Universal Health Services Inc Valuation – April 2019 #UHS

Company Profile (excerpt from Reuters): Universal Health Services, Inc. is a holding company. The Company’s principal business is owning and operating, through its subsidiaries, acute care hospitals and outpatient facilities, and behavioral healthcare facilities. The Company’s segments include Acute Care Hospital Services, Behavioral Health Services and Other. As of August 1, 2018, the Company owned and/or operated more than 326 inpatient facilities, and 32 outpatient and other facilities, located in 37 states, Washington, District of Columbia, the United Kingdom, Puerto Rico and the United States Virgin Islands. The Company’s hospitals provide a range of services, such as oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. As of February 28, 2017, its acute care facilities located in the United States included 26 inpatient acute care hospitals; four free-standing emergency departments, and four outpatient surgery/cancer care centers and one surgical hospital.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of UHS – April 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,167,567,641 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 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 136.21% Pass
6. Moderate PEmg Ratio PEmg < 20 15.96 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.05 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 $8.40
MG Growth Estimate 7.49%
MG Value $197.22
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $121.76
MG Value based on 0% Growth $71.38
Market Implied Growth Rate 3.73%
Current Price $134.03
% of Intrinsic Value 67.96%

Universal Health Services, Inc. Class B qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current 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 feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.6 in 2015 to an estimated $8.4 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.73% 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 Universal Health Services, Inc. Class B revealed the company was trading above its Graham Number of $112.47. The company pays a dividend of $0.4 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was 15.96, which was below the industry average of 47.79, 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 $-41.66.

Universal Health Services, Inc. Class B performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$41.66
Graham Number $112.47
PEmg 15.96
Current Ratio 1.34
PB Ratio 2.27
Current Dividend $0.40
Dividend Yield 0.30%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,937,802,000
Total Current Liabilities $1,448,738,000
Long-Term Debt $3,935,187,000
Total Assets $11,265,480,000
Intangible Assets $3,844,628,000
Total Liabilities $5,799,687,000
Shares Outstanding (Diluted Average) 92,706,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.65
Dec2018 $8.31
Dec2017 $7.81
Dec2016 $7.14
Dec2015 $6.76
Dec2014 $5.42
Dec2013 $5.14
Dec2012 $4.53
Dec2011 $4.04
Dec2010 $2.34
Dec2009 $2.64
Dec2008 $1.96
Dec2007 $1.59
Dec2006 $2.28
Dec2005 $2.00
Dec2004 $1.38
Dec2003 $1.60
Dec2002 $1.37
Dec2001 $0.80
Dec2000 $0.75
Dec1999 $0.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.40
Dec2018 $7.54
Dec2017 $6.92
Dec2016 $6.25
Dec2015 $5.60
Dec2014 $4.78
Dec2013 $4.22
Dec2012 $3.54
Dec2011 $2.87
Dec2010 $2.24
Dec2009 $2.16
Dec2008 $1.89
Dec2007 $1.83
Dec2006 $1.87
Dec2005 $1.59
Dec2004 $1.32
Dec2003 $1.20

Recommended Reading:

Other ModernGraham posts about the company

Universal Health Services Inc Valuation – June 2018 $UHS
Universal Health Services Inc Valuation – August 2017 $UHS
Universal Health Services Inc Valuation – August 2016 $UHS
Universal Health Services Inc. Analysis – Initial Coverage $UHS

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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.

Public Service Enterprise Group Inc Valuation – March 2019 #PEG

Company Profile (excerpt from Reuters): Public Service Enterprise Group Incorporated (PSEG), incorporated on July 25, 1985, is a holding company. The Company is an energy company with operations located primarily in the Northeastern and Mid- Atlantic United States. The Company’s segments include Public Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power) and Other. Its other subsidiaries include PSEG Energy Holdings L.L.C. (Energy Holdings), which earns its revenues primarily from its portfolio of lease investments; PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) transmission and distribution (T&D) system under a contractual agreement, and PSEG Services Corporation (Services), which provides its operating subsidiaries with certain management, administrative and general services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PEG – 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 $30,002,014,276 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.71 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 5.96% Fail
6. Moderate PEmg Ratio PEmg < 20 20.69 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 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 0.71 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.87
MG Growth Estimate -0.25%
MG Value $22.99
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $41.63
MG Value based on 0% Growth $24.41
Market Implied Growth Rate 6.10%
Current Price $59.41
% of Intrinsic Value 258.42%

