Lamb Weston Holdings Inc Valuation – March 2019 #LW

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LW – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,269,088,976 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.63 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 26533.33% Pass
6. Moderate PEmg Ratio PEmg < 20 28.01 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -61.84 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.63 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.30 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.50
MG Growth Estimate 15.00%
MG Value $96.35
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $36.29
MG Value based on 0% Growth $21.27
Market Implied Growth Rate 9.76%
Current Price $70.10
% of Intrinsic Value 72.75%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.61 in 2015 to an estimated $2.5 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.76% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Lamb Weston Holdings Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.76 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 28.01, which was above the industry average of 26.89. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.15.

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

Stage 3: Information for Further Research

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

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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

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

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

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

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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.

National Oilwell Varco Inc Valuation – February 2019 $NOV

Company Profile (excerpt from Reuters): National Oilwell Varco, Inc. (NOV), incorporated on July 14, 1995, is an oilfield equipment manufacturer and technology provider. The Company operates through four segments: Rig Technologies, Wellbore Technologies and Completion & Production Solutions. The Rig Technologies segment designs, manufactures, sells, and supports land rigs, offshore drilling equipment packages, and drilling rig components. The Wellbore Technologies segment designs, manufactures, rents and sells a range of equipment and technologies used to perform drilling operations. The Completion & Production Solutions segment integrates technologies for well completions and oil and gas production.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NOV – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,920,171,664 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.11 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 -106.13% Fail
6. Moderate PEmg Ratio PEmg < 20 -23.84 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.78 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 3.11 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.55 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.19
MG Growth Estimate -4.25%
MG Value $3.63
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$17.32
MG Value based on 0% Growth -$10.15
Market Implied Growth Rate -16.17%
Current Price $28.48
% of Intrinsic Value 784.65%

National-Oilwell Varco, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding 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 $3.07 in 2015 to an estimated $-1.19 for 2019. This level of negative earnings does not support a positive valuation.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 National-Oilwell Varco, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.2 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was -23.84, which was below the industry average of 43.92, 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 $3.63.

National-Oilwell Varco, 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) $3.63
Graham Number $0.00
PEmg -23.84
Current Ratio 3.11
PB Ratio 0.78
Current Dividend $0.20
Dividend Yield 0.70%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $7,279,000,000
Total Current Liabilities $2,341,000,000
Long-Term Debt $2,704,000,000
Total Assets $19,796,000,000
Intangible Assets $9,284,000,000
Total Liabilities $5,907,000,000
Shares Outstanding (Diluted Average) 378,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.18
Dec2018 -$0.08
Dec2017 -$0.63
Dec2016 -$6.41
Dec2015 -$1.99
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.67
Dec2003 $0.47
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 -$0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.19
Dec2018 -$1.35
Dec2017 -$1.18
Dec2016 -$0.39
Dec2015 $3.07
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.11
Dec2005 $0.68
Dec2004 $0.53
Dec2003 $0.41

Recommended Reading:

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National-Oilwell Varco Valuation – December 2016 $NOV
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National-Oilwell Varco Inc Valuation – August 2016 $NOV

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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.

Corning Inc Valuation – January 2019 $GLW

Company Profile (excerpt from Reuters): Corning Incorporated (Corning), incorporated on December 24, 1936, is engaged in manufacturing specialty glass and ceramics. The Company’s segments include Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, Life Sciences and All Other. The Company provides glass for notebook computers, flat panel desktop monitors, liquid crystal display (LCD) televisions, and other information display applications; carrier network and enterprise network products for the telecommunications industry; ceramic substrates for gasoline and diesel engines in automotive and heavy duty vehicle markets; laboratory products for the scientific community and specialized polymer products for biotechnology applications; optical materials for the semiconductor industry and the scientific community, and other technologies. As of December 31, 2016, the Company had manufactured products at 98 plants in 17 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,803,872,024 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.13 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 -27.31% Fail
6. Moderate PEmg Ratio PEmg < 20 25.88 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.98 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.44 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.15
MG Growth Estimate -3.81%
MG Value $1.02
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $16.66
MG Value based on 0% Growth $9.76
Market Implied Growth Rate 8.70%
Current Price $29.76
% of Intrinsic Value 2923.15%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.54 in 2014 to an estimated $1.15 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.7% 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 Corning Incorporated revealed the company was trading above its Graham Number of $21.29. The company pays a dividend of $0.62 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 25.91, which was below the industry average of 33.25, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.22.

