Silgan Holdings Inc Valuation – August 2018 $SLGN

Company Profile (excerpt from Reuters): Silgan Holdings Inc., incorporated on April 6, 1989, is a holding company. The Company is a manufacturer of rigid packaging for consumer goods products. The Company operates in three business segments: metal containers, closures and plastic containers. Its metal container segment is engaged in the manufacture and sale of steel and aluminum containers for human and pet food and general line products. Its closures segment manufactures and sells metal, composite and plastic closures for food and beverage products. Its plastic containers segment manufactures and sells custom designed plastic containers and closures for personal care, food, healthcare, pharmaceutical, household and industrial chemical, pet care, agricultural, automotive and marine chemical products.

SLGN Chart

SLGN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SLGN – August 2018

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,993,661,141 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.26 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 69.90% Pass
6. Moderate PEmg Ratio PEmg < 20 14.85 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.66 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.26 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.08 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 $1.85
MG Growth Estimate 6.01%
MG Value $38.02
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $26.86
MG Value based on 0% Growth $15.75
Market Implied Growth Rate 3.17%
Current Price $27.51
% of Intrinsic Value 72.36%

Silgan Holdings 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 is only concerned with the level of debt relative to the net 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 $1.32 in 2014 to an estimated $1.85 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.17% 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 Silgan Holdings Inc. revealed the company was trading above its Graham Number of $17.72. The company pays a dividend of $0.36 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 14.85, which was below the industry average of 21.21, 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 $-22.36.

Silgan Holdings Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.36
Graham Number $17.72
PEmg 14.85
Current Ratio 2.26
PB Ratio 3.66
Current Dividend $0.36
Dividend Yield 1.31%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,726,800,000
Total Current Liabilities $765,000,000
Long-Term Debt $2,962,700,000
Total Assets $5,059,700,000
Intangible Assets $0
Total Liabilities $4,221,700,000
Shares Outstanding (Diluted Average) 111,574,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.01
Dec2017 $2.42
Dec2016 $1.27
Dec2015 $1.41
Dec2014 $1.43
Dec2013 $1.44
Dec2012 $1.09
Dec2011 $1.38
Dec2010 $0.95
Dec2009 $1.04
Dec2008 $0.82
Dec2007 $0.81
Dec2006 $0.69
Dec2005 $0.58
Dec2004 $0.57
Dec2003 $0.29
Dec2002 $0.37
Dec2001 $0.29
Dec2000 $0.22
Dec1999 $0.17
Dec1998 $0.29

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.85
Dec2017 $1.71
Dec2016 $1.35
Dec2015 $1.37
Dec2014 $1.32
Dec2013 $1.24
Dec2012 $1.11
Dec2011 $1.08
Dec2010 $0.91
Dec2009 $0.85
Dec2008 $0.74
Dec2007 $0.66
Dec2006 $0.56
Dec2005 $0.47
Dec2004 $0.39
Dec2003 $0.29
Dec2002 $0.28

Recommended Reading:

Other ModernGraham posts about the company

Silgan Holdings Inc Valuation – Initial Coverage $SLGN

Other ModernGraham posts about related companies

Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS
Owens-Illinois Inc Valuation – June 2018 $OI
International Paper Co Valuation – June 2018 $IP
Ball Corporation Valuation – April 2018 $BLL
WestRock Co Valuation – April 2018 $WRK
Sealed Air Corp Valuation – April 2018 $SEE
Packaging Corp of America Valuation – Initial Coverage $PKG
AptarGroup Inc Valuation – Initial Coverage $ATR

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.

ILG Inc Valuation – July 2018 $ILG

Company Profile (excerpt from Reuters): ILG, Inc., formerly Interval Leisure Group, Inc., incorporated on May 9, 2008, is a provider of professionally delivered vacation experiences. The Company is a global licensee for the Hyatt, Westin and Sheraton brands in vacation ownership. The Company operates through two segments: Exchange and Rental, and Vacation Ownership. Its Exchange and Rental segment offers access to vacation accommodations and other travel-related transactions and services to leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers and operating vacation rental properties. Its Vacation Ownership segment engages in the management of vacation ownership resorts; sales, marketing, and financing of vacation ownership interests, and related services to owners and associations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ILG – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,150,781,418 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.77 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 146.92% Pass
6. Moderate PEmg Ratio PEmg < 20 21.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.39 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 1.77 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.70 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 $1.56
MG Growth Estimate 6.03%
MG Value $32.07
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $22.61
MG Value based on 0% Growth $13.25
Market Implied Growth Rate 6.34%
Current Price $33.03
% of Intrinsic Value 102.98%

ILG 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, and the high PEmg ratio. 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 $1.11 in 2014 to an estimated $1.56 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.34% 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 ILG Inc revealed the company was trading above its Graham Number of $19.59. The company pays a dividend of $0.6 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 21.18, which was below the industry average of 40.73, 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 $-5.89.