Public Service Enterprise Group 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 growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings 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 $2.92 in 2015 to an estimated $2.87 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.1% 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 Public Service Enterprise Group Inc. revealed the company was trading above its Graham Number of $44.76. The company pays a dividend of $1.8 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.69, which was below the industry average of 23.71, 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 $-54.13.

Public Service Enterprise Group 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) -$54.13
Graham Number $44.76
PEmg 20.69
Current Ratio 0.71
PB Ratio 2.10
Current Dividend $1.80
Dividend Yield 3.03%
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
Total Current Assets $3,507,000,000
Total Current Liabilities $4,935,000,000
Long-Term Debt $13,168,000,000
Total Assets $45,326,000,000
Intangible Assets $159,000,000
Total Liabilities $30,949,000,000
Shares Outstanding (Diluted Average) 507,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.13
Dec2018 $2.83
Dec2017 $3.10
Dec2016 $1.75
Dec2015 $3.30
Dec2014 $2.99
Dec2013 $2.45
Dec2012 $2.51
Dec2011 $2.96
Dec2010 $3.08
Dec2009 $3.14
Dec2008 $2.34
Dec2007 $2.62
Dec2006 $1.46
Dec2005 $1.35
Dec2004 $1.52
Dec2003 $2.54
Dec2002 $0.57
Dec2001 $1.84
Dec2000 $1.79
Dec1999 -$0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.87
Dec2018 $2.76
Dec2017 $2.72
Dec2016 $2.56
Dec2015 $2.92
Dec2014 $2.75
Dec2013 $2.70
Dec2012 $2.82
Dec2011 $2.92
Dec2010 $2.78
Dec2009 $2.48
Dec2008 $2.05
Dec2007 $1.90
Dec2006 $1.53
Dec2005 $1.56
Dec2004 $1.66
Dec2003 $1.59

Recommended Reading:

Other ModernGraham posts about the company

Public Service Enterprise Group Inc Valuation – June 2018 $PEG
Public Service Enterprise Group Inc Valuation – July 2017 $PEG
Public Service Enterprise Group Inc Valuation – August 2016 $PEG
Public Service Enterprise Group Inc. Analysis – 2015 Update $PEG
Public Service Enterprise Group Inc. Annual Valuation – 2014 $PEG

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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.

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

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TROW – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,699,005,370 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.99 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 119.75% Pass
6. Moderate PEmg Ratio PEmg < 20 16.37 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.97 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 6.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.11
MG Growth Estimate 6.95%
MG Value $136.92
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $88.66
MG Value based on 0% Growth $51.97
Market Implied Growth Rate 3.94%
Current Price $100.12
% of Intrinsic Value 73.12%

T. Rowe Price Group Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.18 in 2015 to an estimated $6.11 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.94% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into T. Rowe Price Group Inc revealed the company was trading above its Graham Number of $59.52. The company pays a dividend of $2.8 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.37, which was below the industry average of 21.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.69.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.69
Graham Number $59.52
PEmg 16.37
Current Ratio 6.99
PB Ratio 3.97
Current Dividend $2.80
Dividend Yield 2.80%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,974,800,000
Total Current Liabilities $282,700,000
Long-Term Debt $0
Total Assets $7,689,300,000
Intangible Assets $665,700,000
Total Liabilities $1,565,000,000
Shares Outstanding (Diluted Average) 243,000,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

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

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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.

