Goldman Sachs Group Inc Valuation – April 2019 #GS

Company Profile (excerpt from Reuters): The Goldman Sachs Group, Inc., incorporated on July 21, 1998, is an investment banking, securities and investment management company that provides a range of financial services to corporations, financial institutions, governments and individuals. The Company operates in four business segments: Investment Banking, Institutional Client Services, Investing & Lending, and Investment Management. As of December 2016, it had offices in over 30 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GS – April 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $74,225,517,968 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 62.01% Pass
5. Moderate PEmg Ratio PEmg < 20 11.71 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.86 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $17.28
MG Growth Estimate 3.68%
MG Value $274.01
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $250.54
MG Value based on 0% Growth $146.87
Market Implied Growth Rate 1.61%
Current Price $202.38
% of Intrinsic Value 73.86%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $13.88 in 2015 to an estimated $17.28 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.61% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Goldman Sachs Group Inc revealed the company was trading below its Graham Number of $287.24. The company pays a dividend of $3.15 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 11.71, which was below the industry average of 21.66, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Goldman Sachs Group Inc fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $287.24
PEmg 11.71
PB Ratio 0.86
Dividend Yield 1.56%
TTM Dividend $3.15
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $245,582,000,000
Total Assets $931,796,000,000
Intangible Assets $4,082,000,000
Total Liabilities $841,611,000,000
Shares Outstanding (Diluted Average) 383,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $17.27
Dec2018 $25.27
Dec2017 $9.01
Dec2016 $16.29
Dec2015 $12.14
Dec2014 $17.07
Dec2013 $15.46
Dec2012 $14.13
Dec2011 $4.51
Dec2010 $13.18
Dec2009 $22.13
Nov2008 $4.47
Nov2007 $24.73
Nov2006 $19.69
Nov2005 $11.21
Nov2004 $8.92
Nov2003 $5.87
Nov2002 $4.03
Nov2001 $4.26
Nov2000 $6.00
Nov1999 $5.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $17.28
Dec2018 $16.84
Dec2017 $13.08
Dec2016 $15.08
Dec2015 $13.88
Dec2014 $14.12
Dec2013 $13.06
Dec2012 $11.80
Dec2011 $11.69
Dec2010 $15.80
Dec2009 $16.89
Nov2008 $14.11
Nov2007 $17.32
Nov2006 $12.39
Nov2005 $8.11
Nov2004 $6.31
Nov2003 $5.05

Recommended Reading:

Other ModernGraham posts about the company

Goldman Sachs Group Inc Valuation – November 2018 $GS
Goldman Sachs Group Inc Valuation – February 2018 $GS
Goldman Sachs Group Inc Valuation – June 2016 $GS
10 Low PE Stocks for the Enterprising Investor – June 2016
Stocks Trading Below Their Graham Number – May 2016

Other ModernGraham posts about related companies

American Express Co Valuation – April 2019 #AXP
Broadridge Financial Solutions Inc Valuation – April 2019 #BR
T.Rowe Price Group Inc Valuation – March 2019 #TROW
Moody’s Corp Valuation – March 2019 #MCO
Charles Schwab Corp Valuation – March 2019 #SCHW
Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN

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.

Capri Holdings Inc Valuation – April 2019 #CPRI

Company Profile (excerpt from Reuters): Capri Holdings Limited, formerly Michael Kors Holdings Limited, incorporated on December 13, 2002, is a designer, marketer, distributor and retailer of branded women’s apparel and accessories and men’s apparel bearing the Michael Kors tradename and related trademarks MICHAEL KORS, MICHAEL MICHAEL KORS, and various other related trademarks and logos. The Company operates through three segments: retail, wholesale and licensing. The Retail operations consist of collection stores and lifestyle stores, including concessions and outlet stores, located primarily in the Americas (the United States, Canada and Latin America), Europe and Asia, as well as e-commerce. Wholesale revenues are principally derived from major department and specialty stores located throughout the Americas, Europe and Asia. The Company licenses its trademarks on products, such as fragrances, beauty, eyewear, leather goods, jewelry, watches, coats, men’s suits, swimwear, furs and ties, as well as through geographic licenses.

