Alliant Energy Corp Valuation – March 2019 #LNT

Company Profile (excerpt from Reuters): Alliant Energy Corporation (Alliant Energy), incorporated on April 22, 1981, operates as a utility holding company. The Company’s segments include Utility and Non-regulated, Parent and Other. The Utility segment includes the operations of Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL), which serve retail customers in Iowa and Wisconsin. The Utility segment includes utility electric operations, utility gas operations and utility other, which includes steam operations and the unallocated portions of the utility business. The Company’s Non-regulated, Parent and Other segment includes the operations of Alliant Energy Resources, LLC (Resources) and its subsidiaries; Alliant Energy Corporate Services, Inc. (Corporate Services); the Alliant Energy parent company, and any Alliant Energy parent company consolidating adjustments. As of December 31, 2016, the Company was focused on providing regulated electric and natural gas service to approximately 960,000 electric and approximately 410,000 natural gas customers in the Midwest through its two public utility subsidiaries, IPL and WPL.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LNT – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,189,931,660 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.48 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.77% Pass
6. Moderate PEmg Ratio PEmg < 20 23.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.33 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.48 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.11 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.06
MG Growth Estimate 3.94%
MG Value $33.68
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $29.81
MG Value based on 0% Growth $17.48
Market Implied Growth Rate 7.28%
Current Price $47.40
% of Intrinsic Value 140.75%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.63 in 2015 to an estimated $2.06 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.28% 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 Alliant Energy Corporation revealed the company was trading above its Graham Number of $31.22. The company pays a dividend of $1.34 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.05, which was below the industry average of 23.71, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-41.81.

Alliant Energy Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$41.81
Graham Number $31.22
PEmg 23.05
Current Ratio 0.48
PB Ratio 2.33
Current Dividend $1.34
Dividend Yield 2.83%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $785,100,000
Total Current Liabilities $1,644,100,000
Long-Term Debt $5,246,300,000
Total Assets $15,426,000,000
Intangible Assets $0
Total Liabilities $10,640,300,000
Shares Outstanding (Diluted Average) 235,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.23
Dec2018 $2.19
Dec2017 $1.99
Dec2016 $1.64
Dec2015 $1.68
Dec2014 $1.73
Dec2013 $1.62
Dec2012 $1.45
Dec2011 $1.37
Dec2010 $1.30
Dec2009 $0.51
Dec2008 $1.31
Dec2007 $1.89
Dec2006 $1.35
Dec2005 -$0.04
Dec2004 $0.64
Dec2003 $0.91
Dec2002 $0.59
Dec2001 $1.07
Dec2000 $2.52
Dec1999 $1.26

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.06
Dec2018 $1.93
Dec2017 $1.78
Dec2016 $1.65
Dec2015 $1.63
Dec2014 $1.57
Dec2013 $1.40
Dec2012 $1.26
Dec2011 $1.20
Dec2010 $1.17
Dec2009 $1.07
Dec2008 $1.25
Dec2007 $1.13
Dec2006 $0.73
Dec2005 $0.49
Dec2004 $0.88
Dec2003 $1.09

Recommended Reading:

Other ModernGraham posts about the company

Alliant Energy Corp Valuation – June 2018 $LNT
Alliant Energy Corp Valuation – Initial Coverage $LNT

Other ModernGraham posts about related companies

Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE
Ameren Corp Valuation – March 2019 #AEE
NextEra Energy Inc Valuation – February 2019 $NEE
Dominion Energy Inc Valuation – February 2019 $D
Exelon Corp Valuation – January 2019 $EXC
NRG Energy Inc Valuation – January 2019 $NRG
DTE Energy Co Valuation – January 2019 $DTE
AES Corp Valuation – January 2019 $AES

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.