Analog Devices Inc Valuation – March 2019 #ADI

Company Profile (excerpt from Reuters): Analog Devices, Inc. (Analog Devices), incorporated on January 18, 1965, designs, manufactures and markets a portfolio of solutions that leverage high-performance analog, mixed-signal and digital signal processing(DSP) technology, including integrated circuits (ICs), algorithms, software and subsystems. The Company provides Analog Products, such as Converters, Amplifiers/Radio Frequency, Other Analog, and Power Management and Reference. It also offers Digital Signal Processing Products (DSPs). The Company operates in the United States, Rest of North/South America, Europe, Japan and China.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADI – 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 $40,551,370,837 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 Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.98% Pass
6. Moderate PEmg Ratio PEmg < 20 29.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.54 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 2.34 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.49 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.75
MG Growth Estimate 11.06%
MG Value $114.96
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $54.43
MG Value based on 0% Growth $31.91
Market Implied Growth Rate 10.41%
Current Price $110.06
% of Intrinsic Value 95.74%

Analog Devices, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.16 in 2015 to an estimated $3.75 for 2019. This level of demonstrated earnings growth supports 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 within a margin of safety relative to the price.

At the time of valuation, further research into Analog Devices, Inc. revealed the company was trading above its Graham Number of $59.5. The company pays a dividend of $1.89 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 29.32, which was below the industry average of 35.5, 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 $-22.17.

Analog Devices, 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) -$22.17
Graham Number $59.50
PEmg 29.32
Current Ratio 2.34
PB Ratio 3.54
Current Dividend $1.89
Dividend Yield 1.72%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $1,985,180,000
Total Current Liabilities $849,955,000
Long-Term Debt $6,234,517,000
Total Assets $21,828,278,000
Intangible Assets $16,885,588,000
Total Liabilities $10,242,841,000
Shares Outstanding (Diluted Average) 372,506,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.30
Oct2018 $3.97
Oct2017 $2.07
Oct2016 $2.76
Oct2015 $2.20
Oct2014 $1.98
Oct2013 $2.14
Oct2012 $2.13
Oct2011 $2.81
Oct2010 $2.33
Oct2009 $0.85
Oct2008 $2.67
Oct2007 $1.50
Oct2006 $1.48
Oct2005 $1.08
Oct2004 $1.45
Oct2003 $0.78
Oct2002 $0.28
Oct2001 $0.93
Oct2000 $1.59
Oct1999 $0.55

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.75
Oct2018 $2.85
Oct2017 $2.27
Oct2016 $2.33
Oct2015 $2.16
Oct2014 $2.19
Oct2013 $2.21
Oct2012 $2.22
Oct2011 $2.18
Oct2010 $1.84
Oct2009 $1.56
Oct2008 $1.83
Oct2007 $1.36
Oct2006 $1.19
Oct2005 $1.00
Oct2004 $0.98
Oct2003 $0.77

Recommended Reading:

Other ModernGraham posts about the company

Analog Devices Inc Valuation – June 2018 $ADI
Analog Devices Inc Valuation – February 2017 $ADI
Analog Devices Inc Valuation – August 2016 $ADI
Analog Devices Inc Stock Valuation – February 2016 $ADI
Analog Devices Inc. Analysis – September 2015 Update $ADI

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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.

United Parcel Service Inc Valuation – March 2019 #UPS

Company Profile (excerpt from Reuters): United Parcel Service, Inc. (UPS), incorporated on July 15, 1999, is a package delivery company. The Company is a provider of global supply chain management solutions. The Company operates through three segments: U.S. Domestic Package operations, International Package operations, and Supply Chain & Freight operations. As of December 31, 2016, the Company delivered packages in over 220 countries and territories. WorldShip, a desktop shipping application of UPS, provides middle-market and customers with shipping capabilities. Customers can create custom labels, set up shipment alerts, create and upload customs documentation, track and export shipments, create reports and integrate with their enterprise resource planning and accounting systems to streamline shipping with real-time connectivity. UPS marketplace shipping, which integrates www.ups.com with eBay, Amazon, Etsy and BigCommerce, allows marketplace sellers to ship their orders through www.ups.com or WorldShip. UPS marketplace shipping provides shipment processing, multiple payment options (including PayPal), order and shipment history and automatic tracking updates. The Company serves the global market for logistics services, which include transportation, distribution, contract logistics, ground freight, ocean freight, air freight, customs brokerage, insurance and financing.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of UPS – 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 $74,248,106,732 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.15 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 130.38% Pass
6. Moderate PEmg Ratio PEmg < 20 18.08 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 30.56 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 1.15 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.20 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.90
MG Growth Estimate 7.42%
MG Value $137.71
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $85.54
MG Value based on 0% Growth $50.14
Market Implied Growth Rate 4.79%
Current Price $106.68
% of Intrinsic Value 77.47%

United Parcel Service, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.95 in 2015 to an estimated $5.9 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 4.79% 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 within a margin of safety relative to the price.