ILG 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) -$5.89
Graham Number $19.59
PEmg 21.18
Current Ratio 1.77
PB Ratio 2.39
Current Dividend $0.60
Dividend Yield 1.82%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $1,291,000,000
Total Current Liabilities $728,000,000
Long-Term Debt $958,000,000
Total Assets $3,770,000,000
Intangible Assets $1,003,000,000
Total Liabilities $2,032,000,000
Shares Outstanding (Diluted Average) 125,751,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.27
Dec2017 $1.34
Dec2016 $2.60
Dec2015 $1.26
Dec2014 $1.36
Dec2013 $1.40
Dec2012 $0.71
Dec2011 $0.71
Dec2010 $0.73
Dec2009 $0.67
Dec2008 $0.80
Dec2007 $1.26
Dec2006 $0.97
Dec2005 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.56
Dec2017 $1.67
Dec2016 $1.71
Dec2015 $1.20
Dec2014 $1.11
Dec2013 $0.94
Dec2012 $0.71
Dec2011 $0.76
Dec2010 $0.81
Dec2009 $0.87
Dec2008 $0.91
Dec2007 $0.84
Dec2006 $0.54
Dec2005 $0.27

Recommended Reading:

Other ModernGraham posts about the company

ILG Inc Valuation – Initial Coverage $ILG

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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
Expedia Inc. Analysis – October 2015 Update $EXPE
Tripadvisor Stock Analysis – August 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.

Silgan Holdings Inc Valuation – Initial Coverage $SLGN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Silgan Holdings Inc (SLGN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Silgan Holdings Inc. (Silgan) is a manufacturer of rigid packaging for shelf-stable food and other consumer goods products. The Company operates through three segments: metal container, closures and plastic container. The Company’s products include steel and aluminum containers for human and pet food and general line products; metal, composite and plastic closures for food and beverage products, and custom designed plastic containers and closures for personal care, food, healthcare, pharmaceutical, household and industrial chemical, pet care, agricultural, automotive and marine chemical products. Its metal container business is engaged in the manufacture and sale of steel and aluminum containers that are used primarily by processors and packagers for food products, such as soup, vegetables, fruit, meat, tomato-based products, seafood, coffee, adult nutritional drinks, pet food and other miscellaneous food products, as well as general line metal containers primarily for chemicals.

SLGN Chart

SLGN data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of SLGN – January 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,253,187,185 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 55.74% Pass
6. Moderate PEmg Ratio PEmg < 20 21.97 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.83 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 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.11 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 $2.72
MG Growth Estimate 3.35%
MG Value $41.29
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $39.37
MG Value based on 0% Growth $23.08
Market Implied Growth Rate 6.74%
Current Price $59.66
% of Intrinsic Value 144.50%

Silgan 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, 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 $2.22 in 2012 to an estimated $2.72 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.74% 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 Silgan Holdings Inc. revealed the company was trading above its Graham Number of $27. The company pays a dividend of $0.67 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 21.97, which was below the industry average of 28.3, 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 $-23.86.

Silgan 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) -$23.86
Graham Number $27.00
PEmg 21.97
Current Ratio 1.34
PB Ratio 4.83
Current Dividend $0.67
Dividend Yield 1.12%
Number of Consecutive Years of Dividend Growth 13

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $1,298,358,000
Total Current Liabilities $966,401,000
Long-Term Debt $1,364,199,000
Total Assets $3,501,519,000
Intangible Assets $800,133,000
Total Liabilities $2,749,865,000
Shares Outstanding (Diluted Average) 60,829,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.60
Dec2015 $2.81
Dec2014 $2.86
Dec2013 $2.87
Dec2012 $2.17
Dec2011 $2.75
Dec2010 $1.89
Dec2009 $2.07
Dec2008 $1.63
Dec2007 $1.61
Dec2006 $1.37
Dec2005 $1.17
Dec2004 $1.13
Dec2003 $0.57
Dec2002 $0.73
Dec2001 $0.58
Dec2000 $0.44
Dec1999 $0.33
Dec1998 $0.58
Dec1997 $0.43
Dec1996 $0.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.72
Dec2015 $2.75
Dec2014 $2.65
Dec2013 $2.48
Dec2012 $2.22
Dec2011 $2.16
Dec2010 $1.81
Dec2009 $1.71
Dec2008 $1.48
Dec2007 $1.32
Dec2006 $1.12
Dec2005 $0.94
Dec2004 $0.78
Dec2003 $0.58
Dec2002 $0.57
Dec2001 $0.48
Dec2000 $0.43

