Janus Capital Group Inc Valuation – Initial Coverage $JNS

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 Janus Capital Group Inc (JNS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Janus Capital Group Inc. provides investment management, administration, distribution and related services to financial advisors, individuals and institutional clients through mutual funds, separate accounts, other pooled investment vehicles and subadvised relationships (collectively referred to as investment products) in both domestic and international markets. The Company operates through its investment management business segment. The Company provides investment management solutions across a range of disciplines, including fundamental the United States and global equities (growth and value), mathematical equities, fixed income and alternatives, through its subsidiaries, Janus Capital Management LLC (Janus), INTECH Investment Management LLC (INTECH), Perkins Investment Management LLC (Perkins), VS Holdings, Inc. (VelocityShares) and Kapstream Capital Pty Limited (Kapstream).

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

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

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ModernGraham Valuation of JNS – February 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 $2,204,780,351 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.15 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -186.52% Fail
6. Moderate PEmg Ratio PEmg < 20 15.20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.28 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 3.15 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 $0.80
MG Growth Estimate 15.00%
MG Value $30.95
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $11.66
MG Value based on 0% Growth $6.83
Market Implied Growth Rate 3.35%
Current Price $12.22
% of Intrinsic Value 39.48%

Janus Capital Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. 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 $0.32 in 2013 to an estimated $0.8 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.35% 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 Janus Capital Group Inc revealed the company was trading below its Graham Number of $13.5. The company pays a dividend of $0.42 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 15.2, which was below the industry average of 21.33, 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 $-1.97.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$1.97
Graham Number $13.50
PEmg 15.20
Current Ratio 3.15
PB Ratio 1.28
Current Dividend $0.42
Dividend Yield 3.44%
Number of Consecutive Years of Dividend Growth 4

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $876,800,000
Total Current Liabilities $278,400,000
Long-Term Debt $406,300,000
Total Assets $2,949,900,000
Intangible Assets $1,940,900,000
Total Liabilities $1,230,600,000
Shares Outstanding (Diluted Average) 180,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.86
Dec2016 $0.78
Dec2015 $0.80
Dec2014 $0.81
Dec2013 $0.62
Dec2012 $0.55
Dec2011 $0.78
Dec2010 $0.88
Dec2009 -$4.55
Dec2008 $0.85
Dec2007 $0.65
Dec2006 $0.66
Dec2005 $0.40
Dec2004 $0.73
Dec2003 $4.11
Dec2002 $0.35
Dec2001 $1.27
Dec2000 $2.90
Dec1999 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.80
Dec2016 $0.75
Dec2015 $0.73
Dec2014 $0.71
Dec2013 $0.32
Dec2012 $0.02
Dec2011 -$0.26
Dec2010 -$0.62
Dec2009 -$1.05
Dec2008 $0.69
Dec2007 $0.84
Dec2006 $1.04
Dec2005 $1.28
Dec2004 $1.77
Dec2003 $2.19
Dec2002 $1.21
Dec2001 $1.46

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

Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
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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 – June 2017 $TROW

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 – March 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 T. Rowe Price Group Inc (TROW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): T. Rowe Price Group, Inc. 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. The Company distributes its products in countries located within three geographical regions: North America, Europe Middle East and Africa (EMEA), and Asia Pacific (APAC). It also offers specialized advisory services, including management of stable value investment contracts and a distribution management service for the disposition of equity securities its clients receive from third-party venture capital investment pools. As of December 31, 2016, it serviced clients in 45 countries across the world.

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ModernGraham Valuation of TROW – June 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,168,532,991 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 148.00% Pass
5. Moderate PEmg Ratio PEmg < 20 15.34 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.68 Fail
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 $4.89
MG Growth Estimate 7.74%
MG Value $117.33
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $70.94
MG Value based on 0% Growth $41.59
Market Implied Growth Rate 3.42%
Current Price $75.04
% of Intrinsic Value 63.96%

T. Rowe Price Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the  high PB ratio. 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 $3.23 in 2013 to an estimated $4.89 for 2017.  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 Benjamin Graham’s 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 $50.32.  The company pays a dividend of $2.16 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 15.34, which was below the industry average of 21.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

T. Rowe Price Group Inc performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $50.32
PEmg 15.34
PB Ratio 3.68
Dividend Yield 2.88%
TTM Dividend $2.16
Number of Consecutive Years of Dividend Growth 20

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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2017
Long-Term Debt & Capital Lease Obligation $0
Total Assets $6,275,600,000
Intangible Assets $665,700,000
Total Liabilities $1,275,400,000
Shares Outstanding (Diluted Average) 245,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.50
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
Dec1998 $0.67
Dec1997 $0.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.89
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
Dec2002 $0.83
Dec2001 $0.84

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2016
Dividend Growth Stocks for Intelligent Investors – July 2016
Dividend Growth Stocks for Intelligent Investors – June 2016
T.Rowe Price Group Inc Stock Valuation – February 2016 $TROW
Dividend Growth Stocks for Intelligent Investors – February 2016

Other ModernGraham posts about related companies

Tricon Capital Group Inc Valuation – Initial Coverage $TSE:TCN
Moody’s Corporation Valuation – March 2017 $MCO
KKR & Co Ltd Valuation – March 2017 $KKR
Charles Schwab Corp Valuation – March 2017 $SCHW
Synchrony Financial Valuation – Initial Coverage $SYF
Franklin Resources Inc Valuation – February 2017 $BEN
S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS

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.