At the time of valuation, further research into United Parcel Service, Inc. revealed the company was trading above its Graham Number of $24.06. The company pays a dividend of $3.64 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.08, which was below the industry average of 18.91, 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 $-35.37.

United Parcel Service, 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) -$35.37
Graham Number $24.06
PEmg 18.08
Current Ratio 1.15
PB Ratio 30.56
Current Dividend $3.64
Dividend Yield 3.41%
Number of Consecutive Years of Dividend Growth 9

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $16,210,000,000
Total Current Liabilities $14,087,000,000
Long-Term Debt $19,537,000,000
Total Assets $50,016,000,000
Intangible Assets $5,887,000,000
Total Liabilities $46,979,000,000
Shares Outstanding (Diluted Average) 870,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.31
Dec2018 $5.51
Dec2017 $5.61
Dec2016 $3.86
Dec2015 $5.35
Dec2014 $3.28
Dec2013 $4.61
Dec2012 $0.83
Dec2011 $3.84
Dec2010 $3.33
Dec2009 $2.14
Dec2008 $2.94
Dec2007 $0.36
Dec2006 $3.86
Dec2005 $3.47
Dec2004 $2.93
Dec2003 $2.55
Dec2002 $2.81
Dec2001 $2.10
Dec2000 $2.50
Dec1999 $0.77

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.90
Dec2018 $5.04
Dec2017 $4.71
Dec2016 $4.04
Dec2015 $3.95
Dec2014 $3.22
Dec2013 $3.11
Dec2012 $2.45
Dec2011 $3.01
Dec2010 $2.57
Dec2009 $2.32
Dec2008 $2.51
Dec2007 $2.40
Dec2006 $3.33
Dec2005 $2.96
Dec2004 $2.67
Dec2003 $2.40

Recommended Reading:

Other ModernGraham posts about the company

United Parcel Service Inc Valuation – May 2018 $UPS
United Parcel Service Inc Valuation – February 2017 $UPS
United Parcel Service Inc. Valuation – October 2015 Update $UPS
27 Companies in the Spotlight This Week – 11/8/14
United Parcel Service Inc. Annual Valuation – 2014 $UPS

Other ModernGraham posts about related companies

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Kirby Corp Valuation – September 2018 $KEX
Knight-Swift Transportation Holdings Inc Valuation – August 2018 $KNX
Saia Inc Valuation – July 2018 $SAIA
Ryder System Inc Valuation – June 2018 $R
United Parcel Service Inc Valuation – May 2018 $UPS
JB Hunt Transport Services Inc Valuation – May 2018 $JBHT

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.

Quanta Services Inc Valuation – March 2019 #PWR

Company Profile (excerpt from Reuters): Quanta Services, Inc. (Quanta), incorporated on August 19, 1997, is a provider of specialty contracting services, offering infrastructure solutions primarily to the electric power and oil and gas industries in the United States, Canada and Australia, and selected other international markets. The Company operates through two segments: Electric Power Infrastructure Services, and Oil and Gas Infrastructure Services. The services it provides include the design, installation, upgrade, repair and maintenance of infrastructure within each of the industries it serves, such as electric power transmission and distribution networks, substation facilities, renewable energy facilities, pipeline transmission and distribution systems and facilities, and infrastructure services for the offshore and inland water energy markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PWR – 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 $4,963,069,313 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.84 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 158.99% Pass
6. Moderate PEmg Ratio PEmg < 20 15.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.47 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 1.84 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.68 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.28
MG Growth Estimate 7.85%
MG Value $55.18
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $33.07
MG Value based on 0% Growth $19.39
Market Implied Growth Rate 3.42%
Current Price $34.99
% of Intrinsic Value 63.41%

Quanta Services Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.5 in 2015 to an estimated $2.28 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.42% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Quanta Services Inc revealed the company was trading below its Graham Number of $41.66. The company pays a dividend of $0.04 per share, for a yield of 0.1% Its PEmg (price over earnings per share – ModernGraham) was 15.34, which was below the industry average of 20.99, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.95.