Downloadable PDF version of this valuation:

ModernGraham Valuation of CPRI – April 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,413,375,503 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.48 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 737.59% Pass
6. Moderate PEmg Ratio PEmg < 20 12.62 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.26 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 2.48 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.95 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 $3.90
MG Growth Estimate 5.84%
MG Value $78.64
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $56.51
MG Value based on 0% Growth $33.13
Market Implied Growth Rate 2.06%
Current Price $49.19
% of Intrinsic Value 62.55%

Capri Holdings Ltd qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.81 in 2015 to an estimated $3.9 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.06% 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 Capri Holdings Ltd revealed the company was trading above its Graham Number of $34.96. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 12.62, which was below the industry average of 46.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.14.

Capri Holdings Ltd performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.14
Graham Number $34.96
PEmg 12.62
Current Ratio 2.48
PB Ratio 3.26
Current Dividend $0.00
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

Balance Sheet Information 12/1/2018
Total Current Assets $3,439,500,000
Total Current Liabilities $1,387,400,000
Long-Term Debt $1,954,700,000
Total Assets $6,028,400,000
Intangible Assets $1,912,900,000
Total Liabilities $3,761,300,000
Shares Outstanding (Diluted Average) 150,268,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.03
Mar2018 $3.82
Mar2017 $3.29
Mar2016 $4.44
Mar2015 $4.28
Mar2014 $3.22
Mar2013 $1.97
Mar2012 $0.78
Mar2011 $0.33
Mar2010 $0.22

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.90
Mar2018 $3.82
Mar2017 $3.70
Mar2016 $3.58
Mar2015 $2.81
Mar2014 $1.81
Mar2013 $0.96
Mar2012 $0.39
Mar2011 $0.17
Mar2010 $0.07

Recommended Reading:

Other ModernGraham posts about the company

Michael Kors Holdings Ltd Valuation – March 2018 $KORS
10 Undervalued Stocks for the Enterprising Investor – August 2017
10 Low PE Stock Picks for the Enterprising Investor – July 2017
5 Undervalued Companies for Value Investors with a Low Beta – July 2017
10 Undervalued Stocks for the Enterprising Investor – July 2017

Other ModernGraham posts about related companies

Ralph Lauren Corp Valuation – March 2019 #RL
Gap Inc Valuation – March 2019 #GPS
PVH Corp Valuation – February 2019 $PVH
VF Corp Valuation – February 2019 $VFC
Foot Locker Inc Valuation – January 2019 $FL
Under Armour Inc Valuation – January 2019 $UA
Hanesbrands Inc Valuation – January 2019 $HBI
L Brands Inc Valuation – January 2019 $LB
Nike Inc Valuation – November 2018 $NKE
Deckers Outdoor Corp Valuation – May 2018 $DECK

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.

Nielsen Holdings PLC Valuation – March 2019 #NLSN

Company Profile (excerpt from Reuters): Nielsen Holdings plc, incorporated on February 4, 2015, is a performance management company. The Company provides to clients an understanding of what consumers watch and what they buy and how those choices intersect. The Company’s segments include what consumers buy (Buy), consisting principally of market research information and analytical services, and what consumers watch and listen to (Watch), consisting principally of television, radio, online and mobile audience and advertising measurement services and corresponding analytics.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NLSN – 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 $8,413,430,517 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.21 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 -98.61% Fail
6. Moderate PEmg Ratio PEmg < 20 88.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.76 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.21 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 23.93 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.27
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $3.89
MG Value based on 0% Growth $2.28
Market Implied Growth Rate 39.91%
Current Price $23.67
% of Intrinsic Value N/A

Nielsen Holdings 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 stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.28 in 2015 to an estimated $0.27 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 39.91% 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 Nielsen Holdings PLC revealed the company was trading above its Graham Number of $12.16. The company pays a dividend of $1.39 per share, for a yield of 5.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 88.32, which was above the industry average of 17.84. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.53.