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

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Bemis Company Inc Valuation – July 2016 $BMS
Owens-Illinois Inc Valuation – June 2016 $OI
Bemis Co Inc Valuation – January 2016 Update $BMS
WestRock Co Valuation – January 2016 Update $WRK
International Paper Co Valuation – December 2015 Update $IP
Bemis Company Inc. Analysis – September 2015 Update $BMS
WestRock Co. Analysis – Initial Coverage $WRK
International Paper Company Analysis – September 2015 Update $IP
Ball Corporation Analysis – 2015 Update $BLL

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.

ILG Inc Valuation – Initial Coverage $ILG

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how ILG Inc (ILG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): ILG, Inc., formerly Interval Leisure Group, Inc., is a provider of professionally delivered vacation experiences. The Company is a global licensee for the Hyatt, Westin and Sheraton brands in vacation ownership. The Company operates through two segments: Exchange and Rental, and Vacation Ownership. Its Exchange and Rental segment offers access to vacation accommodations and other travel-related transactions and services to leisure travelers, by providing vacation exchange services and vacation rental, working with resort developers and operating vacation rental properties. Its Vacation Ownership segment engages in the management of vacation ownership resorts; sales, marketing, and financing of vacation ownership interests, and related services to owners and associations. The Company offers leisure and travel-related products and services to owners of vacation interests and others primarily through various membership programs, as well as related services to resort developer clients.

ILG Chart

ILG data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

moderngraham-valuation-of-ilg-november-2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,419,426,175 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.37 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 100.00% Pass
6. Moderate PEmg Ratio PEmg < 20 10.11 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 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 1.37 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.29 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

ilg-value-chart-november-2016

EPSmg $1.79
MG Growth Estimate 15.00%
MG Value $68.86
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $25.94
MG Value based on 0% Growth $15.20
Market Implied Growth Rate 0.80%
Current Price $18.08
% of Intrinsic Value 26.25%

ILG 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, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.71 in 2012 to an estimated $1.79 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.8% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into ILG Inc revealed the company was trading below its Graham Number of $28.21. The company pays a dividend of $0.48 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.11, which was below the industry average of 21.46, 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 $-6.52.

ILG Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

ilg-charts-november-2016

Net Current Asset Value (NCAV) -$6.52
Graham Number $28.21
PEmg 10.11
Current Ratio 1.37
PB Ratio 1.46
Current Dividend $0.48
Dividend Yield 2.65%
Number of Consecutive Years of Dividend Growth 3

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/16/2016
Total Current Assets $854,000,000
Total Current Liabilities $623,000,000
Long-Term Debt $759,000,000
Total Assets $3,232,000,000
Intangible Assets $1,025,000,000
Total Liabilities $1,674,000,000
Shares Outstanding (Diluted Average) 125,763,000

Earnings Per Share History

Next Fiscal Year Estimate $2.84
Dec2015 $1.26
Dec2014 $1.36
Dec2013 $1.40
Dec2012 $0.71
Dec2011 $0.71
Dec2010 $0.73
Dec2009 $0.67
Dec2008 $0.80
Dec2007 $1.26
Dec2006 $0.97
Dec2005 $0.82

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.79
Dec2015 $1.20
Dec2014 $1.11
Dec2013 $0.94
Dec2012 $0.71
Dec2011 $0.76
Dec2010 $0.81
Dec2009 $0.87
Dec2008 $0.91
Dec2007 $0.84
Dec2006 $0.54
Dec2005 $0.27

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Carnival Corp Valuation – July 2016 $CCL
Marriott International Inc Valuation – July 2016 $MAR
Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT
Carnival Corporation Annual Valuation – 2015 $CCL
Marriott International Inc. Annual Valuation – 2015 $MAR
Wyndham Worldwide Corporation Annual Valuation – 2014 $WYN
Starwood Hotels & Resorts Annual Valuation – 2014 $HOT
Carnival Corporation (CCL) Annual Valuation – 2014

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.