Quanta Services Inc performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.95
Graham Number $41.66
PEmg 15.34
Current Ratio 1.84
PB Ratio 1.47
Current Dividend $0.04
Dividend Yield 0.11%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,326,104,000
Total Current Liabilities $1,806,127,000
Long-Term Debt $1,040,532,000
Total Assets $7,075,787,000
Intangible Assets $2,180,059,000
Total Liabilities $3,470,334,000
Shares Outstanding (Diluted Average) 151,310,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.30
Dec2018 $1.90
Dec2017 $2.00
Dec2016 $1.26
Dec2015 $1.59
Dec2014 $1.35
Dec2013 $1.87
Dec2012 $1.44
Dec2011 $0.62
Dec2010 $0.72
Dec2009 $0.81
Dec2008 $0.87
Dec2007 $0.89
Dec2006 $0.15
Dec2005 $0.25
Dec2004 -$0.08
Dec2003 -$0.30
Dec2002 -$7.77
Dec2001 $1.10
Dec2000 $1.42
Dec1999 $0.67

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.28
Dec2018 $1.72
Dec2017 $1.63
Dec2016 $1.46
Dec2015 $1.50
Dec2014 $1.37
Dec2013 $1.28
Dec2012 $0.96
Dec2011 $0.74
Dec2010 $0.76
Dec2009 $0.72
Dec2008 $0.59
Dec2007 $0.36
Dec2006 -$0.46
Dec2005 -$0.96
Dec2004 -$1.42
Dec2003 -$1.72

Recommended Reading:

Other ModernGraham posts about the company

Quanta Services Inc Valuation – May 2018 $PWR
14 Best Stocks for Value Investors This Week – 2/11/17
Quanta Services Inc Valuation – February 2017 $PWR
15 Best Undervalued Stocks of the Week – 8/20/16
Quanta Services Inc Valuation – August 2016 $PWR

Other ModernGraham posts about related companies

Mohawk Industries Inc Valuation – March 2019 #MHK
Jacobs Engineering Group Inc Valuation – March 2019 #JEC
Masco Corp Valuation – February 2019 $MAS
D.R. Horton Inc Valuation – February 2019 $DHI
Martin Marietta Materials Inc Valuation – February 2019 $MLM
Fluor Corp Valuation – February 2019 $FLR
Lennar Corp Valuation – February 2019 $LEN
Vulcan Materials Co Valuation – February 2019 $VMC
PulteGroup Inc Valuation – January 2019 $PHM
Sherwin-Williams Co Valuation – January 2019 $SHW

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.

Discover Financial Services Valuation – March 2019 $DFS

Company Profile (excerpt from Reuters): Discover Financial Services (DFS), incorporated on July 25, 1960, is a direct banking and payment services company. The Company is a bank holding company, as well as a financial holding company. The Company operates through two segments: Direct Banking and Payment Services. It provides direct banking products and services, and payment services through its subsidiaries. It offers its customers credit card loans, private student loans, personal loans, home equity loans and deposit products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DFS – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,591,292,141 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 122.38% Pass
5. Moderate PEmg Ratio PEmg < 20 10.13 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.17 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 $7.09
MG Growth Estimate 6.82%
MG Value $156.93
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $102.80
MG Value based on 0% Growth $60.26
Market Implied Growth Rate 0.82%
Current Price $71.84
% of Intrinsic Value 45.78%