Tricon Capital Group Inc Valuation – Initial Coverage $TSE:TCN

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 – March 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 Tricon Capital Group Inc (TSE:TCN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tricon Capital Group Inc. is a Canada-based company, which is a principal investor and asset manager focused on the residential real estate industry in North America. The Company operates through five segments: Private Funds and Advisory (PF&A), Principal Investing in Tricon Housing Partners (THP), Tricon American Homes (TAH), Tricon Lifestyle Communities (TLC) and Tricon Luxury Residences (TLR). In Private Funds and Advisory, the Company manages, on behalf of private investors, commingled funds, sidecars and separate investment accounts that invest in the development of real estate in North America. Tricon’s investment activities are carried on through Tricon Housing Partners (land and homebuilding), Tricon American Homes (single-family rental), Tricon Lifestyle Communities (manufactured housing communities) and Tricon Luxury Residences (purpose-built multi-family apartments). It manages capital on behalf of third-party institutional and high net-worth accredited investors.

TCN Chart

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ModernGraham Valuation of TSE-TCN – April 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 $1,232,979,038 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.25 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 -392.72% Fail
6. Moderate PEmg Ratio PEmg < 20 14.10 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.38 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 1.25 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 22.33 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 $0.77
MG Growth Estimate 15.00%
MG Value $29.74
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $11.20
MG Value based on 0% Growth $6.57
Market Implied Growth Rate 2.80%
Current Price $10.89
% of Intrinsic Value 36.62%

Tricon Capital 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 small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $0.06 in 2013 to an estimated $0.77 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.8% 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 Tricon Capital Group Inc revealed the company was trading below its Graham Number of $12.4. The company pays a dividend of $0.26 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.1, which was below the industry average of 21.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.22.

Tricon Capital Group Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$2.22
Graham Number $12.40
PEmg 14.10
Current Ratio 1.25
PB Ratio 1.38
Current Dividend $0.26
Dividend Yield 2.38%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $49,715,000
Total Current Liabilities $39,629,000
Long-Term Debt $225,233,000
Total Assets $1,297,511,000
Intangible Assets $33,595,000
Total Liabilities $323,903,000
Shares Outstanding (Diluted Average) 123,647,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.79
Dec2016 $0.61
Dec2015 $0.81
Dec2014 $1.10
Dec2013 $0.56
Dec2012 -$0.15
Dec2011 $0.03
Dec2010 -$0.62
Dec2009 -$0.14

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.77
Dec2016 $0.70
Dec2015 $0.66
Dec2014 $0.45
Dec2013 $0.06
Dec2012 -$0.18
Dec2011 -$0.18
Dec2010 -$0.24
Dec2009 -$0.05

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

Moody’s Corporation Valuation – March 2017 $MCO
KKR & Co Ltd Valuation – March 2017 $KKR
Charles Schwab Corp Valuation – March 2017 $SCHW
Synchrony Financial Valuation – Initial Coverage $SYF
Franklin Resources Inc Valuation – February 2017 $BEN
S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL

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.

Best Stocks Below Their Graham Number – March 2017

Graham Number Stocks

One popular approach to investing based on Benjamin Graham’s methods is to use the so-called “Graham Number.”  There are some important differences between the Graham Number and the Graham Formula, but using the Graham Number is definitely useful even if the investor only uses it as a screening tactic.

I’ve selected the best companies reviewed by ModernGraham which trade below their Graham Number.  The companies selected all are found suitable for the Defensive Investor and/or the Enterprising Investor, and have been valued as undervalued based on the ModernGraham valuation model.  Further, the overall screen found 33 companies meeting these criteria (out of the 850+ companies covered by ModernGraham), and the full list can be found near the end of this article; however, to cut down on the length of the post, I’ve selected the ten which trade furthest below their Graham Number.

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.

These companies have demonstrated strong financial positions through passing the rigorous requirements of the ModernGraham Investor and show potential for capital growth based on their current price in relation to intrinsic value.  As such, these graham number stocks may be a great investment if they prove to be suitable for your portfolio after your own additional research.

Navient Corp (NAVI)

Navient Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor 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 $0.63 in 2012 to an estimated $2.39 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.25% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Navient Corp revealed the company was trading below its Graham Number of $21.98. The company pays a dividend of $0.64 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 6.01, which was below the industry average of 19.87, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

NAVI charts August 2016

Linamar Corporation (TSE:LNR)

Linamar Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years. 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 $2.22 in 2013 to an estimated $6.93 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.1% 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 above the price.

At the time of valuation, further research into Linamar Corporation revealed the company was trading below its Graham Number of $83.15. 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 8.7, which was below the industry average of 18.47, 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 $-7.49.  (See the full valuation)

KB Home (KBH)

KB Home is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years. 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 $-0.72 in 2013 to an estimated $2.2 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.52% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into KB Home revealed the company was trading below its Graham Number of $25.21. The company pays a dividend of $0.1 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 7.47, which was below the industry average of 28.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $8.5.  (See the full valuation)

Aspen Insurance Holdings Limited (AHL)

Aspen Insurance Holdings Limited is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. 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 $2.19 in 2012 to an estimated $4.51 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.7% 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 Aspen Insurance Holdings Limited revealed the company was trading below its Graham Number of $82.44. The company pays a dividend of $0.86 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 11.91, which was below the industry average of 16.56, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

LGI Homes Inc (LGIH)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.39 in 2013 to an estimated $2.76 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.6% 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 LGI Homes Inc revealed the company was trading below its Graham Number of $36.13. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 11.7, which was below the industry average of 28.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $15.24.  (See the full valuation)

Signet Jewelers Ltd. (SIG)

Signet Jewelers Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the 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 $2.84 in 2013 to an estimated $5.77 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.39% 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 Signet Jewelers Ltd. revealed the company was trading above its Graham Number of $71.41. The company pays a dividend of $1 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 15.29, which was below the industry average of 26.36, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.06.  (See the full valuation)

Lincoln National Corporation (LNC)

Lincoln National Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. 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 $2.04 in 2012 to an estimated $5.16 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.12% 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.  (See the full valuation)

LNC charts May 2016

Spok Holdings, Inc. (SPOK)

Spok Holdings, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the 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 $2.08 in 2012 to an estimated $2.83 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.96% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Spok Holdings, Inc. revealed the company was trading below its Graham Number of $38.13. The company pays a dividend of $0.5 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 6.58, which was below the industry average of 68.5, 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 $4.56.  (See the full valuation)