International Paper Co Valuation – March 2019 #IP

Company Profile (excerpt from Reuters): International Paper Company, incorporated on June 23, 1941, is a paper and packaging company with primary markets and manufacturing operations in North America, Europe, Latin America, Russia, Asia, Africa and the Middle East. The Company’s segments include Industrial Packaging, Global Cellulose Fibers, Printing Papers and Consumer Packaging. As of December 31, 2016, the Company operated 29 pulp, paper and packaging mills, 170 converting and packaging plants, 16 recycling plants and three bag facilities in the United States. As of December 31, 2016, the production facilities in Canada, Europe, Asia, Africa, India, Latin America included 17 pulp, paper and packaging mills, 68 converting and packaging plants, and two recycling plants. As of December 31, 2016, the Company operated a printing and packaging products distribution business principally through 12 branches in Asia. The Company sells packaging products, paper products and other products directly to end users and converters, as well as through agents, resellers and paper distributors.

IP Chart

IP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IP – 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 $17,950,583,989 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.49 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 129.44% Pass
6. Moderate PEmg Ratio PEmg < 20 10.33 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.48 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 1.49 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.35 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.34
MG Growth Estimate 15.00%
MG Value $167.17
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $62.96
MG Value based on 0% Growth $36.91
Market Implied Growth Rate 0.91%
Current Price $44.85
% of Intrinsic Value 26.83%

International Paper Co 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 $2.15 in 2015 to an estimated $4.34 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.91% 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 above the price.

At the time of valuation, further research into International Paper Co revealed the company was trading above its Graham Number of $44.07. The company pays a dividend of $1.93 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.33, which was below the industry average of 17, 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 $-47.06.

International Paper Co performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.06
Graham Number $44.07
PEmg 10.33
Current Ratio 1.49
PB Ratio 2.48
Current Dividend $1.93
Dividend Yield 4.29%
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 $6,996,000,000
Total Current Liabilities $4,694,000,000
Long-Term Debt $10,015,000,000
Total Assets $33,576,000,000
Intangible Assets $3,374,000,000
Total Liabilities $26,193,000,000
Shares Outstanding (Diluted Average) 407,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.75
Dec2018 $4.85
Dec2017 $5.13
Dec2016 $2.18
Dec2015 $2.23
Dec2014 $1.29
Dec2013 $3.11
Dec2012 $1.80
Dec2011 $3.03
Dec2010 $1.59
Dec2009 $1.55
Dec2008 -$3.05
Dec2007 $2.70
Dec2006 $2.18
Dec2005 $2.21
Dec2004 -$0.07
Dec2003 $0.63
Dec2002 -$1.83
Dec2001 -$2.50
Dec2000 $0.32
Dec1999 $0.44

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.34
Dec2018 $3.80
Dec2017 $3.12
Dec2016 $2.11
Dec2015 $2.15
Dec2014 $2.13
Dec2013 $2.44
Dec2012 $1.73
Dec2011 $1.52
Dec2010 $0.84
Dec2009 $0.68
Dec2008 $0.43
Dec2007 $1.96
Dec2006 $1.26
Dec2005 $0.43
Dec2004 -$0.53
Dec2003 -$0.71

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2019
10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2018
International Paper Co Valuation – June 2018 $IP
International Paper Co Valuation – March 2017 $IP
International Paper Co Valuation – December 2015 Update $IP

Other ModernGraham posts about related companies

Ball Corporation Valuation – February 2019 $BLL
Westrock Co Valuation – February 2019 $WRK
Sealed Air Corp Valuation – February 2019 $SEE
Packaging Corp of America Valuation – January 2019 $PKG
Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP

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.

Amgen Inc Valuation – March 2019 #AMGN

Company Profile (excerpt from Reuters): Amgen Inc., incorporated on October 31, 1986, is a biotechnology company. The Company discovers, develops, manufactures and delivers various human therapeutics. The Company operates in the human therapeutics segment. The Company’s marketed products portfolio includes Neulasta (pegfilgrastim); erythropoiesis-stimulating agents (ESAs), such as Aranesp (darbepoetin alfa) and EPOGEN (epoetin alfa); Sensipar/Mimpara (cinacalcet); XGEVA (denosumab); Prolia (denosumab); NEUPOGEN (filgrastim), and other marketed products, such as KYPROLIS (carfilzomib), Vectibix (panitumumab), Nplate (romiplostim), Repatha (evolocumab), BLINCYTO (blinatumomab), IMLYGIC (talimogene laherparepvec) and Corlanor (ivabradine). The Company focuses its research and development on human therapeutics for the treatment of serious illness in the areas of oncology/hematology, cardiovascular disease, inflammation, bone health, nephrology and neuroscience.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMGN – 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 $116,179,300,700 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.79 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 99.02% Pass
6. Moderate PEmg Ratio PEmg < 20 18.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.57 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 2.79 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.29
MG Growth Estimate 6.62%
MG Value $223.61
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $149.20
MG Value based on 0% Growth $87.46
Market Implied Growth Rate 4.82%
Current Price $186.70
% of Intrinsic Value 83.49%