Corning Incorporated 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) -$6.22
Graham Number $21.29
PEmg 25.91
Current Ratio 2.13
PB Ratio 1.98
Current Dividend $0.62
Dividend Yield 2.08%
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 9/1/2018
Total Current Assets $6,632,000,000
Total Current Liabilities $3,112,000,000
Long-Term Debt $5,056,000,000
Total Assets $26,392,000,000
Intangible Assets $3,239,000,000
Total Liabilities $12,414,000,000
Shares Outstanding (Diluted Average) 930,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.29
Dec2017 -$0.66
Dec2016 $3.23
Dec2015 $1.00
Dec2014 $1.73
Dec2013 $1.34
Dec2012 $1.09
Dec2011 $1.78
Dec2010 $2.25
Dec2009 $1.28
Dec2008 $3.32
Dec2007 $1.34
Dec2006 $1.16
Dec2005 $0.38
Dec2004 -$1.61
Dec2003 -$0.22
Dec2002 -$1.39
Dec2001 -$5.89
Dec2000 $0.49
Dec1999 $0.22
Dec1998 $0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.15
Dec2017 $1.16
Dec2016 $1.94
Dec2015 $1.33
Dec2014 $1.54
Dec2013 $1.48
Dec2012 $1.68
Dec2011 $1.98
Dec2010 $2.01
Dec2009 $1.76
Dec2008 $1.64
Dec2007 $0.60
Dec2006 $0.04
Dec2005 -$0.92
Dec2004 -$1.63
Dec2003 -$1.54
Dec2002 -$1.89

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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.

Canadian Pacific Railway Ltd Valuation – August 2018 $TSE-CP

Company Profile (excerpt from Reuters): Canadian Pacific Railway Limited, incorporated on October 1, 2001, together with its subsidiaries, owns and operates a transcontinental freight railway in Canada and the United States. The Company operates through rail transportation segment. The Company transports bulk commodities, merchandise freight, and intermodal traffic over a network of approximately 12,400 miles, serving the business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia and the United States Northeast and Midwest regions. Its railway feeds directly into the United States heartland from the east and west coasts. Its Bulk commodities include grain, coal, potash, fertilizers and sulfur. Its Merchandise freight consists of finished vehicles and machinery, as well as forest and industrial and consumer products. Its Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck. Its subsidiaries include Canadian Pacific Railway Company, Soo Line Railroad Company, Delaware and Hudson Railway Company, Inc., Dakota, Minnesota & Eastern Railroad Corporation and Mount Stephen Properties Inc.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CP – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $33,554,710,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.57 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 285.13% Pass
6. Moderate PEmg Ratio PEmg < 20 20.71 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.70 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.57 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.44 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 $12.64
MG Growth Estimate 15.00%
MG Value $486.54
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $183.24
MG Value based on 0% Growth $107.42
Market Implied Growth Rate 6.11%
Current Price $261.72
% of Intrinsic Value 53.79%

Canadian Pacific Railway Limited (USA) 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 Undervalued after growing its EPSmg (normalized earnings) from $5.4 in 2014 to an estimated $12.64 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.11% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Pacific Railway Limited (USA) revealed the company was trading above its Graham Number of $115.43. The company pays a dividend of $2.19 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 20.71, which was below the industry average of 21.35, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-91.56.

Canadian Pacific Railway Limited (USA) receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$91.56
Graham Number $115.43
PEmg 20.71
Current Ratio 0.57
PB Ratio 5.70
Current Dividend $2.19
Dividend Yield 0.84%
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 6/1/2018
Total Current Assets $1,000,000,000
Total Current Liabilities $1,760,000,000
Long-Term Debt $7,936,000,000
Total Assets $20,685,000,000
Intangible Assets $196,000,000
Total Liabilities $14,111,000,000
Shares Outstanding (Diluted Average) 143,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.33
Dec2017 $16.44
Dec2016 $10.63
Dec2015 $8.40
Dec2014 $8.46
Dec2013 $4.96
Dec2012 $2.79
Dec2011 $3.34
Dec2010 $3.85
Dec2009 $3.30
Dec2008 $3.91
Dec2007 $6.08
Dec2006 $5.02
Dec2005 $3.39
Dec2004 $2.59
Dec2003 $2.52
Dec2002 $3.06
Dec2001 $2.27
Dec2000 $3.13
Dec1999 $0.19
Dec1998 $2.29