Fifth Third Bancorp (FITB)

Fifth Third Bancorp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. 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 $0.82 in 2012 to an estimated $1.74 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.75% 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. (See the full valuation)

FITB charts July 2016

Citigroup Inc (C)

Citigroup Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the 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 $-2.31 in 2012 to an estimated $4.1 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.16% 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.  (See the full valuation)

C charts July 2016

The Full List

[not-level-free]
Clicking on the company name will take you to the company’s latest valuation.  For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield Graham Number
AFL AFLAC Incorporated D 12/19/2016 $112.32 $71.84 63.96% 11.55 2.28% $87.98
AHL Aspen Insurance Holdings Limited E 12/13/2016 $173.48 $52.10 30.03% 11.55 1.65% $82.44
ARW Arrow Electronics, Inc. E 7/3/2016 $124.11 $72.75 58.62% 13.83 0.00% $81.27
BAC Bank of America Corp E 7/14/2016 $35.60 $23.03 64.69% 25.03 0.87% $23.92
BAX Baxter International Inc D 1/28/2017 $111.31 $51.83 46.56% 10.04 0.95% $56.96
BBBY Bed Bath & Beyond Inc. D 6/14/2016 $93.73 $38.32 40.88% 7.80 0.00% $41.96
BK Bank of New York Mellon Corp E 1/7/2017 $77.99 $46.25 59.30% 18.21 1.51% $48.91
C Citigroup Inc E 7/19/2016 $157.95 $58.33 36.93% 14.23 0.34% $85.07
CNO CNO Financial Group Inc E 1/28/2017 $42.30 $20.21 47.78% 18.37 1.48% $24.73
COF Capital One Financial Corp. E 7/6/2016 $142.36 $82.13 57.69% 11.52 1.95% $122.14
CVG Convergys Corp E 3/18/2017 $45.02 $20.71 46.00% 13.90 1.69% $23.70
FITB Fifth Third Bancorp E 7/2/2016 $67.04 $24.73 36.89% 14.21 2.10% $25.45
IVZ Invesco Ltd. D 7/24/2016 $60.45 $30.00 49.63% 13.95 3.60% $30.20
JNS Janus Capital Group Inc E 2/2/2017 $30.95 $12.66 40.90% 15.83 3.32% $13.50
KBH KB Home E 2/4/2017 $84.55 $19.36 22.90% 8.80 0.52% $25.21
KELYA Kelly Services, Inc. E 2/7/2017 $50.08 $21.26 42.45% 11.81 1.32% $30.13
LGIH LGI Homes Inc E 3/11/2017 $106.16 $32.56 30.67% 11.80 0.00% $36.13
LNC Lincoln National Corporation E 5/20/2016 $198.66 $63.47 31.95% 12.30 1.73% $89.07
MET Metlife Inc E 12/13/2016 $119.73 $51.69 43.17% 12.79 3.00% $78.35
NAVI Navient Corp E 8/31/2016 $92.14 $14.00 15.19% 5.86 4.57% $21.98
RF Regions Financial Corp E 6/27/2016 $29.52 $14.08 47.70% 18.29 1.70% $14.93
SENEA Seneca Foods Corp E 12/22/2016 $69.62 $35.05 50.34% 12.89 0.00% $69.20
SIG Signet Jewelers Ltd. E 1/9/2017 $222.15 $69.66 31.36% 12.07 1.44% $71.41
SPOK Spok Holdings, Inc. E 2/9/2017 $54.43 $18.75 34.45% 6.63 2.67% $38.13
STBA S & T Bancorp Inc E 2/23/2017 $48.34 $33.54 69.38% 16.52 2.30% $34.16
STI SunTrust Banks, Inc. E 8/25/2016 $126.84 $54.34 42.84% 16.52 1.77% $59.54
STWD Starwood Property Trust, Inc. E 8/25/2016 $57.61 $22.87 39.70% 11.55 8.40% $27.64
SYF Synchrony Financial E 3/2/2017 $75.28 $32.74 43.49% 11.69 0.79% $34.07
TCB TCF Financial Corporation E 3/26/2017 $41.61 $15.83 38.04% 14.66 1.90% $18.02
TRV Travelers Companies Inc D 12/1/2016 $320.65 $121.01 37.74% 12.26 1.61% $134.38
TSE:CLS Celestica Inc E 1/11/2017 $37.85 $18.98 50.15% 19.37 0.00% $20.71
TSE:CWB Canadian Western Bank D 3/25/2017 $43.69 $28.99 66.35% 10.78 3.17% $36.05
TSE:LNR Linamar Corporation E 3/26/2017 $266.91 $61.10 22.89% 8.82 0.65% $83.15

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

To view the MG Value and PEmg information,  you must be logged in as a premium member.  Clicking on the company name will take you to the company’s latest valuation.