Amgen, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. 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 $7.14 in 2015 to an estimated $10.29 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 4.82% 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 Amgen, Inc. revealed the company was trading above its Graham Number of $76.93. The company pays a dividend of $5.28 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 18.15, which was below the industry average of 47.6, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-25.43.

Amgen, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$25.43
Graham Number $76.93
PEmg 18.15
Current Ratio 2.79
PB Ratio 9.57
Current Dividend $5.28
Dividend Yield 2.83%
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
Total Current Assets $37,618,000,000
Total Current Liabilities $13,488,000,000
Long-Term Debt $29,510,000,000
Total Assets $66,416,000,000
Intangible Assets $22,142,000,000
Total Liabilities $53,916,000,000
Shares Outstanding (Diluted Average) 641,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.25
Dec2018 $12.62
Dec2017 $2.69
Dec2016 $10.24
Dec2015 $9.06
Dec2014 $6.70
Dec2013 $6.64
Dec2012 $5.52
Dec2011 $4.04
Dec2010 $4.79
Dec2009 $4.51
Dec2008 $3.77
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.93
Dec2004 $1.81
Dec2003 $1.69
Dec2002 -$1.21
Dec2001 $1.03
Dec2000 $1.05
Dec1999 $1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.29
Dec2018 $8.63
Dec2017 $6.78
Dec2016 $8.42
Dec2015 $7.14
Dec2014 $5.97
Dec2013 $5.43
Dec2012 $4.73
Dec2011 $4.22
Dec2010 $4.09
Dec2009 $3.60
Dec2008 $3.02
Dec2007 $2.54
Dec2006 $2.11
Dec2005 $1.70
Dec2004 $1.02
Dec2003 $0.65

Recommended Reading:

Other ModernGraham posts about the company

Amgen Inc Valuation – June 2018 $AMGN
6 Best Stocks for Value Investors This Week – 3/26/17
Amgen Inc Valuation – March 2017 $AMGN
21 Best Undervalued Stocks of the Week – 8/27/16
Amgen Inc Valuation – August 2016 $AMGN

Other ModernGraham posts about related companies

AbbVie Inc Valuation – March 2019 #ABBV
Allergan PLC Valuation – February 2019 $AGN
Incyte Corp Valuation – February 2019 $INCY
Regeneron Pharmaceuticals Inc Valuation – February 2019 $REGN
Alexion Pharmaceuticals Inc Valuation – February 2019 $ALXN
Vertex Pharmaceuticals Inc Valuation – February 2019 $VRTX
Perrigo Company Valuation – February 2019 $PRGO
Eli Lilly and Co Valuation – January 2019 $LLY
Zoetis Inc Valuation – January 2019 $ZTS
Gilead Sciences Inc Valuation – January 2019 $GILD

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.

Royal Caribbean Cruises Ltd Valuation – March 2019 #RCL

Company Profile (excerpt from Reuters): Royal Caribbean Cruises Ltd., incorporated on July 23, 1985, is a cruise company. The Company owns and operates three global cruise brands: Royal Caribbean International, Celebrity Cruises and Azamara Club Cruises (Global Brands). The Company also own joint venture interest in the German brand TUI Cruises, interest in the Spanish brand Pullmantur and interest in the Chinese brand SkySea Cruises (collectively, Partner Brands). Together, its Global Brands and its Partner Brands operate a combined total of 50 ships in the cruise vacation industry with an aggregate capacity of approximately 123,270 berths, as of December 31, 2016. As of July 31, 2018, the Company’s ships offer a selection of itineraries that call on approximately 540 destinations in 105 countries, covering all seven continents.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RCL – 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 $24,317,988,750 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.17 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 396.93% Pass
6. Moderate PEmg Ratio PEmg < 20 14.42 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.20 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.42 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 $8.06
MG Growth Estimate 15.00%
MG Value $310.46
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $116.93
MG Value based on 0% Growth $68.54
Market Implied Growth Rate 2.96%
Current Price $116.25
% of Intrinsic Value 37.44%

Royal Caribbean Cruises 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. 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 $2.54 in 2015 to an estimated $8.06 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.96% 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 Royal Caribbean Cruises Ltd revealed the company was trading above its Graham Number of $108.51. The company pays a dividend of $2.6 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.42, which was below the industry average of 31.69, 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 $-73.