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $12.64
Dec2017 $11.45
Dec2016 $8.32
Dec2015 $6.64
Dec2014 $5.40
Dec2013 $3.80
Dec2012 $3.29
Dec2011 $3.73
Dec2010 $4.09
Dec2009 $4.25
Dec2008 $4.55
Dec2007 $4.56
Dec2006 $3.63
Dec2005 $2.88
Dec2004 $2.66
Dec2003 $2.54
Dec2002 $2.43

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Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP

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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.

Canadian National Railway Co Valuation – August 2018 $TSE:CNR

Company Profile (excerpt from Reuters): Canadian National Railway Company, incorporated on August 24, 1995, is engaged in the rail and related transportation business. The Company’s network of approximately 20,000 route miles of track spans Canada and mid-America, connecting approximately three coasts, including the Atlantic, the Pacific and the Gulf of Mexico and serving the cities and ports of Vancouver, Prince Rupert (British Columbia), Montreal, Halifax, New Orleans, and Mobile (Alabama), and the metropolitan areas of Toronto, Edmonton, Winnipeg, Calgary, Chicago, Memphis, Detroit, Duluth (Minnesota)/Superior (Wisconsin), and Jackson (Mississippi), with connections to all points in North America. The Company’s network and connections to all Class I railroads provide its customers access to the three North American Free Trade Agreement (NAFTA) nations. The Company carries over 300 million tons of cargo, serving exporters, importers, retailers, farmers and manufacturers. The Company’s freight includes seven commodity groups representing a portfolio of goods, including petroleum and chemicals, metals and minerals, forest products, coal, grain and fertilizers, intermodal and automotive.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CNR – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $78,467,470,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 151.70% Pass
6. Moderate PEmg Ratio PEmg < 20 20.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.88 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.93 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.53
MG Growth Estimate 10.69%
MG Value $165.20
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $80.19
MG Value based on 0% Growth $47.01
Market Implied Growth Rate 6.12%
Current Price $114.68
% of Intrinsic Value 69.42%

Canadian National Railway (USA) 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 Undervalued after growing its EPSmg (normalized earnings) from $3.23 in 2014 to an estimated $5.53 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian National Railway (USA) revealed the company was trading above its Graham Number of $52.54. The company pays a dividend of $1.65 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 20.74, which was below the industry average of 21.35, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.51.

Canadian National Railway (USA) receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.51
Graham Number $52.54
PEmg 20.74
Current Ratio 0.64
PB Ratio 4.88
Current Dividend $1.65
Dividend Yield 1.44%
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 6/1/2018
Total Current Assets $2,842,000,000
Total Current Liabilities $4,430,000,000
Long-Term Debt $9,416,000,000
Total Assets $39,805,000,000
Intangible Assets $268,000,000
Total Liabilities $22,436,000,000
Shares Outstanding (Diluted Average) 739,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.47
Dec2017 $7.24
Dec2016 $4.67
Dec2015 $4.39
Dec2014 $3.85
Dec2013 $3.09
Dec2012 $3.06
Dec2011 $2.71
Dec2010 $2.24
Dec2009 $1.96
Dec2008 $1.98
Dec2007 $2.13
Dec2006 $1.96
Dec2005 $1.39
Dec2004 $1.09
Dec2003 $0.87
Dec2002 $0.66
Dec2001 $0.87
Dec2000 $0.78
Dec1999 $0.62
Dec1998 $0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.53
Dec2017 $5.26
Dec2016 $4.11
Dec2015 $3.70
Dec2014 $3.23
Dec2013 $2.82
Dec2012 $2.58
Dec2011 $2.30
Dec2010 $2.08
Dec2009 $1.96
Dec2008 $1.87
Dec2007 $1.71
Dec2006 $1.40
Dec2005 $1.07
Dec2004 $0.90
Dec2003 $0.79
Dec2002 $0.71

Recommended Reading:

Other ModernGraham posts about the company

Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR

Other ModernGraham posts about related companies

Kansas City Southern Valuation – May 2018 $KSU
Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP
Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR
Kansas City Southern Valuation – December 2016 $KSU
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC

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.