Alliant Energy Corp Valuation – June 2018 $LNT

Company Profile (excerpt from Reuters): Alliant Energy Corporation (Alliant Energy), incorporated on April 22, 1981, operates as a utility holding company. The Company’s segments include Utility and Non-regulated, Parent and Other. The Utility segment includes the operations of Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL), which serve retail customers in Iowa and Wisconsin. The Utility segment includes utility electric operations, utility gas operations and utility other, which includes steam operations and the unallocated portions of the utility business. The Company’s Non-regulated, Parent and Other segment includes the operations of Alliant Energy Resources, LLC (Resources) and its subsidiaries; Alliant Energy Corporate Services, Inc. (Corporate Services); the Alliant Energy parent company, and any Alliant Energy parent company consolidating adjustments. As of December 31, 2016, the Company was focused on providing regulated electric and natural gas service to approximately 960,000 electric and approximately 410,000 natural gas customers in the Midwest through its two public utility subsidiaries, IPL and WPL.

LNT Chart

LNT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LNT – June 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,312,513,151 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.35 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 80.47% Pass
6. Moderate PEmg Ratio PEmg < 20 21.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.35 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.01 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.90
MG Growth Estimate 3.18%
MG Value $28.22
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $27.52
MG Value based on 0% Growth $16.13
Market Implied Growth Rate 6.35%
Current Price $40.23
% of Intrinsic Value 142.56%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.57 in 2014 to an estimated $1.9 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.35% 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 below the price.

At the time of valuation, further research into Alliant Energy Corporation revealed the company was trading above its Graham Number of $29.23. The company pays a dividend of $1.26 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.2, which was below the industry average of 22.69, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-39.26.

Alliant Energy Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$39.26
Graham Number $29.23
PEmg 21.20
Current Ratio 0.35
PB Ratio 2.10
Current Dividend $1.26
Dividend Yield 3.13%
Number of Consecutive Years of Dividend Growth 14

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $725,900,000
Total Current Liabilities $2,073,500,000
Long-Term Debt $4,056,800,000
Total Assets $14,241,800,000
Intangible Assets $0
Total Liabilities $9,810,300,000
Shares Outstanding (Diluted Average) 231,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.10
Dec2017 $1.99
Dec2016 $1.64
Dec2015 $1.68
Dec2014 $1.73
Dec2013 $1.62
Dec2012 $1.45
Dec2011 $1.37
Dec2010 $1.30
Dec2009 $0.51
Dec2008 $1.31
Dec2007 $1.89
Dec2006 $1.35
Dec2005 -$0.04
Dec2004 $0.64
Dec2003 $0.91
Dec2002 $0.59
Dec2001 $1.07
Dec2000 $2.52
Dec1999 $1.26
Dec1998 $0.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.90
Dec2017 $1.78
Dec2016 $1.65
Dec2015 $1.63
Dec2014 $1.57
Dec2013 $1.40
Dec2012 $1.26
Dec2011 $1.20
Dec2010 $1.17
Dec2009 $1.07
Dec2008 $1.25
Dec2007 $1.13
Dec2006 $0.73
Dec2005 $0.49
Dec2004 $0.88
Dec2003 $1.09
Dec2002 $1.19

Recommended Reading:

Other ModernGraham posts about the company

Alliant Energy Corp Valuation – Initial Coverage $LNT

Other ModernGraham posts about related companies

Duke Energy Corp Valuation – May 2018 $DUK
Sempra Energy Valuation – May 2018 $SRE
Ameren Corp Valuation – May 2018 $AEE
NextEra Energy Inc Valuation – May 2018 $NEE
PG&E Corp Valuation – April 2018 $PCG
Dominion Energy Inc Valuation – April 2018 $D
Exelon Corp Valuation – March 2018 $EXC
NRG Energy Inc Valuation – March 2018 $NRG
DTE Energy Co Valuation – March 2018 $DTE
The AES Corp Valuation – March 2018 $AES

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.

Alliant Energy Corp Valuation – Initial Coverage $LNT

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 Alliant Energy Corp (LNT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Alliant Energy Corporation (Alliant Energy) is a regulated investor-owned public utility holding company. The Company provides regulated electric and natural gas services in Iowa and Wisconsin. The Company’s business segments are Utility and Non-regulated, Parent and Other. The Utility segment includes the operations of Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL). The utility business segment includes utility electric operations, utility gas operations and utility other, which includes steam operations and the unallocated portions of the utility business. The Company’s Non-regulated, Parent and Other segment includes the operations of Alliant Energy Resources, LLC (Resources) and its subsidiaries; Alliant Energy Corporate Services, Inc. (Corporate Services); the Alliant Energy parent company, and any Alliant Energy parent company consolidating adjustments.