Royal Caribbean Cruises 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) -$73.00
Graham Number $108.51
PEmg 14.42
Current Ratio 0.17
PB Ratio 2.20
Current Dividend $2.60
Dividend Yield 2.24%
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
Total Current Assets $1,242,044,000
Total Current Liabilities $7,112,165,000
Long-Term Debt $8,355,370,000
Total Assets $27,698,270,000
Intangible Assets $1,378,353,000
Total Liabilities $16,592,809,000
Shares Outstanding (Diluted Average) 210,297,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.85
Dec2018 $8.56
Dec2017 $7.53
Dec2016 $5.93
Dec2015 $3.02
Dec2014 $3.43
Dec2013 $2.14
Dec2012 $0.08
Dec2011 $2.77
Dec2010 $2.37
Dec2009 $0.75
Dec2008 $2.68
Dec2007 $2.82
Dec2006 $2.94
Dec2005 $3.26
Dec2004 $2.26
Dec2003 $1.42
Dec2002 $1.79
Dec2001 $1.32
Dec2000 $2.31
Dec1999 $2.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.06
Dec2018 $6.68
Dec2017 $5.30
Dec2016 $3.76
Dec2015 $2.54
Dec2014 $2.26
Dec2013 $1.65
Dec2012 $1.52
Dec2011 $2.25
Dec2010 $2.10
Dec2009 $2.14
Dec2008 $2.82
Dec2007 $2.77
Dec2006 $2.61
Dec2005 $2.30
Dec2004 $1.82
Dec2003 $1.66

Recommended Reading:

Other ModernGraham posts about the company

Royal Caribbean Cruises Ltd Valuation – Initial Coverage June 2018 $RCL

Other ModernGraham posts about related companies

Hilton Worldwide Holdings Inc Valuation – February 2019 $HLT
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

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.

Expedia Group Inc Valuation – March 2019 #EXPE

Company Profile (excerpt from Reuters): Expedia Group, Inc., formerly Expedia, Inc., incorporated on April 18, 2005, is an online travel company. The Company operates through four segments: Core Online Travel Agencies (Core OTA), trivago, Egencia and HomeAway. It has created a global travel marketplace used by a range of leisure and corporate travelers, offline retail travel agents and travel service providers. The Company offers travel and non-travel advertisers access to a source of incremental traffic and transactions through its media and advertising offerings on its transaction-based Websites. The Company’s Core OTA segment provides a range of travel and advertising services to its customers across the world, through a range of brands, including Expedia.com and Hotels.com in the United States, and localized Expedia and Hotels.com Websites throughout the world, Orbitz.com, Expedia Affiliate Network, Hotwire.com, Travelocity, Wotif Group, CarRentals.com and Classic Vacations. The Company’s trivago segment sends referrals to online travel companies and travel service providers from its hotel metasearch Websites. Its Egencia segment, which also includes Orbitz Worldwide (Orbitz) for Business, provides managed travel services to corporate customers across the world. The Company’s HomeAway segment operates an online marketplace for the vacation rental industry.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EXPE – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,501,820,260 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 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 32.73% Fail
6. Moderate PEmg Ratio PEmg < 20 32.96 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.37 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 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.30 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 $3.81
MG Growth Estimate 1.23%
MG Value $41.76
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $55.29
MG Value based on 0% Growth $32.41
Market Implied Growth Rate 12.23%
Current Price $125.67
% of Intrinsic Value 300.94%

Expedia 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 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 $3.53 in 2015 to an estimated $3.81 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.23% 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 Expedia Group Inc revealed the company was trading above its Graham Number of $61.37. The company pays a dividend of $1.24 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 32.96, which was below the industry average of 41.58, 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 $-47.47.