For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield Graham Number
AFL AFLAC Incorporated D 12/19/2016 $71.84 2.28% $87.98
AHL Aspen Insurance Holdings Limited E 12/13/2016 $52.10 1.65% $82.44
ARW Arrow Electronics, Inc. E 7/3/2016 $72.75 0.00% $81.27
BAC Bank of America Corp E 7/14/2016 $23.03 0.87% $23.92
BAX Baxter International Inc D 1/28/2017 $51.83 0.95% $56.96
BBBY Bed Bath & Beyond Inc. D 6/14/2016 $38.32 0.00% $41.96
BK Bank of New York Mellon Corp E 1/7/2017 $46.25 1.51% $48.91
C Citigroup Inc E 7/19/2016 $58.33 0.34% $85.07
CNO CNO Financial Group Inc E 1/28/2017 $20.21 1.48% $24.73
COF Capital One Financial Corp. E 7/6/2016 $82.13 1.95% $122.14
CVG Convergys Corp E 3/18/2017 $20.71 1.69% $23.70
FITB Fifth Third Bancorp E 7/2/2016 $24.73 2.10% $25.45
IVZ Invesco Ltd. D 7/24/2016 $30.00 3.60% $30.20
JNS Janus Capital Group Inc E 2/2/2017 $12.66 3.32% $13.50
KBH KB Home E 2/4/2017 $19.36 0.52% $25.21
KELYA Kelly Services, Inc. E 2/7/2017 $21.26 1.32% $30.13
LGIH LGI Homes Inc E 3/11/2017 $32.56 0.00% $36.13
LNC Lincoln National Corporation E 5/20/2016 $63.47 1.73% $89.07
MET Metlife Inc E 12/13/2016 $51.69 3.00% $78.35
NAVI Navient Corp E 8/31/2016 $14.00 4.57% $21.98
RF Regions Financial Corp E 6/27/2016 $14.08 1.70% $14.93
SENEA Seneca Foods Corp E 12/22/2016 $35.05 0.00% $69.20
SIG Signet Jewelers Ltd. E 1/9/2017 $69.66 1.44% $71.41
SPOK Spok Holdings, Inc. E 2/9/2017 $18.75 2.67% $38.13
STBA S & T Bancorp Inc E 2/23/2017 $33.54 2.30% $34.16
STI SunTrust Banks, Inc. E 8/25/2016 $54.34 1.77% $59.54
STWD Starwood Property Trust, Inc. E 8/25/2016 $22.87 8.40% $27.64
SYF Synchrony Financial E 3/2/2017 $32.74 0.79% $34.07
TCB TCF Financial Corporation E 3/26/2017 $15.83 1.90% $18.02
TRV Travelers Companies Inc D 12/1/2016 $121.01 1.61% $134.38
TSE:CLS Celestica Inc E 1/11/2017 $18.98 0.00% $20.71
TSE:CWB Canadian Western Bank D 3/25/2017 $28.99 3.17% $36.05
TSE:LNR Linamar Corporation E 3/26/2017 $61.10 0.65% $83.15

[/level-free]

Disclaimer: 

The author held a long position in Invesco Ltd (IVZ) and Starwood Property Trust (STWD) but did not hold a position in any other company mentioned in this article at the time of publication and had no specific intention of changing that position within the next 72 hours; however, the author does intend to make some trades in the next 72 hours and may select a company from this list.  See my current holdings here.  This article is not investment advice and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions.  Please also read our full disclaimer.

Moody’s Corporation Valuation – March 2017 $MCO

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 – March 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 Moody’s Corporation (MCO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Moody’s Corporation (Moody’s) is a provider of credit ratings; credit, capital markets and economic related research, data and analytical tools; software solutions and related risk management services, quantitative credit risk measures, financial services training and certification services, and research and analytical services to financial institution customers. The Company operates in two segments: Moody’s Investors Service (MIS) and Moody’s Analytics (MA). The MIS segment includes its ratings operations. The MA segment develops a range of products and services that support financial analysis and risk management activities of institutional participants in financial markets. The MIS segment includes corporate finance group; structured finance group; financial institutions group; public, project and infrastructure finance, and MIS Other. The MA segment consists of three lines of business: data and analytics business, enterprise risk solutions and professional service.

MCO Chart

MCO data by YCharts

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

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

Learn More About Premium Membership

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCO – March 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 $21,338,397,663 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 95.45% Pass
6. Moderate PEmg Ratio PEmg < 20 28.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -17.77 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.71 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.87
MG Growth Estimate 4.93%
MG Value $70.97
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $56.07
MG Value based on 0% Growth $32.87
Market Implied Growth Rate 10.16%
Current Price $111.41
% of Intrinsic Value 156.99%

Moody’s 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, 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 $2.91 in 2013 to an estimated $3.87 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.16% 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 Moody’s Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.48 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 28.81, which was above the industry average of 21.55. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.88.

Moody’s 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) -$16.88
Graham Number $0.00
PEmg 28.81
Current Ratio 1.34
PB Ratio -17.77
Current Dividend $1.48
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 8

[/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 12/1/2016
Total Current Assets $3,253,100,000
Total Current Liabilities $2,428,200,000
Long-Term Debt $3,063,000,000
Total Assets $5,327,300,000
Intangible Assets $1,320,000,000
Total Liabilities $6,552,300,000
Shares Outstanding (Diluted Average) 195,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.17
Dec2016 $1.36
Dec2015 $4.63
Dec2014 $4.61
Dec2013 $3.60
Dec2012 $3.05
Dec2011 $2.49
Dec2010 $2.15
Dec2009 $1.69
Dec2008 $1.87
Dec2007 $2.58
Dec2006 $2.58
Dec2005 $1.84
Dec2004 $1.40
Dec2003 $1.19
Dec2002 $0.92
Dec2001 $0.66
Dec2000 $0.49
Dec1999 $0.48
Dec1998 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.87
Dec2016 $3.29
Dec2015 $4.07
Dec2014 $3.58
Dec2013 $2.91
Dec2012 $2.46
Dec2011 $2.16
Dec2010 $2.06
Dec2009 $2.04
Dec2008 $2.17
Dec2007 $2.18
Dec2006 $1.85
Dec2005 $1.39
Dec2004 $1.09
Dec2003 $0.87
Dec2002 $0.70
Dec2001 $0.55

Recommended Reading:

Other ModernGraham posts about the company

Moody’s Corporation Stock Valuation – February 2016 $MCO
10 Best Stocks For Value Investors This Week – 9/26/15
Moody’s Corporation Analysis – September 2015 Update $MCO
The Best Stocks of the Financial Services Industry – September 2015
The 10 Best Stocks For Value Investors This Week – 6/20/15

Other ModernGraham posts about related companies

KKR & Co Ltd Valuation – March 2017 $KKR
Charles Schwab Corp Valuation – March 2017 $SCHW
Synchrony Financial Valuation – Initial Coverage $SYF
Franklin Resources Inc Valuation – February 2017 $BEN
S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
Sun Life Financial Inc Valuation – Initial Coverage $TSE:SLF

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.