LNT Chart

LNT data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of LNT – 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 $8,866,467,764 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.75 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 70.36% Pass
6. Moderate PEmg Ratio PEmg < 20 22.21 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.75 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -15.15 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.77
MG Growth Estimate 3.92%
MG Value $28.96
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $25.69
MG Value based on 0% Growth $15.06
Market Implied Growth Rate 6.85%
Current Price $39.34
% of Intrinsic Value 135.86%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.4 in 2013 to an estimated $1.77 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.85% 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 Alliant Energy Corporation revealed the company was trading above its Graham Number of $26.77. The company pays a dividend of $1.18 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.21, which was below the industry average of 23.36, 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 $-38.02.

Alliant Energy Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$38.02
Graham Number $26.77
PEmg 22.21
Current Ratio 0.75
PB Ratio 2.31
Current Dividend $1.18
Dividend Yield 2.99%
Number of Consecutive Years of Dividend Growth 14

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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 $877,100,000
Total Current Liabilities $1,162,000,000
Long-Term Debt $4,315,600,000
Total Assets $13,373,800,000
Intangible Assets $0
Total Liabilities $9,511,800,000
Shares Outstanding (Diluted Average) 227,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.98
Dec2016 $1.64
Dec2015 $1.68
Dec2014 $1.73
Dec2013 $1.62
Dec2012 $1.44
Dec2011 $1.37
Dec2010 $1.30
Dec2009 $0.51
Dec2008 $1.31
Dec2007 $1.89
Dec2006 $1.35
Dec2005 -$0.04
Dec2004 $0.64
Dec2003 $0.91
Dec2002 $0.59
Dec2001 $1.07
Dec2000 $2.52
Dec1999 $1.26
Dec1998 $0.63
Dec1997 $1.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.77
Dec2016 $1.65
Dec2015 $1.63
Dec2014 $1.57
Dec2013 $1.40
Dec2012 $1.26
Dec2011 $1.20
Dec2010 $1.17
Dec2009 $1.07
Dec2008 $1.25
Dec2007 $1.13
Dec2006 $0.73
Dec2005 $0.49
Dec2004 $0.88
Dec2003 $1.09
Dec2002 $1.19
Dec2001 $1.43

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Duke Energy Corp Valuation – February 2017 $DUK
Spire Inc Valuation – Initial Coverage $SR
Ameren Corp Valuation – February 2017 $AEE
Sempra Energy Valuation – February 2017 $SRE
Capital Power Corp Valuation – Initial Coverage $TSE:CPX
Superior Plus Corp Valuation – Initial Coverage $TSE:SPB
Energy Company of Minas Valuation – Initial Coverage $CIG
NextEra Energy Inc Valuation – December 2016 $NEE
Westar Energy Inc Valuation – August 2016 $WR
Eversource Energy Valuation – August 2016 $ES

Disclaimer:

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

Public Service Enterprise Group Inc Valuation – March 2019 #PEG

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PEG – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $30,002,014,276 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.71 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 5.96% Fail
6. Moderate PEmg Ratio PEmg < 20 20.69 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.71 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

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

Public Service Enterprise Group Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.92 in 2015 to an estimated $2.87 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.1% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Public Service Enterprise Group Inc. revealed the company was trading above its Graham Number of $44.76. The company pays a dividend of $1.8 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.69, which was below the industry average of 23.71, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-54.13.