Expedia 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) -$47.47
Graham Number $61.37
PEmg 32.96
Current Ratio 0.64
PB Ratio 3.37
Current Dividend $1.24
Dividend Yield 0.99%
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 $5,197,000,000
Total Current Liabilities $8,060,000,000
Long-Term Debt $3,717,000,000
Total Assets $18,033,000,000
Intangible Assets $10,112,000,000
Total Liabilities $12,382,000,000
Shares Outstanding (Diluted Average) 151,344,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.00
Dec2018 $2.65
Dec2017 $2.42
Dec2016 $1.82
Dec2015 $5.70
Dec2014 $2.99
Dec2013 $1.67
Dec2012 $2.00
Dec2011 $3.41
Dec2010 $2.93
Dec2009 $2.06
Dec2008 -$17.60
Dec2007 $1.88
Dec2006 $1.40
Dec2005 $1.30
Dec2004 $0.00
Dec2003 $0.66
Dec2002 $0.46
Dec2001 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.81
Dec2018 $2.85
Dec2017 $2.94
Dec2016 $3.08
Dec2015 $3.53
Dec2014 $2.49
Dec2013 $2.30
Dec2012 $1.26
Dec2011 $0.11
Dec2010 -$1.65
Dec2009 -$3.36
Dec2008 -$4.91
Dec2007 $1.30
Dec2006 $0.93
Dec2005 $0.63
Dec2004 $0.28
Dec2003 $0.35

Recommended Reading:

Other ModernGraham posts about the company

Expedia Group Inc Valuation – May 2018 $EXPE
Expedia Inc Valuation – February 2017 $EXPE
Expedia Inc. Analysis – October 2015 Update $EXPE
17 Companies in the Spotlight This Week – 9/27/2014
Expedia Inc. Annual Stock Valuation – 2014 $EXPE

Other ModernGraham posts about related companies

Booking Holdings Inc Valuation – January 2019 $BKNG
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

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.

Masco Corp Valuation – February 2019 $MAS

Company Profile (excerpt from Reuters): Masco Corporation, incorporated on June 15, 1962, designs, manufactures, markets and distributes branded home improvement and building products. The Company operates through four business segments: Plumbing Products, Decorative Architectural Products, Cabinetry Products, and Windows and Other Specialty Products. The Company’s portfolio of brands includes BEHR paint; DELTA and HANSGROHE faucets, bath and shower fixtures; KRAFTMAID and MERILLAT cabinets; MILGARD windows and doors, and HOT SPRING spas.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAS – 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 $11,044,960,279 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.64 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -233.67% Fail
6. Moderate PEmg Ratio PEmg < 20 17.77 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 163.54 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 1.64 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.75 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 $2.11
MG Growth Estimate 15.00%
MG Value $81.21
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $30.59
MG Value based on 0% Growth $17.93
Market Implied Growth Rate 4.64%
Current Price $37.49
% of Intrinsic Value 46.16%

Masco Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PB ratio. 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 $0.98 in 2015 to an estimated $2.11 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.64% 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 above the price.

At the time of valuation, further research into Masco Corp revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.44 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 17.77, which was below the industry average of 20.47, 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 $-8.5.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$8.50
Graham Number $0.00
PEmg 17.77
Current Ratio 1.64
PB Ratio 163.54
Current Dividend $0.44
Dividend Yield 1.16%
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 12/1/2018
Total Current Assets $2,766,000,000
Total Current Liabilities $1,684,000,000
Long-Term Debt $2,971,000,000
Total Assets $5,393,000,000
Intangible Assets $1,304,000,000
Total Liabilities $5,324,000,000
Shares Outstanding (Diluted Average) 301,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.64
Dec2018 $2.37
Dec2017 $1.66
Dec2016 $1.48
Dec2015 $1.02
Dec2014 $2.38
Dec2013 $0.80
Dec2012 -$0.33
Dec2011 -$1.66
Dec2010 -$3.00
Dec2009 -$0.53
Dec2008 -$1.13
Dec2007 $1.03
Dec2006 $1.22
Dec2005 $2.19
Dec2004 $1.96
Dec2003 $1.65
Dec2002 $1.01
Dec2001 $0.35
Dec2000 $1.31
Dec1999 $1.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.11
Dec2018 $1.82
Dec2017 $1.52
Dec2016 $1.33
Dec2015 $0.98
Dec2014 $0.52
Dec2013 -$0.59
Dec2012 -$1.30
Dec2011 -$1.54
Dec2010 -$1.15
Dec2009 $0.04
Dec2008 $0.56
Dec2007 $1.48
Dec2006 $1.67
Dec2005 $1.74
Dec2004 $1.43
Dec2003 $1.15