KKR & Co Ltd Valuation – March 2017 $KKR

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 – March 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 KKR & Co Ltd (KKR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): KKR & CO. L.P. (KKR) is a global investment firm that manages investments across multiple asset classes, including private equity, energy, infrastructure, real estate, credit and hedge funds. The Company’s business offers a range of investment management services to its fund investors, and provides capital markets services to its firm, its portfolio companies and third parties. The Company conducts its business with offices across the world, providing it with a global platform for sourcing transactions, raising capital and carrying out capital markets activities. The Company operates through four segments: Private Markets, Public Markets, Capital Markets and Principal Activities. It operates and reports its combined credit and hedge funds businesses through the Public Markets segment. The Capital Markets segment consists primarily of its global capital markets business. Through its Principal Activities segment, the Company manages the firm’s assets and deploys capital.

KKR Chart

KKR 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.

Learn More About Premium Membership

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of KKR – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,889,756,354 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 103.70% Pass
5. Moderate PEmg Ratio PEmg < 20 14.81 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.49 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 Fail

Stage 2: Determination of Intrinsic Value

EPSmg $1.23
MG Growth Estimate -3.24%
MG Value $2.49
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $17.89
MG Value based on 0% Growth $10.49
Market Implied Growth Rate 3.15%
Current Price $18.27
% of Intrinsic Value 733.06%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.57 in 2013 to an estimated $1.23 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.15% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into KKR & Co. L.P. revealed the company was trading below its Graham Number of $22.48. The company pays a dividend of $0.64 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.81, which was below the industry average of 21.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

KKR & Co. L.P. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $22.48
PEmg 14.81
PB Ratio 1.49
Dividend Yield 3.50%
TTM Dividend $0.64
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $18,544,075,000
Total Assets $39,002,897,000
Intangible Assets $0
Total Liabilities $33,063,064,000
Shares Outstanding (Diluted Average) 483,431,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Dec2016 $0.59
Dec2015 $1.01
Dec2014 $1.16
Dec2013 $2.30
Dec2012 $2.21
Dec2011 $0.01
Dec2010 $1.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.23
Dec2016 $1.15
Dec2015 $1.40
Dec2014 $1.55
Dec2013 $1.57
Dec2012 $1.06
Dec2011 $0.44
Dec2010 $0.54

Recommended Reading:

Other ModernGraham posts about the company

KKR & Co L.P. Valuation – August 2016 $KKR
10 Best Dividend Paying Stocks for the Enterprising Investor – August 2016
Dividend Investors Should Research These 10 Stocks – July 2016
10 Most Undervalued Companies for the Enterprising Investor – June 2016
10 Companies for Enterprising Dividend Investors – June 2016

Other ModernGraham posts about related companies

Charles Schwab Corp Valuation – March 2017 $SCHW
Synchrony Financial Valuation – Initial Coverage $SYF
Franklin Resources Inc Valuation – February 2017 $BEN
S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
Sun Life Financial Inc Valuation – Initial Coverage $TSE:SLF
Capstead Mortgage Corporation Valuation – Initial Coverage $CMO

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.

Charles Schwab Corp Valuation – March 2017 $SCHW

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 – February 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 Charles Schwab Corp (SCHW) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Charles Schwab Corporation is a savings and loan holding company. The Company, through its subsidiaries, engages in wealth management, securities brokerage, banking, money management and financial advisory services. The Company provides financial services to individuals and institutional clients through two segments: Investor Services and Advisor Services. The Investor Services segment provides retail brokerage and banking services, retirement plan services and other corporate brokerage services. The Advisor Services segment provides custodial, trading, and support services, as well as retirement business services. The Company offers a range of products to address individuals’ varying investment and financial needs. Its product offerings include brokerage, mutual funds, exchange-traded funds, advice solutions, banking and trust. Its subsidiaries include Charles Schwab & Co., Inc. (Schwab), Charles Schwab Bank (Schwab Bank) and Charles Schwab Investment Management, Inc. (CSIM).

SCHW Chart

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ModernGraham Valuation of SCHW – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $57,018,203,782 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 73.93% Pass
5. Moderate PEmg Ratio PEmg < 20 36.08 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.45 Fail
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 $1.18
MG Growth Estimate 10.97%
MG Value $35.84
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $17.07
MG Value based on 0% Growth $10.01
Market Implied Growth Rate 13.79%
Current Price $42.48
% of Intrinsic Value 118.53%

Charles Schwab Corp 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 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 Overvalued after growing its EPSmg (normalized earnings) from $0.68 in 2013 to an estimated $1.18 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.79% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Charles Schwab Corp revealed the company was trading above its Graham Number of $17.55. The company pays a dividend of $0.27 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 36.08, which was above the industry average of 21.33.

Charles Schwab Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $17.55
PEmg 36.08
PB Ratio 3.45
Dividend Yield 0.64%
TTM Dividend $0.27
Number of Consecutive Years of Dividend Growth 2

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $2,876,000,000
Total Assets $223,383,000,000
Intangible Assets $1,371,000,000
Total Liabilities $206,962,000,000
Shares Outstanding (Diluted Average) 1,334,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.33
Dec2016 $1.31
Dec2015 $1.03
Dec2014 $0.95
Dec2013 $0.78
Dec2012 $0.69
Dec2011 $0.70
Dec2010 $0.38
Dec2009 $0.68
Dec2008 $1.05
Dec2007 $1.97
Dec2006 $0.95
Dec2005 $0.55
Dec2004 $0.21
Dec2003 $0.35
Dec2002 $0.08
Dec2001 $0.14
Dec2000 $0.51
Dec1999 $0.49
Dec1998 $0.28
Dec1997 $0.22