Public Service Enterprise Group Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$54.13
Graham Number $44.76
PEmg 20.69
Current Ratio 0.71
PB Ratio 2.10
Current Dividend $1.80
Dividend Yield 3.03%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,507,000,000
Total Current Liabilities $4,935,000,000
Long-Term Debt $13,168,000,000
Total Assets $45,326,000,000
Intangible Assets $159,000,000
Total Liabilities $30,949,000,000
Shares Outstanding (Diluted Average) 507,000,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

PPL Corp Valuation – March 2019 #PPL
Eversource Energy Valuation – March 2019 #ES
Evergy Inc Valuation – March 2019 #EVRG
Entergy Corp Valuation – March 2019 #ETR
Pinnacle West Capital Corp Valuation – March 2019 #PNW
NiSource Inc Valuation – March 2019 #NI
American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED

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.

PPL Corp Valuation – March 2019 #PPL

Company Profile (excerpt from Reuters): PPL Corporation (PPL), incorporated on March 15, 1994, is a utility holding company. Through its subsidiaries, PPL delivers electricity to customers in the United Kingdom, Pennsylvania, Kentucky, Virginia and Tennessee; delivers natural gas to customers in Kentucky, and generates electricity from power plants in Kentucky. PPL operates through U.K. Regulated Segment, Kentucky Regulated Segment and Pennsylvania Regulated Segment.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PPL – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,781,609,475 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.53 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 -11.38% Fail
6. Moderate PEmg Ratio PEmg < 20 14.01 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.97 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.53 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.42 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.26
MG Growth Estimate 2.70%
MG Value $31.35
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $32.70
MG Value based on 0% Growth $19.17
Market Implied Growth Rate 2.76%
Current Price $31.60
% of Intrinsic Value 100.80%

PPL Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.91 in 2015 to an estimated $2.26 for 2019. This level of demonstrated earnings growth supports 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 within a margin of safety relative to the price.

At the time of valuation, further research into PPL Corp revealed the company was trading above its Graham Number of $29.56. The company pays a dividend of $1.64 per share, for a yield of 5.2%, 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 23.71, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-40.28.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$40.28
Graham Number $29.56
PEmg 14.01
Current Ratio 0.53
PB Ratio 1.97
Current Dividend $1.64
Dividend Yield 5.19%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,432,000,000
Total Current Liabilities $4,563,000,000
Long-Term Debt $20,069,000,000
Total Assets $43,396,000,000
Intangible Assets $3,879,000,000
Total Liabilities $31,739,000,000
Shares Outstanding (Diluted Average) 727,561,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.40
Dec2018 $2.58
Dec2017 $1.64
Dec2016 $2.79
Dec2015 $1.01
Dec2014 $2.61
Dec2013 $1.76
Dec2012 $2.60
Dec2011 $2.70
Dec2010 $2.17
Dec2009 $1.08
Dec2008 $2.47
Dec2007 $3.35
Dec2006 $2.24
Dec2005 $1.65
Dec2004 $1.87
Dec2003 $2.18
Dec2002 $0.68
Dec2001 $0.61
Dec2000 $1.72
Dec1999 $1.42

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.26
Dec2018 $2.16
Dec2017 $1.96
Dec2016 $2.13
Dec2015 $1.91
Dec2014 $2.36
Dec2013 $2.18
Dec2012 $2.33
Dec2011 $2.25
Dec2010 $2.10
Dec2009 $2.10
Dec2008 $2.51
Dec2007 $2.44
Dec2006 $1.90
Dec2005 $1.62
Dec2004 $1.54
Dec2003 $1.35

Recommended Reading:

Other ModernGraham posts about the company

PPL Corp Valuation – June 2018 $PPL
PPL Corp Valuation – June 2017 $PPL
PPL Corporation Valuation – January 2016 Update $PPL
26 Companies in the Spotlight This Week – 12/13/14
PPL Corporation Annual Valuation – 2014 $PPL

Other ModernGraham posts about related companies

Evergy Inc Valuation – March 2019 #EVRG
Entergy Corp Valuation – March 2019 #ETR
Pinnacle West Capital Corp Valuation – March 2019 #PNW
NiSource Inc Valuation – March 2019 #NI
American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE

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.