Recommended Reading:

Other ModernGraham posts about the company

5 Companies for Enterprising Investors Near 52 Week Lows – July 2018
Masco Corp Valuation – May 2018 $MAS
Masco Corp Valuation – January 2017 $MAS
Masco Corporation Analysis – September 2015 Update $MAS
Masco Corporation Annual Valuation – 2015 $MAS

Other ModernGraham posts about related companies

D.R. Horton Inc Valuation – February 2019 $DHI
Martin Marietta Materials Inc Valuation – February 2019 $MLM
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Lennar Corp Valuation – February 2019 $LEN
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PulteGroup Inc Valuation – January 2019 $PHM
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Johnson Controls International PC Valuation – January 2019 $JCI
Cummins Inc Valuation – January 2019 $CMI
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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.

Ball Corporation Valuation – February 2019 $BLL

Company Profile (excerpt from Reuters): Ball Corporation (Ball), incorporated on December 19, 1922, is a supplier of metal packaging to the beverage, food, personal care and household products industries. The Company’s packaging products are produced for a range of end uses and are manufactured in facilities around the world. Its segments include beverage packaging, North and Central America; beverage packaging, South America; beverage packaging, Europe; food and aerosol packaging; aerospace, and other. Its major product line is aluminum and steel beverage containers. It also produces steel food, aerosol containers, extruded aluminum aerosol containers and aluminum slugs. It sells its packaging products to multinational beverage, food, personal care and household products companies. Its aerospace business is engaged in the design, development and manufacture of aerospace systems for civil, commercial and national cyber security aerospace markets. It produces spacecraft, instruments and sensors, radio frequency systems and components, data exploitation solutions and a range of aerospace technologies and products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BLL – 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 $18,465,563,018 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 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 20.83% Fail
6. Moderate PEmg Ratio PEmg < 20 36.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.30 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 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -42.00 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 $1.50
MG Growth Estimate 2.25%
MG Value $19.42
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $21.68
MG Value based on 0% Growth $12.71
Market Implied Growth Rate 13.97%
Current Price $54.50
% of Intrinsic Value 280.58%

Ball Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $1.3 in 2015 to an estimated $1.5 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.97% 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 Ball Corporation revealed the company was trading above its Graham Number of $23.31. The company pays a dividend of $0.4 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 36.45, which was above the industry average of 17.32. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.14.

Ball Corporation 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) -$26.14
Graham Number $23.31
PEmg 36.45
Current Ratio 0.96
PB Ratio 5.30
Current Dividend $0.40
Dividend Yield 0.73%
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 12/1/2018
Total Current Assets $3,940,000,000
Total Current Liabilities $4,095,000,000
Long-Term Debt $6,510,000,000
Total Assets $16,554,000,000
Intangible Assets $6,663,000,000
Total Liabilities $12,992,000,000
Shares Outstanding (Diluted Average) 346,274,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.30
Dec2018 $1.29
Dec2017 $1.05
Dec2016 $0.81
Dec2015 $1.00
Dec2014 $1.65
Dec2013 $1.37
Dec2012 $1.25
Dec2011 $1.32
Dec2010 $1.28
Dec2009 $1.02
Dec2008 $0.83
Dec2007 $0.69
Dec2006 $0.79
Dec2005 $0.62
Dec2004 $0.66
Dec2003 $0.50
Dec2002 $0.34
Dec2001 -$0.12
Dec2000 $0.03
Dec1999 $0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.50
Dec2018 $1.12
Dec2017 $1.08
Dec2016 $1.13
Dec2015 $1.30
Dec2014 $1.42
Dec2013 $1.29
Dec2012 $1.21
Dec2011 $1.14
Dec2010 $1.01
Dec2009 $0.84
Dec2008 $0.74
Dec2007 $0.68
Dec2006 $0.65
Dec2005 $0.52
Dec2004 $0.41
Dec2003 $0.25

Recommended Reading:

Other ModernGraham posts about the company

Ball Corporation Valuation – April 2018 $BLL
Ball Corporation Valuation – December 2016 $BLL
Ball Corporation Analysis – 2015 Update $BLL
19 Companies in the Spotlight This Week – 8/9/14
Ball Corporation Annual Valuation – 2014 $BLL

Other ModernGraham posts about related companies

Westrock Co Valuation – February 2019 $WRK
Sealed Air Corp Valuation – February 2019 $SEE
Packaging Corp of America Valuation – January 2019 $PKG
Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS

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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