Nielsen Holdings 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) -$28.53
Graham Number $12.16
PEmg 88.32
Current Ratio 1.21
PB Ratio 2.76
Current Dividend $1.39
Dividend Yield 5.87%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,003,000,000
Total Current Liabilities $1,657,000,000
Long-Term Debt $8,280,000,000
Total Assets $15,179,000,000
Intangible Assets $12,011,000,000
Total Liabilities $12,136,000,000
Shares Outstanding (Diluted Average) 355,195,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.82
Dec2018 -$2.00
Dec2017 $1.20
Dec2016 $1.39
Dec2015 $1.54
Dec2014 $1.00
Dec2013 $1.94
Dec2012 $0.75
Dec2011 $0.23
Dec2010 $0.46
Dec2009 -$1.79
Dec2008 -$2.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.27
Dec2018 $0.20
Dec2017 $1.34
Dec2016 $1.38
Dec2015 $1.28
Dec2014 $1.06
Dec2013 $0.83
Dec2012 -$0.01
Dec2011 -$0.51
Dec2010 -$0.85
Dec2009 -$1.29
Dec2008 -$0.87

Recommended Reading:

Other ModernGraham posts about the company

Nielsen Holdings PLC Valuation – June 2018 $NLSN
10 Best Stocks for Value Investors This Week – 7/22/17
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Nielsen NV Valuation – August 2016 $NLSN
Nielsen NV Analysis – July 2015 Update $NLSN

Other ModernGraham posts about related companies

Interpublic Group of Companies Inc Valuation – March 2019 #IPG
Omnicom Group Inc Valuation – February 2019 $OMC
Nielsen Holdings PLC Valuation – June 2018 $NLSN
Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG

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.

Paypal Holdings Inc Valuation – March 2019 #PYPL

Company Profile (excerpt from Reuters): PayPal Holdings, Inc., incorporated on January 30, 2015, is a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants. The Company’s combined payment solutions, including its PayPal, PayPal Credit, Braintree, Venmo, Xoom and Paydiant products, compose its Payments Platform. The Company operates a two-sided global technology platform that links its customers, both merchants and consumers, around the globe to facilitate the processing of payment transactions, allowing it to connect merchants and consumers. The Company allows its customers to use their account for both purchase and paying for goods, as well as to transfer and withdraw funds. The Company enables consumers to exchange funds with merchants using a range of funding sources, which include a bank account, a PayPal account balance, a PayPal Credit account, a credit and debit card or other stored value products, such as coupons and gift cards. The Company offers consumers person-to-person (P2P) payment solutions through its PayPal Website and mobile application, Venmo and Xoom.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PYPL – 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 $119,362,281,153 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.27 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 19566.67% Pass
6. Moderate PEmg Ratio PEmg < 20 54.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.89 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.27 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.88
MG Growth Estimate 15.00%
MG Value $72.25
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $27.21
MG Value based on 0% Growth $15.95
Market Implied Growth Rate 22.84%
Current Price $101.69
% of Intrinsic Value 140.74%

Paypal Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the low current ratio, 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 growing its EPSmg (normalized earnings) from $0.58 in 2015 to an estimated $1.88 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 22.84% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Paypal Holdings Inc revealed the company was trading above its Graham Number of $28.32. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 54.19, which was above the industry average of 21.22. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.2.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $4.20
Graham Number $28.32
PEmg 54.19
Current Ratio 1.27
PB Ratio 7.89
Current Dividend $0.00
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

Balance Sheet Information 12/1/2018
Total Current Assets $32,963,000,000
Total Current Liabilities $25,904,000,000
Long-Term Debt $0
Total Assets $43,332,000,000
Intangible Assets $7,109,000,000
Total Liabilities $27,946,000,000
Shares Outstanding (Diluted Average) 1,194,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.72
Dec2018 $1.71
Dec2017 $1.47
Dec2016 $1.15
Dec2015 $1.00
Dec2014 $0.34
Dec2013 $0.78