Eversource Energy Valuation – March 2019 #ES

Company Profile (excerpt from Reuters): Eversource Energy, incorporated on January 15, 1927, is a utility holding company. The Company is engaged in the energy delivery business. It operates through three segments: electric distribution, electric transmission and natural gas distribution. It operates through its utility subsidiaries, which include The Connecticut Light and Power Company (CL&P), an electric utility that serves residential, commercial and industrial customers in parts of Connecticut; NSTAR Electric Company (NSTAR Electric), an electric utility that serves residential, commercial and industrial customers in parts of eastern Massachusetts; Public Service Company of New Hampshire (PSNH), an electric utility that serves residential, commercial and industrial customers in parts of New Hampshire, and owns generation assets used to serve customers; Western Massachusetts Electric Company (WMECO), an electric utility that serves residential, commercial and industrial customers in parts of western Massachusetts, and owns solar generating assets; NSTAR Gas Company (NSTAR Gas), a natural gas utility that serves residential, commercial and industrial customers in parts of Massachusetts, and Yankee Gas Services Company (Yankee Gas), a natural gas utility that serves residential, commercial and industrial customers in parts of Connecticut. CL&P, NSTAR Electric, PSNH and WMECO also serve New England customers through the Company’s electric transmission business.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ES – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,452,304,349 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.56 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.56% Pass
6. Moderate PEmg Ratio PEmg < 20 22.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.96 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.56 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.05 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.21
MG Growth Estimate 4.24%
MG Value $54.56
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $46.60
MG Value based on 0% Growth $27.32
Market Implied Growth Rate 6.76%
Current Price $70.76
% of Intrinsic Value 129.69%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.51 in 2015 to an estimated $3.21 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.76% 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 Eversource Energy revealed the company was trading above its Graham Number of $52.97. The company pays a dividend of $2.02 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 22.02, which was below the industry average of 23.71, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-76.89.

Eversource Energy receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$76.89
Graham Number $52.97
PEmg 22.02
Current Ratio 0.56
PB Ratio 1.96
Current Dividend $2.02
Dividend Yield 2.85%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,292,224,000
Total Current Liabilities $4,112,882,000
Long-Term Debt $12,832,074,000
Total Assets $38,241,256,000
Intangible Assets $4,427,266,000
Total Liabilities $26,754,439,000
Shares Outstanding (Diluted Average) 318,130,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.44
Dec2018 $3.25
Dec2017 $3.11
Dec2016 $2.96
Dec2015 $2.76
Dec2014 $2.58
Dec2013 $2.49
Dec2012 $1.89
Dec2011 $2.22
Dec2010 $2.19
Dec2009 $1.91
Dec2008 $1.67
Dec2007 $1.59
Dec2006 $3.05
Dec2005 -$1.93
Dec2004 $0.91
Dec2003 $0.91
Dec2002 $1.18
Dec2001 $1.74
Dec2000 -$0.20
Dec1999 $0.26

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.21
Dec2018 $3.04
Dec2017 $2.89
Dec2016 $2.70
Dec2015 $2.51
Dec2014 $2.34
Dec2013 $2.20
Dec2012 $2.03
Dec2011 $2.03
Dec2010 $1.99
Dec2009 $1.68
Dec2008 $1.39
Dec2007 $1.14
Dec2006 $0.88
Dec2005 $0.05
Dec2004 $1.00
Dec2003 $0.96

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Eversource Energy Valuation – June 2018 $ES
Eversource Energy Valuation – July 2017 $ES
Eversource Energy Valuation – August 2016 $ES
Eversource Energy Analysis – Initial Coverage $ES

Other ModernGraham posts about related companies

Evergy Inc Valuation – March 2019 #EVRG
Entergy Corp Valuation – March 2019 #ETR
Pinnacle West Capital Corp Valuation – March 2019 #PNW
NiSource Inc Valuation – March 2019 #NI
American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE

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.

Evergy Inc Valuation – March 2019 #EVRG

Company Profile (excerpt from Reuters): Evergy, Inc., is an energy company. The Company provides electricity generation, transmission and distribution services. It serves the customers under Westar and KCP&L brand names.