Clearwater Paper Corp Valuation – July 2018 $CLW

Company Profile (excerpt from Reuters): Clearwater Paper Corporation, incorporated on October 7, 2005, manufactures consumer tissue, away-from-home (AFH) tissue, parent roll tissue, bleached paperboard and pulp at manufacturing facilities across the nation. The Company operates through two segments: Consumer Products segment, and Pulp and Paperboard segment. The Company is a supplier of private label tissue to a range of retailers and wholesale distributors, including grocery, drug, mass merchants and discount stores. In addition, the Company produces bleached paperboard used by printers and packaging converters, and offers services that include custom sheeting, slitting and cutting.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLW – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $353,240,139 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.03 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 -17.40% Fail
6. Moderate PEmg Ratio PEmg < 20 7.16 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.63 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 1.03 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 50.92 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.06
MG Growth Estimate 5.71%
MG Value $60.94
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $44.37
MG Value based on 0% Growth $26.01
Market Implied Growth Rate -0.67%
Current Price $21.90
% of Intrinsic Value 35.94%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.22 in 2014 to an estimated $3.06 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.67% 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 Clearwater Paper Corp revealed the company was trading below its Graham Number of $35.15. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 7.16, which was below the industry average of 21.34, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-47.93.

Clearwater Paper 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) -$47.93
Graham Number $35.15
PEmg 7.16
Current Ratio 1.03
PB Ratio 0.63
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $436,677,000
Total Current Liabilities $425,468,000
Long-Term Debt $570,716,000
Total Assets $1,811,912,000
Intangible Assets $274,753,000
Total Liabilities $1,231,192,000
Shares Outstanding (Diluted Average) 16,577,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.57
Dec2017 $5.88
Dec2016 $2.90
Dec2015 $2.97
Dec2014 -$0.11
Dec2013 $4.80
Dec2012 $2.72
Dec2011 $1.66
Dec2010 $3.12
Dec2009 $7.75
Dec2008 $0.43
Dec2007 $1.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.06
Dec2017 $3.63
Dec2016 $2.56
Dec2015 $2.39
Dec2014 $2.22
Dec2013 $3.59
Dec2012 $3.04
Dec2011 $3.07
Dec2010 $3.34
Dec2009 $2.92
Dec2008 $0.44
Dec2007 $0.37

Recommended Reading:

Other ModernGraham posts about the company

5 of the Worst Stocks to Invest In – January 2017
Clearwater Paper Corp Valuation – Initial Coverage $CLW

Other ModernGraham posts about related companies

Bemis Co Inc Valuation – June 2018 $BMS
Owens-Illinois Inc Valuation – June 2018 $OI
International Paper Co Valuation – June 2018 $IP
Ball Corporation Valuation – April 2018 $BLL
WestRock Co Valuation – April 2018 $WRK
Sealed Air Corp Valuation – April 2018 $SEE
Packaging Corp of America Valuation – Initial Coverage $PKG
AptarGroup Inc Valuation – Initial Coverage $ATR
Tredegar Corp Valuation – Initial Coverage $TG
International Paper Co Valuation – March 2017 $IP

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.

National Oilwell Varco Inc Valuation – May 2018 $NOV

Company Profile (excerpt from Reuters): National Oilwell Varco, Inc. (NOV), incorporated on July 14, 1995, is an oilfield equipment manufacturer and technology provider. The Company operates through four segments: Rig Technologies, Wellbore Technologies and Completion & Production Solutions. The Rig Technologies segment designs, manufactures, sells, and supports land rigs, offshore drilling equipment packages, and drilling rig components. The Wellbore Technologies segment designs, manufactures, rents and sells a range of equipment and technologies used to perform drilling operations. The Completion & Production Solutions segment integrates technologies for well completions and oil and gas production.