Discover Financial Services 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 $4.87 in 2015 to an estimated $7.09 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.82% 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 Discover Financial Services revealed the company was trading below its Graham Number of $77.91. The company pays a dividend of $1.5 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.13, which was below the industry average of 31.76, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Discover Financial Services fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $77.91
PEmg 10.13
PB Ratio 2.17
Dividend Yield 2.09%
TTM Dividend $1.50
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $27,228,000,000
Total Assets $109,553,000,000
Intangible Assets $416,000,000
Total Liabilities $98,423,000,000
Shares Outstanding (Diluted Average) 336,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.45
Dec2018 $7.79
Dec2017 $5.42
Dec2016 $5.77
Dec2015 $5.13
Dec2014 $4.90
Dec2013 $4.96
Nov2012 $4.46
Nov2011 $4.06
Nov2010 $1.22
Nov2009 $2.38
Nov2008 $1.92
Nov2007 $1.23
Nov2006 $1.89
Nov2005 $1.21
Nov2004 $0.00
Nov2003 $1.36

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.09
Dec2018 $6.21
Dec2017 $5.36
Dec2016 $5.23
Dec2015 $4.87
Dec2014 $4.47
Dec2013 $3.98
Nov2012 $3.26
Nov2011 $2.49
Nov2010 $1.72
Nov2009 $1.88
Nov2008 $1.51
Nov2007 $1.25
Nov2006 $1.13
Nov2005 $0.68
Nov2004 $0.36
Nov2003 $0.45

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stock Picks for the Defensive Investor – June 2018
Discover Financial Services Valuation – May 2018 $DFS
10 Low PE Stock Picks for the Defensive Investor – August 2017
10 Low PE Stock Picks for the Defensive Investor – February 2017
12 Best Stocks for Value Investors This Week – 2/4/17

Other ModernGraham posts about related companies

Mastercard Inc Valuation – January 2019 $MA
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American Express Co Valuation – November 2018 $AXP
Mastercard Inc Valuation – March 2018 $MA
Discover Financial Services Valuation – January 2017 $DFS
Discover Financial Services Valuation – August 2016 $DFS
Mastercard Inc Valuation – July 2016 $MA
Discover Financial Services Valuation – February 2016 $DFS
Mastercard Inc Valuation – January 2016 Update $MA
Discover Financial Services Inc. Valuation – November 2015 Update $DFS

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.

Republic Services Inc Valuation – March 2019 $RSG

Company Profile (excerpt from Reuters): Republic Services, Inc., incorporated on December 20, 1996, is a provider of non-hazardous solid waste collection, transfer, disposal, recycling and energy services. The Company’s segments include Group 1, Group 2 and Corporate entities. Its Group 1 and Group 2 segments provide integrated waste management services. Group 1 consists of geographic areas located in the western and portions of the mid-western United States. Group 2 consists of geographic areas located in Texas, the southeastern and portions of the mid-western United States, and the eastern seaboard of the United States. As of December 31, 2016, it operated in 39 states and Puerto Rico through 333 collection operations, 204 transfer stations, 192 active landfills, 64 recycling centers, seven treatment, recovery and disposal facilities, and 10 salt water disposal wells. As of December 31, 2016, it also operated 71 landfill gas and renewable energy projects and had post-closure responsibility for 124 closed landfills.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RSG – 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 $25,307,916,611 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.58 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 129.35% Pass
6. Moderate PEmg Ratio PEmg < 20 25.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.23 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 0.58 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.63 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.05
MG Growth Estimate 11.13%
MG Value $93.88
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $44.26
MG Value based on 0% Growth $25.95
Market Implied Growth Rate 8.64%
Current Price $78.69
% of Intrinsic Value 83.82%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.75 in 2015 to an estimated $3.05 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 8.64% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Republic Services, Inc. revealed the company was trading above its Graham Number of $42.27. The company pays a dividend of $1.44 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 25.78, which was below the industry average of 47.91, 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 $-37.22.

Republic Services, 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) -$37.22
Graham Number $42.27
PEmg 25.78
Current Ratio 0.58
PB Ratio 3.23
Current Dividend $1.44
Dividend Yield 1.83%
Number of Consecutive Years of Dividend Growth 17