Downloadable PDF version of this valuation:

ModernGraham Valuation of EVRG – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,535,813,734 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.59 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 29.25% Fail
6. Moderate PEmg Ratio PEmg < 20 22.82 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.51 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.59 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.64 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.53
MG Growth Estimate 2.29%
MG Value $33.05
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $36.65
MG Value based on 0% Growth $21.48
Market Implied Growth Rate 7.16%
Current Price $57.67
% of Intrinsic Value 174.47%

Evergy Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $2.19 in 2015 to an estimated $2.53 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.16% 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 Evergy Inc revealed the company was trading above its Graham Number of $49.23. The company pays a dividend of $1.74 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.82, which was below the industry average of 23.71, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-53.07.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$53.07
Graham Number $49.23
PEmg 22.82
Current Ratio 0.59
PB Ratio 1.51
Current Dividend $1.74
Dividend Yield 3.01%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,681,000,000
Total Current Liabilities $2,867,200,000
Long-Term Debt $6,687,400,000
Total Assets $25,598,100,000
Intangible Assets $2,338,900,000
Total Liabilities $15,607,400,000
Shares Outstanding (Diluted Average) 262,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.83
Dec2018 $2.50
Dec2017 $2.27
Dec2016 $2.43
Dec2015 $2.09
Dec2014 $2.35
Dec2013 $2.27
Dec2012 $2.15
Dec2011 $1.93
Dec2010 $1.80
Dec2009 $1.58
Dec2008 $1.69
Dec2007 $1.83
Dec2006 $1.87
Dec2005 $1.54
Dec2004 $2.13
Dec2003 $1.16
Dec2002 -$11.06
Dec2001 -$0.31
Dec2000 $1.96
Dec1999 $0.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.53
Dec2018 $2.36
Dec2017 $2.29
Dec2016 $2.28
Dec2015 $2.19
Dec2014 $2.20
Dec2013 $2.06
Dec2012 $1.91
Dec2011 $1.79
Dec2010 $1.73
Dec2009 $1.70
Dec2008 $1.77
Dec2007 $1.78
Dec2006 $0.88
Dec2005 -$0.18
Dec2004 -$1.10
Dec2003 -$2.35

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

Pinnacle West Capital Corp Valuation – March 2019 #PNW
NiSource Inc Valuation – March 2019 #NI
American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE
Ameren Corp Valuation – March 2019 #AEE
NextEra Energy Inc Valuation – February 2019 $NEE

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.

Entergy Corp Valuation – March 2019 #ETR

Company Profile (excerpt from Reuters): Entergy Corporation, incorporated on August 19, 1992, is a holding company. The Company is an integrated energy company engaged in electric power production and retail electric distribution operations. The Company operates through two segments: Utility and Entergy Wholesale Commodities. As of December 31, 2016, the Company owned and operated power plants with over 30,000 megawatts of aggregate electric generating capacity, including approximately 10,000 megawatts of nuclear-fueled capacity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ETR – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,067,984,316 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.54 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -35.85% Fail
6. Moderate PEmg Ratio PEmg < 20 32.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.99 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.54 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.24 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.94
MG Growth Estimate -0.27%
MG Value $23.41
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $42.68
MG Value based on 0% Growth $25.02
Market Implied Growth Rate 11.86%
Current Price $94.86
% of Intrinsic Value 405.24%

Entergy Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3 in 2015 to an estimated $2.94 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.86% 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 Entergy Corporation revealed the company was trading above its Graham Number of $74.62. The company pays a dividend of $3.58 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 32.23, which was above the industry average of 23.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-196.69.