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.88
Dec2018 $1.35
Dec2017 $1.09
Dec2016 $0.82
Dec2015 $0.58
Dec2014 $0.32
Dec2013 $0.26

Recommended Reading:

Other ModernGraham posts about the company

PayPal Holdings Inc Valuation – June 2018 $PYPL
Paypal Holdings Inc Valuation – Initial Coverage $PYPL

Other ModernGraham posts about related companies

Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN
S&P Global Inc Valuation – March 2019 #SPGI
Equifax Inc Valuation – March 2019 #EFX
CME Group Inc Valuation – March 2019 #CME
Northern Trust Corp Valuation – March 2019 #NTRS
Affiliated Managers Group Inc Valuation – February 2019 $AMG
Bank of New York Mellon Corp Valuation – February 2019 $BK
Western Union Co Valuation – February 2019 $WU

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.

Lamb Weston Holdings Inc Valuation – March 2019 #LW

Company Profile (excerpt from Reuters): Lamb Weston Holdings, Inc. (Lamb Weston), is a supplier of frozen potato, sweet potato, appetizer and vegetable products to restaurants and retailers around the world. The Company’s segments include Global, Foodservice, Retail and Other. The Company, along with its joint venture partners, offers a product portfolio to a channel and customer base in over 100 countries. Its offerings include Sweet Things, Straight Cut Fries, Crinkle/Concertina, Wedge, Twister/Curly Fries, Criss Cut/Waffle Fries, Puff, Chip, Slice, Potato Skin, Mashed, Hash Browns/Formed, Steak Cut Fries, Platter Cut Fries, Trim Fries, Chef Cut Fries, Ribcut and Appetizers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LW – 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 $10,269,088,976 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.63 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 26533.33% Pass
6. Moderate PEmg Ratio PEmg < 20 28.01 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -61.84 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.63 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.30 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 $2.50
MG Growth Estimate 15.00%
MG Value $96.35
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $36.29
MG Value based on 0% Growth $21.27
Market Implied Growth Rate 9.76%
Current Price $70.10
% of Intrinsic Value 72.75%

Lamb Weston Holdings Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.61 in 2015 to an estimated $2.5 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.76% 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 Lamb Weston Holdings Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.76 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 28.01, which was above the industry average of 26.89. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.15.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$14.15
Graham Number $0.00
PEmg 28.01
Current Ratio 1.63
PB Ratio -61.84
Current Dividend $0.76
Dividend Yield 1.08%
Number of Consecutive Years of Dividend Growth 2

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 11/1/2018
Total Current Assets $1,134,600,000
Total Current Liabilities $696,800,000
Long-Term Debt $2,321,800,000
Total Assets $3,052,500,000
Intangible Assets $167,000,000
Total Liabilities $3,219,600,000
Shares Outstanding (Diluted Average) 147,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.95
May2018 $2.82
May2017 $2.22
May2016 $1.51
May2015 $1.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.50
May2018 $2.08
May2017 $1.51
May2016 $0.99
May2015 $0.61

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Sysco Corp Valuation – March 2019 $SYY
General Mills Inc Valuation – February 2019 $GIS
McCormick & Co Valuation – February 2019 $MKC
Archer-Daniels Midland Co Valuation – February 2019 $ADM
Conagra Brands Inc Valuation – February 2019 $CAG
Monster Beverage Corp Valuation – February 2019 $MNST
Campbell Soup Co Valuation – January 2019 $CPB
Kellogg Co Valuation – January 2019 $K
PepsiCo Inc Valuation – January 2019 $PEP
The Hershey Co Valuation – January 2019 $HSY

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.