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.18
Dec2016 $1.05
Dec2015 $0.89
Dec2014 $0.78
Dec2013 $0.68
Dec2012 $0.65
Dec2011 $0.74
Dec2010 $0.84
Dec2009 $1.06
Dec2008 $1.15
Dec2007 $1.07
Dec2006 $0.56
Dec2005 $0.33
Dec2004 $0.23
Dec2003 $0.27
Dec2002 $0.25
Dec2001 $0.33

Recommended Reading:

Other ModernGraham posts about the company

Charles Schwab Corp Valuation – August 2016 $SCHW
27 Companies in the Spotlight This Week – 4/4/15
Charles Schwab Corporation Annual Valuation – 2015 $SCHW
17 Companies in the Spotlight This Week – 3/29/14
Charles Schwab Corp (SCHW) Annual Valuation – 2014

Other ModernGraham posts about related companies

Synchrony Financial Valuation – Initial Coverage $SYF
Franklin Resources Inc Valuation – February 2017 $BEN
S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
Sun Life Financial Inc Valuation – Initial Coverage $TSE:SLF
Capstead Mortgage Corporation Valuation – Initial Coverage $CMO
Affiliated Managers Group Inc Valuation – January 2017 $AMG

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.

Synchrony Financial Valuation – Initial Coverage $SYF

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 – February 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 Synchrony Financial (SYF) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Synchrony Financial is a consumer financial services company. The Company provides a range of credit products through programs it has established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers. The Company’s revenue activities are managed through three sales platforms: Retail Card, Payment Solutions and CareCredit. It offers its credit products through its subsidiary, Synchrony Bank (the Bank). Through the Bank, it offers a range of deposit products insured by the Federal Deposit Insurance Corporation (FDIC), including certificates of deposit, individual retirement accounts (IRAs), money market accounts and savings accounts. The Company offers three types of credit products: credit cards, commercial credit products and consumer installment loans. The Company also offers a debt cancellation product. It offers two types of credit cards: private label credit cards and Dual Cards.

SYF Chart

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ModernGraham Valuation of SYF – March 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $29,835,641,645 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 27766566.67% Pass
5. Moderate PEmg Ratio PEmg < 20 12.91 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.12 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 $2.80
MG Growth Estimate 9.19%
MG Value $75.28
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $40.61
MG Value based on 0% Growth $23.81
Market Implied Growth Rate 2.20%
Current Price $36.15
% of Intrinsic Value 48.02%

Synchrony Financial is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor 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 $1.74 in 2013 to an estimated $2.8 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.2% 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 Synchrony Financial revealed the company was trading above its Graham Number of $34.07. The company pays a dividend of $0.26 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 12.91, which was below the industry average of 21.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Synchrony Financial receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $34.07
PEmg 12.91
PB Ratio 2.12
Dividend Yield 0.72%
TTM Dividend $0.26
Number of Consecutive Years of Dividend Growth 2

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Long-Term Debt & Capital Lease Obligation $20,147,000,000
Total Assets $90,207,000,000
Intangible Assets $1,661,000,000
Total Liabilities $76,011,000,000
Shares Outstanding (Diluted Average) 831,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.97
Dec2016 $2.71
Dec2015 $2.65
Dec2014 $2.78
Dec2013 $2.81
Dec2012 $3.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.80
Dec2016 $2.74
Dec2015 $2.59
Dec2014 $2.28
Dec2013 $1.74
Dec2012 $1.00

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

Franklin Resources Inc Valuation – February 2017 $BEN
S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
Sun Life Financial Inc Valuation – Initial Coverage $TSE:SLF
Capstead Mortgage Corporation Valuation – Initial Coverage $CMO
Affiliated Managers Group Inc Valuation – January 2017 $AMG
Investment Technology Group Valuation – Initial Coverage $ITG

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.

Franklin Resources Inc Valuation – February 2017 $BEN

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 – February 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 Franklin Resources Inc (BEN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.

BEN Chart

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ModernGraham Valuation of BEN – February 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 $24,175,566,255 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 10.84 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 57.23% Pass
6. Moderate PEmg Ratio PEmg < 20 14.02 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.01 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 10.84 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.18 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 $3.04
MG Growth Estimate 0.94%
MG Value $31.56
Opinion Overvalued
MG Grade B
MG Value based on 3% Growth $44.06
MG Value based on 0% Growth $25.83
Market Implied Growth Rate 2.76%
Current Price $42.60
% of Intrinsic Value 134.97%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.86 in 2013 to an estimated $3.04 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.76% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Franklin Resources, Inc. revealed the company was trading above its Graham Number of $35.12. The company pays a dividend of $0.74 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 14.02, which was below the industry average of 21.33, 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 $11.77.

Franklin Resources, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $11.77
Graham Number $35.12
PEmg 14.02
Current Ratio 10.84
PB Ratio 2.01
Current Dividend $0.74
Dividend Yield 1.74%
Number of Consecutive Years of Dividend Growth 20

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $10,897,600,000
Total Current Liabilities $1,005,300,000
Long-Term Debt $1,734,500,000
Total Assets $16,210,300,000
Intangible Assets $2,200,400,000
Total Liabilities $4,245,500,000
Shares Outstanding (Diluted Average) 565,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.60
Sep2016 $2.94
Sep2015 $3.29
Sep2014 $3.79
Sep2013 $3.37
Sep2012 $2.98
Sep2011 $2.87
Sep2010 $2.11
Sep2009 $1.28
Sep2008 $2.22
Sep2007 $2.34
Sep2006 $1.62
Sep2005 $1.35
Sep2004 $0.92
Sep2003 $0.66
Sep2002 $0.55
Sep2001 $0.64
Sep2000 $0.76
Sep1999 $0.56
Sep1998 $0.66
Sep1997 $0.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.04
Sep2016 $3.26
Sep2015 $3.37
Sep2014 $3.28
Sep2013 $2.86
Sep2012 $2.50
Sep2011 $2.23
Sep2010 $1.91
Sep2009 $1.80
Sep2008 $1.93
Sep2007 $1.65
Sep2006 $1.21
Sep2005 $0.94
Sep2004 $0.73
Sep2003 $0.63
Sep2002 $0.63
Sep2001 $0.65