NOV Chart

NOV data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NOV – May 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 $14,671,302,739 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.37 Pass
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 -159.10% Fail
6. Moderate PEmg Ratio PEmg < 20 -27.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.03 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 3.37 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.54 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.38
MG Growth Estimate -4.25%
MG Value $3.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$20.07
MG Value based on 0% Growth -$11.76
Market Implied Growth Rate -18.13%
Current Price $38.42
% of Intrinsic Value 1151.38%

National-Oilwell Varco, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding 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 $5.45 in 2014 to an estimated $-1.38 for 2018. This level of negative earnings does not support a positive valuation.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 National-Oilwell Varco, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.2 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was -27.76, which was below the industry average of 97.7, 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 $3.34.

National-Oilwell Varco, 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) $3.34
Graham Number $0.00
PEmg -27.76
Current Ratio 3.37
PB Ratio 1.03
Current Dividend $0.20
Dividend Yield 0.52%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $7,186,000,000
Total Current Liabilities $2,132,000,000
Long-Term Debt $2,707,000,000
Total Assets $20,010,000,000
Intangible Assets $9,432,000,000
Total Liabilities $5,928,000,000
Shares Outstanding (Diluted Average) 377,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.17
Dec2017 -$0.63
Dec2016 -$6.41
Dec2015 -$1.99
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.67
Dec2003 $0.47
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 -$0.07
Dec1998 $0.60

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.38
Dec2017 -$1.18
Dec2016 -$0.39
Dec2015 $3.07
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.11
Dec2005 $0.68
Dec2004 $0.53
Dec2003 $0.41
Dec2002 $0.36

Recommended Reading:

Other ModernGraham posts about the company

National-Oilwell Varco Valuation – December 2016 $NOV
5 of the Worst Stocks to Invest In – August 2016
National-Oilwell Varco Inc Valuation – August 2016 $NOV
26 Best Stocks For Value Investors This Week – 2/6/16
National Oilwell Varco Inc Valuation – February 2016 Update $NOV

Other ModernGraham posts about related companies

Phillips 66 Valuation – April 2018 $PSX
Baker Hughes, a GE Co Valuation – April 2018 $BHGE
Marathon Petroleum Corp Valuation – April 2018 $MPC
TechnipFMC PLC Valuation – April 2018 $FTI
EOG Resources Inc Valuation – April 2018 $EOG
ConocoPhillips Valuation – April 2018 $COP
Devon Energy Corp Valuation – March 2018 $DVN
Noble Energy Inc Valuation – March 2018 $NBL
ONEOK Inc Valuation – March 2018 $OKE
Marathon Oil Corp Valuation – March 2018 $MRO

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.

Corning Inc Valuation – February 2018 $GLW

Company Profile (obtained from Marketwatch): Corning, Inc. develops and manufactures specialty glass and ceramics. The company provides glass for notebook computers, flat panel desktop monitors, LCD televisions, and other information display applications; optical fiber and cable and hardware and equipment products for the telecommunications industry; ceramic substrates for gasoline and diesel engines in automotive and heavy duty vehicle markets; laboratory products for the scientific community and specialized polymer products for biotechnology applications; advanced optical materials for the semiconductor industry and the scientific community; and other technologies. It operates through through the following business segments: Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials and Life Sciences. The Display Technologies segment manufactures glass substrates for active matrix liquid crystal displays which are used primarily in notebook computers, flat panel desktop monitors, and LCD televisions. The Optical Communications segment manufactures optical fiber and cable, and hardware and equipment to being a comprehensive provider of industry-leading optical solutions across the broader communications industry pioneer optical fiber, cable and connectivity solutions. The Environmental Technologies segment manufactures ceramic substrates and filter products for emissions control in mobile and stationary applications around the world. The Specialty Materials segment manufactures products that provide more than 150 material formulations for glass, glass ceramics and fluoride crystals to meet demand for unique customer needs. The Life Sciences segment develops, manufactures and supplies scientific laboratory products. Corning was founded by Amory Houghton Sr. in 1851 and is headquartered in Corning, NY.

