1.76
Sep2008 $2.28
Sep2007 $2.25
Sep2006 $1.64
Sep2005 $1.19
Sep2004 $1.07
Sep2003 $0.59
Sep2002 $0.60
Sep2001 -$0.02
Sep2000 $0.57
Sep1999 $0.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.89
Sep2018 $6.39
Sep2017 $5.20
Sep2016 $4.73
Sep2015 $4.03
Sep2014 $3.42
Sep2013 $2.85
Sep2012 $2.51
Sep2011 $2.19
Sep2010 $2.01
Sep2009 $1.94
Sep2008 $1.92
Sep2007 $1.61
Sep2006 $1.20
Sep2005 $0.88
Sep2004 $0.67
Sep2003 $0.47

Recommended Reading:

Other ModernGraham posts about the company

Walt Disney Co Valuation – February 2018 $DIS
Walt Disney Co Valuation – March 2017 $DIS
Walt Disney Co Valuation – December 2015 Update $DIS
26 Companies in the Spotlight This Week – 11/22/14
The Walt Disney Company Annual Valuation – 2014 $DIS

Other ModernGraham posts about related companies

Tegna Inc Valuation – August 2018 $TGNA
E.W. Scripps Co Valuation – August 2018 $SSP
Cinemark Holdings Inc Valuation – August 2018 $CNK
Corus Entertainment Inc Valuation – July 2018 $TSE:CJR.B
AMC Networks Inc Valuation – July 2018 $AMCX
International Speedway Corp Valuation – July 2018 $ISCA
Cineplex Inc Valuation – July 2018 $TSE-CGX
Graham Holdings Co Valuation – July 2018 $GHC
News Corp Valuation – June 2018 $NWS
Netflix Inc Valuation – June 2018 $NFLX

Disclaimer:

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

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