Entergy Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$196.69
Graham Number $74.62
PEmg 32.23
Current Ratio 0.54
PB Ratio 1.99
Current Dividend $3.58
Dividend Yield 3.77%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,958,064,000
Total Current Liabilities $5,443,544,000
Long-Term Debt $15,518,303,000
Total Assets $48,275,066,000
Intangible Assets $377,172,000
Total Liabilities $39,430,761,000
Shares Outstanding (Diluted Average) 185,437,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.26
Dec2018 $4.63
Dec2017 $2.28
Dec2016 -$3.26
Dec2015 -$0.99
Dec2014 $5.22
Dec2013 $3.99
Dec2012 $4.76
Dec2011 $7.55
Dec2010 $6.66
Dec2009 $6.30
Dec2008 $6.20
Dec2007 $5.60
Dec2006 $5.36
Dec2005 $4.19
Dec2004 $3.93
Dec2003 $4.01
Dec2002 $2.64
Dec2001 $3.23
Dec2000 $2.97
Dec1999 $2.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.94
Dec2018 $1.72
Dec2017 $0.65
Dec2016 $0.54
Dec2015 $3.00
Dec2014 $5.21
Dec2013 $5.42
Dec2012 $6.19
Dec2011 $6.75
Dec2010 $6.24
Dec2009 $5.87
Dec2008 $5.45
Dec2007 $4.93
Dec2006 $4.40
Dec2005 $3.81
Dec2004 $3.54
Dec2003 $3.23

Recommended Reading:

Other ModernGraham posts about the company

Entergy Corp Valuation – June 2018 $ETR
Entergy Corp Valuation – April 2017 $ETR
Entergy Corp Valuation – January 2016 Update $ETR
5 Speculative and Overvalued Companies to Avoid – December 2014
32 Companies in the Spotlight This Week – 12/6/14

Other ModernGraham posts about related companies

Pinnacle West Capital Corp Valuation – March 2019 #PNW
NiSource Inc Valuation – March 2019 #NI
American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE
Ameren Corp Valuation – March 2019 #AEE
NextEra Energy Inc Valuation – February 2019 $NEE

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.

Pinnacle West Capital Corp Valuation – March 2019 #PNW

Company Profile (excerpt from Reuters): Pinnacle West Capital Corporation, incorporated on February 20, 1985, is a holding company that operates through its subsidiaries. The Company operates through regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses and related activities, and includes electricity generation, transmission and distribution. The Company’s subsidiaries include Arizona Public Service Company (APS), which is a vertically-integrated electric utility that provides retail or wholesale electric service to the State of Arizona, with the exceptions of one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona.

PNW Chart

PNW data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PNW – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,824,428,063 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.56 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 39.65% Pass
6. Moderate PEmg Ratio PEmg < 20 21.58 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.03 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.56 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.47
MG Growth Estimate 3.33%
MG Value $67.81
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $64.84
MG Value based on 0% Growth $38.01
Market Implied Growth Rate 6.54%
Current Price $96.52
% of Intrinsic Value 142.35%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.66 in 2015 to an estimated $4.47 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.54% 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 Pinnacle West Capital Corporation revealed the company was trading above its Graham Number of $71.02. The company pays a dividend of $2.82 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 21.58, which was below the industry average of 23.71, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-101.07.

Pinnacle West Capital Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$101.07
Graham Number $71.02
PEmg 21.58
Current Ratio 0.56
PB Ratio 2.03
Current Dividend $2.82
Dividend Yield 2.92%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $924,991,000
Total Current Liabilities $1,648,964,000
Long-Term Debt $4,638,232,000
Total Assets $17,664,202,000
Intangible Assets $262,902,000
Total Liabilities $12,315,497,000
Shares Outstanding (Diluted Average) 112,703,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.81
Dec2018 $4.54
Dec2017 $4.35
Dec2016 $3.95
Dec2015 $3.92
Dec2014 $3.58
Dec2013 $3.66
Dec2012 $3.45
Dec2011 $3.09
Dec2010 $3.27
Dec2009 $0.67
Dec2008 $2.40
Dec2007 $3.05
Dec2006 $3.27
Dec2005 $1.82
Dec2004 $2.66
Dec2003 $2.63
Dec2002 $1.76
Dec2001 $3.68
Dec2000 $3.56
Dec1999 $1.97

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.47
Dec2018 $4.22
Dec2017 $4.01
Dec2016 $3.80
Dec2015 $3.66
Dec2014 $3.49
Dec2013 $3.24
Dec2012 $2.88
Dec2011 $2.56
Dec2010 $2.37
Dec2009 $2.03
Dec2008 $2.69
Dec2007 $2.78
Dec2006 $2.58
Dec2005 $2.32
Dec2004 $2.67
Dec2003 $2.69

Recommended Reading:

Other ModernGraham posts about the company

Pinnacle West Capital Corp Valuation – June 2018 $PNW
Pinnacle West Corp Valuation – March 2017 $PNW
Pinnacle West Capital Corp Valuation – December 2015 Update $PNW
22 Companies in the Spotlight This Week – 11/29/14
Pinnacle West Capital Corporation Annual Valuation – 2014 $PNW

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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.