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,564,400,000
Total Current Liabilities $2,718,600,000
Long-Term Debt $7,646,800,000
Total Assets $21,617,000,000
Intangible Assets $11,506,600,000
Total Liabilities $13,687,500,000
Shares Outstanding (Diluted Average) 325,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.23
Dec2018 $3.16
Dec2017 $3.77
Dec2016 $1.78
Dec2015 $2.13
Dec2014 $1.53
Dec2013 $1.62
Dec2012 $1.55
Dec2011 $1.56
Dec2010 $1.32
Dec2009 $1.30
Dec2008 $0.37
Dec2007 $1.51
Dec2006 $1.39
Dec2005 $1.20
Dec2004 $1.08
Dec2003 $0.78
Dec2002 $0.96
Dec2001 $0.49
Dec2000 $0.84
Dec1999 $0.76

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.05
Dec2018 $2.80
Dec2017 $2.47
Dec2016 $1.79
Dec2015 $1.75
Dec2014 $1.55
Dec2013 $1.53
Dec2012 $1.39
Dec2011 $1.28
Dec2010 $1.15
Dec2009 $1.10
Dec2008 $1.04
Dec2007 $1.31
Dec2006 $1.17
Dec2005 $1.00
Dec2004 $0.88
Dec2003 $0.78

Recommended Reading:

Other ModernGraham posts about the company

Republic Services Inc Valuation – May 2018 $RSG
Republic Services Inc Valuation – January 2017 $RSG
Republic Services Inc. Analysis – September 2015 Update $RSG
20 Companies to Research This Week – 9/6/14
Republic Services Inc. Annual Stock Valuation – September 2014 $RSG

Other ModernGraham posts about related companies

Waste Management Inc Valuation – February 2019 $WM
Clean Harbors Inc Valuation – July 2018 $CLH
Stericycle Inc Valuation – May 2018 $SRCL
Republic Services Inc Valuation – May 2018 $RSG
Waste Management Inc Valuation – April 2018 $WM
US Ecology Inc Valuation – Initial Coverage $ECOL
Stericycle Inc Valuation – February 2017 $SRCL
Republic Services Inc Valuation – January 2017 $RSG
Clean Harbors Inc Valuation – Initial Coverage $CLH
Waste Management Inc Valuation – August 2016 $WM

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.

JB Hunt Transport Services Inc Valuation – February 2019 $JBHT

Company Profile (excerpt from Reuters): J.B. Hunt Transport Services, Inc., incorporated on September 10, 1961, is a holding company. The Company is a surface transportation, delivery, and logistics company in North America. The Company, through its subsidiaries, provides transportation and delivery services to a range of customers and consumers throughout the continental United States, Canada and Mexico. The Company operates through four segments, which include Intermodal (JBI), Dedicated Contract Services (DCS), Integrated Capacity Solutions (ICS) and Truck (JBT). The Company’s service offerings include transportation of full- truckload containerized freight, customized freight movement, revenue equipment, labor, systems and delivery services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JBHT – 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 $11,650,296,393 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.11 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 159.27% Pass
6. Moderate PEmg Ratio PEmg < 20 21.24 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.60 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 1.11 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.96 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.04
MG Growth Estimate 9.22%
MG Value $135.88
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $73.12
MG Value based on 0% Growth $42.86
Market Implied Growth Rate 6.37%
Current Price $107.10
% of Intrinsic Value 78.82%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.12 in 2015 to an estimated $5.04 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 6.37% 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 within a margin of safety relative to the price.

At the time of valuation, further research into J B Hunt Transport Services Inc revealed the company was trading above its Graham Number of $49.44. The company pays a dividend of $0.96 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 21.24, which was above the industry average of 18.52. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.53.

J B Hunt Transport Services 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) -$13.53
Graham Number $49.44
PEmg 21.24
Current Ratio 1.11
PB Ratio 5.60
Current Dividend $0.96
Dividend Yield 0.90%
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 12/1/2018
Total Current Assets $1,502,981,000
Total Current Liabilities $1,352,348,000
Long-Term Debt $898,398,000
Total Assets $5,091,647,000
Intangible Assets $105,187,000
Total Liabilities $2,990,263,000
Shares Outstanding (Diluted Average) 109,939,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.62
Dec2018 $4.43
Dec2017 $6.18
Dec2016 $3.81
Dec2015 $3.66
Dec2014 $3.16
Dec2013 $2.87
Dec2012 $2.59
Dec2011 $2.11
Dec2010 $1.56
Dec2009 $1.05
Dec2008 $1.56
Dec2007 $1.55
Dec2006 $1.44
Dec2005 $1.28
Dec2004 $0.88
Dec2003 $0.58
Dec2002 $0.33
Dec2001 $0.23
Dec2000 $0.26
Dec1999 $0.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.04
Dec2018 $4.59
Dec2017 $4.42
Dec2016 $3.43
Dec2015 $3.12
Dec2014 $2.72
Dec2013 $2.35
Dec2012 $1.98
Dec2011 $1.64
Dec2010 $1.41
Dec2009 $1.35
Dec2008 $1.45
Dec2007 $1.31
Dec2006 $1.10
Dec2005 $0.84
Dec2004 $0.56
Dec2003 $0.38