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stock Picks for the Defensive Investor – August 2016
Dividend Growth Stocks for Intelligent Investors – July 2016
10 Low PE Stocks for the Defensive Investor – July 2016
Dividend Growth Stocks for Intelligent Investors – June 2016
10 Low PE Stocks for the Defensive Investor – June 2016

Other ModernGraham posts about related companies

S&P Global Inc Valuation – Initial Coverage $SPGI
CME Group Inc Valuation – February 2017 $CME
Equifax Inc Valuation – February 2017 $EFX
Janus Capital Group Inc Valuation – Initial Coverage $JNS
Jones Lang LaSalle Inc Valuation – Initial Coverage $JLL
Sun Life Financial Inc Valuation – Initial Coverage $TSE:SLF
Capstead Mortgage Corporation Valuation – Initial Coverage $CMO
Affiliated Managers Group Inc Valuation – January 2017 $AMG
Investment Technology Group Valuation – Initial Coverage $ITG
Calamos Asset Management Inc Valuation – Initial Coverage $CLMS

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.

Best Stocks Below Their Graham Number – February 2017

Graham Number Stocks

One popular approach to investing based on Benjamin Graham’s methods is to use the so-called “Graham Number.”  There are some important differences between the Graham Number and the Graham Formula, but using the Graham Number is definitely useful even if the investor only uses it as a screening tactic.

I’ve selected the best companies reviewed by ModernGraham which trade below their Graham Number.  The companies selected all are found suitable for the Defensive Investor and/or the Enterprising Investor, and have been valued as undervalued based on the ModernGraham valuation model.  Further, the overall screen found 28 companies meeting these criteria (out of the 745+ companies covered by ModernGraham), and the full list can be found near the end of this article; however, to cut down on the length of the post, I’ve selected the ten which trade furthest below their Graham Number.

Defensive Investors are defined as investors who are not able or willing to do substantial research into individual investments, and therefore need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk. Each company suitable for the Defensive Investor is also suitable for Enterprising Investors.

These companies have demonstrated strong financial positions through passing the rigorous requirements of the ModernGraham Investor and show potential for capital growth based on their current price in relation to intrinsic value.  As such, these graham number stocks may be a great investment if they prove to be suitable for your portfolio after your own additional research.

Spok Holdings, Inc. (SPOK)

Spok Holdings, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the 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 $2.08 in 2012 to an estimated $2.83 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.96% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Spok Holdings, Inc. revealed the company was trading below its Graham Number of $38.13. The company pays a dividend of $0.5 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 6.58, which was below the industry average of 68.5, 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 $4.56.  (See the full valuation)

Seneca Foods Corp (SENEA)

Seneca Foods Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.73 in 2012 to an estimated $2.72 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.19% 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 Seneca Foods Corp revealed the company was trading below its Graham Number of $69.2. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.87, which was below the industry average of 24.74, 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 $16.89.  (See the full valuation)

KB Home (KBH)

KB Home is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years. 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 $-0.72 in 2013 to an estimated $2.2 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.52% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into KB Home revealed the company was trading below its Graham Number of $25.21. The company pays a dividend of $0.1 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 7.47, which was below the industry average of 28.49, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $8.5.  (See the full valuation)

Metlife Inc (MET)

Metlife Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. 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 $2.37 in 2012 to an estimated $4.04 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.75% 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 Metlife Inc revealed the company was trading below its Graham Number of $78.35. The company pays a dividend of $1.55 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 14.01, which was below the industry average of 16.56, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

Aspen Insurance Holdings Limited (AHL)

Aspen Insurance Holdings Limited is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. 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 $2.19 in 2012 to an estimated $4.51 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.7% 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 Aspen Insurance Holdings Limited revealed the company was trading below its Graham Number of $82.44. The company pays a dividend of $0.86 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 11.91, which was below the industry average of 16.56, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

Equity Residential (EQR)

Equity Residential 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 2012 to an estimated $5.79 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.39% 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 Equity Residential revealed the company was trading below its Graham Number of $90.07. The company pays a dividend of $2.11 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.29, which was below the industry average of 34.03, 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 $-24.85.  (See the full valuation)

Navient Corp (NAVI)

Navient Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor 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 $0.63 in 2012 to an estimated $2.39 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.25% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Navient Corp revealed the company was trading below its Graham Number of $21.98. The company pays a dividend of $0.64 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 6.01, which was below the industry average of 19.87, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

NAVI charts August 2016

Citigroup Inc (C)

Citigroup Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the 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 $-2.31 in 2012 to an estimated $4.1 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.16% 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.  (See the full valuation)

C charts July 2016

Kelly Services, Inc. (KELYA)

Kelly Services, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the 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 $1.1 in 2013 to an estimated $1.8 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.74% 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 above the price.

At the time of valuation, further research into Kelly Services, Inc. revealed the company was trading below its Graham Number of $30.13. The company pays a dividend of $0.28 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 11.99, which was below the industry average of 21.9, 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 $5.19.  (See the full valuation)

Fossil Group Inc (FOSL)

Fossil Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.26 in 2012 to an estimated $4.36 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.81% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Fossil Group Inc revealed the company was trading above its Graham Number of $25.49. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 6.88, which was below the industry average of 49.91, 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 $0.64.  (See the full valuation)