IQVIA Holdings Inc Valuation – February 2019 $IQV

Company Profile (excerpt from Reuters): IQVIA Holdings Inc., formerly Quintiles IMS Holdings, Inc., incorporated on October 3, 2016, provides integrated information and technology-enabled healthcare services. The Company operates through segments, including Commercial Solutions; Research & Development Solutions, and Integrated Engagement Services. It serves pharmaceutical, biotechnology, medical device and healthcare companies. The Company has its operations in the Americas, Europe and Africa, and the Asia-Pacific.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IQV – 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 $27,790,759,500 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.10 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 841.73% Pass
6. Moderate PEmg Ratio PEmg < 20 37.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.13 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.10 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 32.08 Fail
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 $3.78
MG Growth Estimate 9.77%
MG Value $106.06
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $54.86
MG Value based on 0% Growth $32.16
Market Implied Growth Rate 14.36%
Current Price $140.82
% of Intrinsic Value 132.77%

Iqvia Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, 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 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 growing its EPSmg (normalized earnings) from $2.29 in 2015 to an estimated $3.78 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.36% 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 Iqvia Holdings Inc revealed the company was trading above its Graham Number of $68.27. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 37.22, which was below the industry average of 51.18, 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 $-57.46.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$57.46
Graham Number $68.27
PEmg 37.22
Current Ratio 1.10
PB Ratio 4.13
Current Dividend $0.00
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

Balance Sheet Information 12/1/2018
Total Current Assets $3,874,000,000
Total Current Liabilities $3,534,000,000
Long-Term Debt $10,907,000,000
Total Assets $22,549,000,000
Intangible Assets $17,751,000,000
Total Liabilities $15,595,000,000
Shares Outstanding (Diluted Average) 204,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.11
Dec2018 $1.24
Dec2017 $5.74
Dec2016 $0.47
Dec2015 $3.08
Dec2014 $2.72
Dec2013 $1.77
Dec2012 $1.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.78
Dec2018 $2.63
Dec2017 $3.14
Dec2016 $1.85
Dec2015 $2.29
Dec2014 $1.66
Dec2013 $0.96
Dec2012 $0.46

Recommended Reading:

Other ModernGraham posts about the company

IQVIA Holdings Inc Valuation – Initial Coverage May 2018 $IQV

Other ModernGraham posts about related companies

Thermo Fisher Scientific Inc Valuation – February 2019 $TMO
Illumina Inc Valuation – February 2019 $ILMN
Waters Corp Valuation – February 2019 $WAT
Cerner Corp Valuation – February 2019 $CERN
HCA Healthcare Inc Valuation – February 2019 $HCA
Stryker Corp Valuation – February 2019 $SYK
Align Technology Inc Valuation – February 2019 $ALGN
Quest Diagnostics Inc Valuation – February 2019 $DGX
AmerisourceBergen Corp Valuation – February 2019 $ABC
Abiomed Inc Valuation – February 2019 $ABMD

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.

Hilton Worldwide Holdings Inc Valuation – February 2019 $HLT

Company Profile (excerpt from Reuters): Hilton Worldwide Holdings Inc., incorporated on March 18, 2010, is a hospitality company. The Company is engaged in owning, leasing, managing and franchising hotels and resorts. The Company’s segments include ownership, and management and franchise. As of December 31, 2016, the Company owned, leased, managed or franchised 4,875 hotel and resort properties, totaling 796,440 rooms in 104 countries and territories. Its brand portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio-A Collection by Hilton, DoubleTree by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton and Home2 Suites by Hilton.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HLT – 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 $23,940,242,250 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.76 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 281.62% Pass
6. Moderate PEmg Ratio PEmg < 20 29.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 43.81 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 0.76 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.50 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 $2.79
MG Growth Estimate 2.12%
MG Value $35.55
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $40.44
MG Value based on 0% Growth $23.70
Market Implied Growth Rate 10.41%
Current Price $81.75
% of Intrinsic Value 229.93%

Hilton Hotels Corporation Common Stock 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, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.44 in 2015 to an estimated $2.79 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.41% 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 Hilton Hotels Corporation Common Stock revealed the company was trading above its Graham Number of $11.44. The company pays a dividend of $0.6 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 29.32, which was below the industry average of 31.44, 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 $-38.31.