GLW Chart

GLW data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – February 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 $24,934,736,664 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.75 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 -21.66% Fail
6. Moderate PEmg Ratio PEmg < 20 23.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.60 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.75 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.85 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.25
MG Growth Estimate -2.83%
MG Value $3.54
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $18.11
MG Value based on 0% Growth $10.61
Market Implied Growth Rate 7.39%
Current Price $29.08
% of Intrinsic Value 821.42%

Corning Incorporated does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the 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 $1.54 in 2014 to an estimated $1.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.39% 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 below the price.

At the time of valuation, further research into Corning Incorporated revealed the company was trading above its Graham Number of $23.56. The company pays a dividend of $0.62 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.29, which was below the industry average of 25.98, 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 $-3.43.

Corning Incorporated 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) -$3.43
Graham Number $23.56
PEmg 23.29
Current Ratio 2.75
PB Ratio 1.60
Current Dividend $0.62
Dividend Yield 2.13%
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 12/1/2017
Total Current Assets $8,827,000,000
Total Current Liabilities $3,209,000,000
Long-Term Debt $4,749,000,000
Total Assets $27,494,000,000
Intangible Assets $2,563,000,000
Total Liabilities $11,796,000,000
Shares Outstanding (Diluted Average) 865,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2017 -$0.66
Dec2016 $3.23
Dec2015 $1.00
Dec2014 $1.73
Dec2013 $1.34
Dec2012 $1.09
Dec2011 $1.78
Dec2010 $2.25
Dec2009 $1.28
Dec2008 $3.32
Dec2007 $1.34
Dec2006 $1.16
Dec2005 $0.38
Dec2004 -$1.61
Dec2003 -$0.22
Dec2002 -$1.39
Dec2001 -$5.89
Dec2000 $0.49
Dec1999 $0.66
Dec1998 $0.56

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.25
Dec2017 $1.16
Dec2016 $1.94
Dec2015 $1.33
Dec2014 $1.54
Dec2013 $1.48
Dec2012 $1.68
Dec2011 $1.98
Dec2010 $2.01
Dec2009 $1.76
Dec2008 $1.64
Dec2007 $0.60
Dec2006 $0.04
Dec2005 -$0.92
Dec2004 -$1.63
Dec2003 -$1.51
Dec2002 -$1.81

Recommended Reading:

Other ModernGraham posts about the company

Corning Inc Valuation – November 2015 Update $GLW
Corning Inc. Analysis – August 2015 Update $GLW
30 Companies in the Spotlight This Week – 5/23/15
Corning Inc. Quarterly Valuation – May 2015 $GLW
34 Companies in the Spotlight This Week – 2/7/15

Other ModernGraham posts about related companies

Caterpillar Inc Valuation – February 2018 $CAT
Eagle Materials Inc Valuation – Initial Coverage $EXP
Louisiana-Pacific Corp Valuation – Initial Coverage $LPX
Lowe’s Companies Inc Valuation – March 2017 $LOW
Cavco Industries Inc Valuation – Initial Coverage $CVCO
LGI Homes Inc Valuation – Initial Coverage $LGIH
Fortune Brands Home & Security Inc Valuation – Initial Coverage $FBHS
Acuity Brands Inc Valuation – Initial Coverage $AYI
Stantec Inc Valuation – Initial Coverage $TSE:STN
Home Depot Inc Valuation – February 2017 $HD

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.

Stillwater Mining Company Valuation – Initial Coverage $SWC

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 Stillwater Mining Company (SWC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Stillwater Mining Company is engaged in the development, extraction, processing, smelting and refining of palladium, platinum and associated metals (platinum group metals (PGMs)) produced by mining a geological formation in south-central Montana, known as the J-M Reef. The Company operates through five segments: Mine Production, PGM Recycling, Canadian Properties, South American Properties and All Other. The Company is engaged in recycling spent catalytic converters and other industrial sources. The Company is also engaged in expanding its mining development along the J-M Reef, and holds exploration-stage properties at the Marathon PGM copper property, adjacent to Lake Superior in northern Ontario, Canada (Marathon), and at the Altar copper-gold property in San Juan province, Argentina. In addition to palladium and platinum, the Company’s operations produce associated by-product metals, including nickel, copper and minor amounts of gold, silver and rhodium.