FOSL charts August 2016

The Full List

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Clicking on the company name will take you to the company’s latest valuation.  For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield Graham Number
AFL AFLAC Incorporated D 12/19/2016 $112.32 $71.72 63.85% 11.53 2.29% $87.98
AHL Aspen Insurance Holdings Limited E 12/13/2016 $173.48 $56.75 32.71% 12.58 1.52% $82.44
AIG American International Group Inc E 8/25/2016 $140.01 $64.02 45.73% 17.59 1.87% $82.15
ARW Arrow Electronics, Inc. E 7/3/2016 $124.11 $73.40 59.14% 13.95 0.00% $81.27
BAX Baxter International Inc D 1/28/2017 $111.31 $50.39 45.27% 9.77 0.97% $56.96
BBBY Bed Bath & Beyond Inc. D 6/14/2016 $93.73 $40.40 43.10% 8.23 0.00% $41.96
BK Bank of New York Mellon Corp E 1/7/2017 $77.99 $47.34 60.70% 18.64 1.48% $48.91
C Citigroup Inc E 7/19/2016 $157.95 $60.62 38.38% 14.79 0.33% $85.07
CNO CNO Financial Group Inc E 1/28/2017 $42.30 $21.06 49.79% 19.15 1.42% $24.73
COF Capital One Financial Corp. E 7/6/2016 $142.36 $93.41 65.62% 13.10 1.71% $122.14
DHI D.R. Horton, Inc. E 1/11/2017 $70.21 $30.98 44.12% 14.21 1.03% $32.39
EQR Equity Residential D 8/21/2016 $223.04 $62.76 28.14% 10.84 3.36% $90.07
FOSL Fossil Group Inc E 8/25/2016 $40.21 $19.42 48.30% 4.45 0.00% $25.49
JNS Janus Capital Group Inc E 2/2/2017 $30.95 $12.62 40.78% 15.78 3.33% $13.50
KBH KB Home E 2/4/2017 $84.55 $16.93 20.02% 7.70 0.59% $25.21
KELYA Kelly Services, Inc. E 2/7/2017 $50.08 $21.56 43.05% 11.98 1.30% $30.13
LEN Lennar Corporation E 11/19/2016 $125.38 $47.15 37.61% 14.46 0.34% $49.83
LNC Lincoln National Corporation E 5/20/2016 $198.66 $71.69 36.09% 13.89 1.53% $89.07
MET Metlife Inc E 12/13/2016 $119.73 $53.56 44.73% 13.26 2.89% $78.35
MNST Monster Beverage Corporation E 7/27/2016 $112.75 $43.90 38.94% 14.98 0.00% $45.24
NAVI Navient Corp E 8/31/2016 $92.14 $15.47 16.79% 6.47 4.14% $21.98
PHM PulteGroup, Inc. E 7/18/2016 $79.18 $21.60 27.28% 10.49 1.57% $21.69
PVH PVH Corp D 1/13/2017 $146.17 $90.76 62.09% 15.84 0.17% $95.06
SENEA Seneca Foods Corp E 12/22/2016 $69.62 $37.60 54.01% 13.82 0.00% $69.20
SPOK Spok Holdings, Inc. E 2/9/2017 $54.43 $19.05 35.00% 6.73 2.62% $38.13
STWD Starwood Property Trust, Inc. E 8/25/2016 $57.61 $22.96 39.85% 11.60 8.36% $27.64
TRV Travelers Companies Inc D 12/1/2016 $320.65 $122.36 38.16% 12.40 1.59% $134.38
TSE:CLS Celestica Inc E 1/11/2017 $37.85 $18.30 48.35% 18.67 0.00% $20.71

 

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To view the MG Value and PEmg information,  you must be logged in as a premium member.  Clicking on the company name will take you to the company’s latest valuation.

For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield Graham Number
AFL AFLAC Incorporated D 12/19/2016 $71.72 2.29%
AHL Aspen Insurance Holdings Limited E 12/13/2016 $56.75 1.52%
AIG American International Group Inc E 8/25/2016 $64.02 1.87%
ARW Arrow Electronics, Inc. E 7/3/2016 $73.40 0.00%
BAX Baxter International Inc D 1/28/2017 $50.39 0.97%
BBBY Bed Bath & Beyond Inc. D 6/14/2016 $40.40 0.00%
BK Bank of New York Mellon Corp E 1/7/2017 $47.34 1.48%
C Citigroup Inc E 7/19/2016 $60.62 0.33%
CNO CNO Financial Group Inc E 1/28/2017 $21.06 1.42%
COF Capital One Financial Corp. E 7/6/2016 $93.41 1.71%
DHI D.R. Horton, Inc. E 1/11/2017 $30.98 1.03%
EQR Equity Residential D 8/21/2016 $62.76 3.36%
FOSL Fossil Group Inc E 8/25/2016 $19.42 0.00%
JNS Janus Capital Group Inc E 2/2/2017 $12.62 3.33%
KBH KB Home E 2/4/2017 $16.93 0.59%
KELYA Kelly Services, Inc. E 2/7/2017 $21.56 1.30%
LEN Lennar Corporation E 11/19/2016 $47.15 0.34%
LNC Lincoln National Corporation E 5/20/2016 $71.69 1.53%
MET Metlife Inc E 12/13/2016 $53.56 2.89%
MNST Monster Beverage Corporation E 7/27/2016 $43.90 0.00%
NAVI Navient Corp E 8/31/2016 $15.47 4.14%
PHM PulteGroup, Inc. E 7/18/2016 $21.60 1.57%
PVH PVH Corp D 1/13/2017 $90.76 0.17%
SENEA Seneca Foods Corp E 12/22/2016 $37.60 0.00%
SPOK Spok Holdings, Inc. E 2/9/2017 $19.05 2.62%
STWD Starwood Property Trust, Inc. E 8/25/2016 $22.96 8.36%
TRV Travelers Companies Inc D 12/1/2016 $122.36 1.59%
TSE:CLS Celestica Inc E 1/11/2017 $18.30 0.00%

 

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Disclaimer: 

The author held a long position in Starwood Property Trust (STWD) but did not hold a position in any other company mentioned in this article at the time of publication and had no specific intention of changing that position within the next 72 hours; however, the author does intend to make some trades in the next 72 hours and may select a company from this list.  See my current holdings here.  This article is not investment advice and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions.  Please also read our full disclaimer.

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