Hilton Hotels Corporation Common Stock 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) -$38.31
Graham Number $11.44
PEmg 29.32
Current Ratio 0.76
PB Ratio 43.81
Current Dividend $0.60
Dividend Yield 0.73%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,983,000,000
Total Current Liabilities $2,615,000,000
Long-Term Debt $7,266,000,000
Total Assets $13,995,000,000
Intangible Assets $11,316,000,000
Total Liabilities $13,437,000,000
Shares Outstanding (Diluted Average) 299,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.11
Dec2018 $2.50
Dec2017 $3.32
Dec2016 $1.03
Dec2015 $4.26
Dec2014 $2.05
Dec2013 $1.35
Dec2012 $1.14
Dec2011 $0.81
Dec2010 $0.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.79
Dec2018 $2.63
Dec2017 $2.60
Dec2016 $2.15
Dec2015 $2.44
Dec2014 $1.41
Dec2013 $0.97
Dec2012 $0.67
Dec2011 $0.37
Dec2010 $0.13

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Carnival Corp Valuation – February 2019 $CCL
Marriott International Inc Valuation – January 2019 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – January 2019 $NCLH
Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT

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.

CF Industries Holdings Inc Valuation – February 2019 $CF

Company Profile (excerpt from Reuters): CF Industries Holdings, Inc., incorporated on April 15, 2005, is a manufacturer and distributor of nitrogen fertilizer, and other nitrogen products. The Company’s nitrogen fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Its other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to the Company’s industrial customers, and compound fertilizer products (nitrogen, phosphorus and potassium or NPKs). The Company’s segments include ammonia, granular urea, UAN, AN and other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CF – 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 $9,940,168,299 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.03 Pass
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 -79.13% Fail
6. Moderate PEmg Ratio PEmg < 20 33.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.64 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 2.03 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.81 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.30
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $18.79
MG Value based on 0% Growth $11.02
Market Implied Growth Rate 12.37%
Current Price $43.07
% of Intrinsic Value N/A

CF Industries Holdings, 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 stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.93 in 2014 to an estimated $1.3 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.37% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into CF Industries Holdings, Inc. revealed the company was trading above its Graham Number of $19.57. The company pays a dividend of $1.2 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 33.23, which was below the industry average of 34.35, 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 $-22.94.

CF Industries Holdings, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.94
Graham Number $19.57
PEmg 33.23
Current Ratio 2.03
PB Ratio 1.64
Current Dividend $1.20
Dividend Yield 2.79%
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 $1,597,000,000
Total Current Liabilities $788,000,000
Long-Term Debt $4,697,000,000
Total Assets $13,156,000,000
Intangible Assets $2,480,000,000
Total Liabilities $6,993,000,000
Shares Outstanding (Diluted Average) 235,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.11
Dec2017 $1.53
Dec2016 -$1.19
Dec2015 $2.96
Dec2014 $5.42
Dec2013 $4.95
Dec2012 $5.72
Dec2011 $4.40
Dec2010 $1.07
Dec2009 $1.48
Dec2008 $2.43
Dec2007 $1.31
Dec2006 $0.12
Dec2005 -$0.14
Dec2004 $0.25
Dec2003 -$0.07
Dec2002 -$0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.30
Dec2017 $1.84
Dec2016 $2.52
Dec2015 $4.48
Dec2014 $4.93
Dec2013 $4.30
Dec2012 $3.65
Dec2011 $2.46
Dec2010 $1.42
Dec2009 $1.41
Dec2008 $1.18
Dec2007 $0.47
Dec2006 $0.04
Dec2005 -$0.01
Dec2004 $0.04
Dec2003 -$0.05
Dec2002 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