NiSource Inc Valuation – March 2019 #NI

Company Profile (excerpt from Reuters): NiSource Inc., incorporated on March 29, 2000, is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s principal subsidiaries include NiSource Gas Distribution Group, Inc., which is a natural gas distribution holding company, and NIPSCO, which is a gas and electric company. NiSource Finance Corporation (NiSource Finance) is a consolidated finance subsidiary of the Company. NiSource Finance is engaged in financing activities to raise funds for the business operations of the Company and its subsidiaries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NI – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,657,053,567 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.51 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -56.27% Fail
6. Moderate PEmg Ratio PEmg < 20 43.61 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.84 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.51 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.59 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.66
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $9.51
MG Value based on 0% Growth $5.58
Market Implied Growth Rate 17.56%
Current Price $28.61
% of Intrinsic Value N/A

NiSource Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.34 in 2015 to an estimated $0.66 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.56% 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 NiSource Inc. revealed the company was trading above its Graham Number of $19.48. The company pays a dividend of $0.78 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 43.61, which was above the industry average of 23.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.86.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.86
Graham Number $19.48
PEmg 43.61
Current Ratio 0.51
PB Ratio 1.84
Current Dividend $0.78
Dividend Yield 2.73%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,055,400,000
Total Current Liabilities $4,036,800,000
Long-Term Debt $7,105,400,000
Total Assets $21,804,000,000
Intangible Assets $1,911,400,000
Total Liabilities $16,053,100,000
Shares Outstanding (Diluted Average) 369,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.29
Dec2018 -$0.18
Dec2017 $0.39
Dec2016 $1.02
Dec2015 $0.90
Dec2014 $1.67
Dec2013 $1.70
Dec2012 $1.39
Dec2011 $1.03
Dec2010 $1.01
Dec2009 $0.79
Dec2008 $0.29
Dec2007 $1.17
Dec2006 $1.03
Dec2005 $1.12
Dec2004 $1.64
Dec2003 $0.33
Dec2002 $1.75
Dec2001 $1.03
Dec2000 $1.11
Dec1999 $1.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.66
Dec2018 $0.48
Dec2017 $0.92
Dec2016 $1.23
Dec2015 $1.34
Dec2014 $1.49
Dec2013 $1.33
Dec2012 $1.06
Dec2011 $0.89
Dec2010 $0.83
Dec2009 $0.79
Dec2008 $0.87
Dec2007 $1.13
Dec2006 $1.13
Dec2005 $1.18
Dec2004 $1.20
Dec2003 $1.02

Recommended Reading:

Other ModernGraham posts about the company

NiSource Inc Valuation – June 2018 $NI
NiSource Inc Valuation – March 2017 $NI
NiSource Inc Valuation – August 2016 $NI
NiSource Analysis – 2015 Update $NI
NiSource Inc. Annual Valuation – 2014 $NI

Other ModernGraham posts about related companies

American Electric Power Company Inc Valuation – March 2019 #AEP
American Water Works Co Inc Valuation – March 2019 #AWK
Alliant Energy Corp Valuation – March 2019 #LNT
Consolidated Edison Inc Valuation – March 2019 #ED
Duke Energy Corp Valuation – March 2019 #DUK
Sempra Energy Valuation – March 2019 #SRE
Ameren Corp Valuation – March 2019 #AEE
NextEra Energy Inc Valuation – February 2019 $NEE
Dominion Energy Inc Valuation – February 2019 $D
Exelon Corp Valuation – January 2019 $EXC

Disclaimer:

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

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