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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.

Advanced Micro Devices Inc Valuation – February 2019 $AMD

Company Profile (excerpt from Reuters): Advanced Micro Devices, Inc. (AMD), incorporated on May 1, 1969, is a global semiconductor company. The Company is engaged in offering x86 microprocessors, as standalone devices or as incorporated into an accelerated processing unit (APU), chipsets, discrete graphics processing units (GPUs) and professional graphics, and, server and embedded processors and semi-custom System-on-Chip (SoC) products and technology for game consoles. The Company’s segments include the Computing and Graphics segment, and the Enterprise, Embedded and Semi-Custom segment. The Computing and Graphics segment primarily includes desktop and notebook processors and chipsets, discrete GPUs and professional graphics. The Enterprise, Embedded and Semi-Custom segment primarily includes server and embedded processors, semi-custom SoC products, development services, technology for game consoles and licensing portions of its intellectual property portfolio. The Company sells its products through its direct sales force and through independent distributors and sales representatives in both domestic and international markets. Its microprocessor customers consist primarily of original equipment manufacturers (OEMs), original design manufacturers (ODMs), system builders and independent distributors in both domestic and international markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMD – 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 $24,489,084,253 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.78 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 -333.33% Fail
6. Moderate PEmg Ratio PEmg < 20 304.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 20.82 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 1.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.72 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.08
MG Growth Estimate 15.00%
MG Value $3.08
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $1.16
MG Value based on 0% Growth $0.68
Market Implied Growth Rate 148.00%
Current Price $24.36
% of Intrinsic Value 790.91%

Advanced Micro Devices, 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 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 lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.61 in 2015 to an estimated $0.08 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 148% 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 Advanced Micro Devices, Inc. revealed the company was trading above its Graham Number of $3.42. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 304.5, which was above the industry average of 29.46. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.23.

Advanced Micro Devices, 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) $0.23
Graham Number $3.42
PEmg 304.50
Current Ratio 1.78
PB Ratio 20.82
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,540,000,000
Total Current Liabilities $1,984,000,000
Long-Term Debt $1,114,000,000
Total Assets $4,556,000,000
Intangible Assets $515,000,000
Total Liabilities $3,290,000,000
Shares Outstanding (Diluted Average) 1,082,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.41
Dec2018 $0.32
Dec2017 -$0.03
Dec2016 -$0.60
Dec2015 -$0.84
Dec2014 -$0.53
Dec2013 -$0.11
Dec2012 -$1.60
Dec2011 $0.66
Dec2010 $0.64
Dec2009 $0.45
Dec2008 -$5.15
Dec2007 -$6.06
Dec2006 -$0.34
Dec2005 $0.40
Dec2004 $0.25
Dec2003 -$0.79
Dec2002 -$3.81
Dec2001 -$0.18
Dec2000 $2.89
Dec1999 -$0.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.08
Dec2018 -$0.17
Dec2017 -$0.42
Dec2016 -$0.65
Dec2015 -$0.61
Dec2014 -$0.40
Dec2013 -$0.22
Dec2012 -$0.51
Dec2011 -$0.61
Dec2010 -$1.53
Dec2009 -$2.45
Dec2008 -$3.33
Dec2007 -$2.05
Dec2006 -$0.32
Dec2005 -$0.48
Dec2004 -$0.72
Dec2003 -$0.95

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Valuation: Advanced Micro Devices (AMD)

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Disclaimer:

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

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