CF Industries Holdings Inc Valuation – April 2018 $CF
CF Industries Holdings Inc Valuation – August 2016 $CF
CF Industries Valuation – March 2016 $CF
10 Companies Benjamin Graham Would Invest In Today – March 2016
10 Most Undervalued Companies for the Defensive Investor – February 2016

Other ModernGraham posts about related companies

Scotts Miracle Gro Co Valuation – August 2018 $SMG
Intrepid Potash Inc Valuation – July 2018 $IPI
Mosaic Company Valuation – May 2018 $MOS
CF Industries Holdings Inc Valuation – April 2018 $CF
LSB Industries Inc Valuation – Initial Coverage $LXU
Monsanto Company Valuation – March 2017 $MON
Mosaic Company Valuation – February 2017 $MOS
Scotts Miracle-Gro Inc Valuation – Initial Coverage $SMG
Intrepid Potash Inc Valuation – Initial Coverage $IPI
CF Industries Holdings Inc Valuation – August 2016 $CF

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.

Booking Holdings Inc Valuation – January 2019 $BKNG

Company Profile (excerpt from Reuters): Booking Holdings Inc., formerly The Priceline Group Inc., incorporated on July 30, 1998, is a provider of travel and restaurant online reservation and related services. The Company, through its online travel companies (OTCs), connects consumers wishing to make travel reservations with providers of travel services across the world. It offers consumers an array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through its Booking.com, priceline.com and agoda.com brands. Its other brands include KAYAK, Rentalcars.com and OpenTable, Inc. (OpenTable).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BKNG – 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 $84,685,840,413 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.41 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 329.88% Pass
6. Moderate PEmg Ratio PEmg < 20 30.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.77 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 2.41 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.57 Fail
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 $59.93
MG Growth Estimate 11.55%
MG Value $1,894.30
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $868.95
MG Value based on 0% Growth $509.38
Market Implied Growth Rate 11.00%
Current Price $1,827.90
% of Intrinsic Value 96.49%

Booking Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of 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 Fairly Valued after growing its EPSmg (normalized earnings) from $33.85 in 2014 to an estimated $59.93 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 11% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Booking Holdings Inc revealed the company was trading above its Graham Number of $677.42. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 30.5, which was below the industry average of 38.01, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-103.68.

Booking Holdings Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$103.68
Graham Number $677.42
PEmg 30.50
Current Ratio 2.41
PB Ratio 8.77
Current Dividend $0.00
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

Balance Sheet Information 9/1/2018
Total Current Assets $9,467,847,000
Total Current Liabilities $3,930,224,000
Long-Term Debt $8,703,901,000
Total Assets $24,370,476,000
Intangible Assets $4,962,404,000
Total Liabilities $14,418,666,000
Shares Outstanding (Diluted Average) 47,751,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $87.79
Dec2017 $46.86
Dec2016 $42.65
Dec2015 $49.45
Dec2014 $45.67
Dec2013 $36.11
Dec2012 $27.66
Dec2011 $20.63
Dec2010 $10.73
Dec2009 $9.88
Dec2008 $3.74
Dec2007 $3.42
Dec2006 $1.68
Dec2005 $4.21
Dec2004 $0.76
Dec2003 $0.27
Dec2002 -$0.57
Dec2001 -$0.48
Dec2000 -$11.82
Dec1999 -$47.39
Dec1998 -$8.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $59.93
Dec2017 $45.38
Dec2016 $43.20
Dec2015 $40.95
Dec2014 $33.85
Dec2013 $25.63
Dec2012 $18.43
Dec2011 $12.44
Dec2010 $7.53
Dec2009 $5.48
Dec2008 $3.11
Dec2007 $2.55
Dec2006 $1.83
Dec2005 $1.55
Dec2004 -$0.64
Dec2003 -$4.89
Dec2002 -$9.56

Recommended Reading:

Other ModernGraham posts about the company

Booking Holdings Inc Valuation – April 2018 $BKNG

Other ModernGraham posts about related companies

TripAdvisor Inc Valuation – January 2019 $TRIP
ILG Inc Valuation – July 2018 $ILG
Royal Caribbean Cruises Ltd Valuation – Initial Coverage June 2018 $RCL
Expedia Group Inc Valuation – May 2018 $EXPE
Booking Holdings Inc Valuation – April 2018 $BKNG
TripAdviser Inc Valuation – March 2018 $TRIP
Expedia Inc Valuation – February 2017 $EXPE
Priceline Group Inc Valuation – July 2016 $PCLN
TripAdvisor Inc Valuation – June 2016 $TRIP
TripAdvisor Inc. Valuation – November 2015 Update $TRIP

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.

Norwegian Cruise Line Holdings Ltd Valuation – January 2019 $NCLH

Company Profile (excerpt from Reuters): Norwegian Cruise Line Holdings Ltd. (NCLH), incorporated on February 21, 2011, is a global cruise company. The Company operates the Norwegian Cruise Line, Oceania Cruises and Regent Seven Seas Cruises brands. The Company had 25 ships with approximately 50,400 Berths, as of May 1, 2017. The Company’s brands offer itineraries to various destinations around the world, including Europe, Asia, Australia, New Zealand, South America, Africa, Canada, Bermuda, Caribbean, Alaska and Hawaii. The Company’s brands offer various features, amenities, and activities, including various accommodations, multiple dining venues, bars and lounges, spa, casino and retail shopping areas and various entertainment choices. All the brands offer a selection of shore excursions at each port of call, as well as hotel packages for stays before or after a voyage.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NCLH – 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 $10,517,052,862 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.24 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 867.56% Pass
6. Moderate PEmg Ratio PEmg < 20 14.73 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.72 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.24 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.53 Fail
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 $3.24
MG Growth Estimate 15.00%
MG Value $124.92
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $47.05
MG Value based on 0% Growth $27.58
Market Implied Growth Rate 3.12%
Current Price $47.81
% of Intrinsic Value 38.27%

Norwegian Cruise Line Holdings Ltd 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, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 Undervalued after growing its EPSmg (normalized earnings) from $0.95 in 2014 to an estimated $3.24 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.12% 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 Norwegian Cruise Line Holdings Ltd revealed the company was trading below its Graham Number of $49.62. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.73, which was below the industry average of 29.4, 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 $-37.67.

Norwegian Cruise Line Holdings Ltd receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.67
Graham Number $49.62
PEmg 14.73
Current Ratio 0.24
PB Ratio 1.72
Current Dividend $0.00
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

Balance Sheet Information 9/1/2018
Total Current Assets $727,408,000
Total Current Liabilities $3,052,179,000
Long-Term Debt $5,875,252,000
Total Assets $15,316,122,000
Intangible Assets $2,241,747,000
Total Liabilities $9,118,032,000
Shares Outstanding (Diluted Average) 222,753,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.35
Dec2017 $3.31
Dec2016 $2.78
Dec2015 $1.86
Dec2014 $1.62
Dec2013 $0.49
Dec2012 $0.94
Dec2011 $0.62
Dec2010 $0.13
Dec2009 $0.33

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.24
Dec2017 $2.47
Dec2016 $1.87
Dec2015 $1.32
Dec2014 $0.95
Dec2013 $0.58
Dec2012 $0.55
Dec2011 $0.31
Dec2010 $0.13
Dec2009 $0.11

Recommended Reading:

Other ModernGraham posts about the company

Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH

Other ModernGraham posts about related companies

Wyndham Worldwide Corp Valuation – May 2018 $WYN
Carnival Corp Valuation – April 2018 $CCL
Marriott International Inc Valuation – March 2018 $MAR
Norwegian Cruise Line Holdings Ltd Valuation – Initial Coverage $NCLH
Wyndham Worldwide Corp Valuation – January 2017 $WYN
ILG Inc Valuation – Initial Coverage $ILG
Starwood Hotels & Resorts Worldwide Inc Valuation – August 2016 $HOT
Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT

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.

Back To Top