SWC Chart

SWC data by YCharts

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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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Downloadable PDF version of this valuation:

ModernGraham Valuation of SWC – 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 $2,068,284,974 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.04 Pass
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 -133.33% Fail
6. Moderate PEmg Ratio PEmg < 20 710.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.25 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 7.04 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.52 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $0.02
MG Growth Estimate 15.00%
MG Value $1.71
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $0.35
MG Value based on 0% Growth $0.20
Market Implied Growth Rate 350.96%
Current Price $17.05
% of Intrinsic Value 995.96%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.32 in 2013 to an estimated $0.02 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 350.96% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Stillwater Mining Company revealed the company was trading above its Graham Number of $7.16. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 710.42, which was above the industry average of 47.18. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.71.

Stillwater Mining Company 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) $1.71
Graham Number $7.16
PEmg 710.42
Current Ratio 7.04
PB Ratio 2.25
Current Dividend $0.00
Dividend Yield 0.00%
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 $614,319,000
Total Current Liabilities $87,308,000
Long-Term Debt $274,806,000
Total Assets $1,327,037,000
Intangible Assets $0
Total Liabilities $406,191,000
Shares Outstanding (Diluted Average) 121,576,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.30
Dec2016 $0.08
Dec2015 -$0.10
Dec2014 $0.56
Dec2013 -$2.28
Dec2012 $0.46
Dec2011 $1.30
Dec2010 $0.51
Dec2009 -$0.09
Dec2008 -$1.26
Dec2007 -$0.17
Dec2006 $0.09
Dec2005 -$0.15
Dec2004 $0.33
Dec2003 -$4.77
Dec2002 $0.74
Dec2001 $1.68
Dec2000 $1.57
Dec1999 $0.96
Dec1998 $0.38
Dec1997 -$0.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.02
Dec2016 -$0.16
Dec2015 -$0.19
Dec2014 -$0.12
Dec2013 -$0.32
Dec2012 $0.51
Dec2011 $0.37
Dec2010 -$0.12
Dec2009 -$0.40
Dec2008 -$0.45
Dec2007 -$0.34
Dec2006 -$0.53
Dec2005 -$0.71
Dec2004 -$0.69
Dec2003 -$0.78
Dec2002 $1.16
Dec2001 $1.21

Recommended Reading:

Other ModernGraham posts about the company

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

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Ivanhoe Mines Ltd Valuation – Initial Coverage $TSE:IVN

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.

Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP

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 Canadian Pacific Railway Ltd (TSE:CP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Canadian Pacific Railway Limited (CP), together with its subsidiaries, operates a transcontinental railway in Canada and the United States. The Company operates in rail transportation segment. The Company’s business mix includes bulk commodities, merchandise freight and intermodal traffic over a network of approximately 12,500 miles, serving the principal business centers of Canada from Montreal, Quebec, to Vancouver, British Columbia, and the United States Northeast and Midwest regions. The Company transports bulk commodities, merchandise freight and intermodal traffic. Bulk commodities include Canadian grain, U.S. grain, coal, potash, and fertilizers and sulfur. Merchandise freight consists of finished vehicles and automotive parts, as well as forest and industrial and consumer products. Intermodal traffic consists of retail goods in overseas containers that can be transported by train, ship and truck and in domestic containers and trailers that can be moved by train and truck.

CP Chart

CP 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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CP – 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 $28,560,603,324 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 174.50% Pass
6. Moderate PEmg Ratio PEmg < 20 19.88 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.17 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.75 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -25.62 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 $9.75
MG Growth Estimate 15.00%
MG Value $375.38
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $141.38
MG Value based on 0% Growth $82.88
Market Implied Growth Rate 5.69%
Current Price $193.84
% of Intrinsic Value 51.64%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.8 in 2013 to an estimated $9.75 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.69% 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 Canadian Pacific Railway Limited revealed the company was trading above its Graham Number of $89.79. The company pays a dividend of $1.85 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 19.88, which was below the industry average of 20.23, 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 $-92.23.

Canadian Pacific Railway Limited receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$92.23
Graham Number $89.79
PEmg 19.86
Current Ratio 0.75
PB Ratio 6.16
Current Dividend $1.85
Dividend Yield 0.96%
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
Total Current Assets $1,009,000,000
Total Current Liabilities $1,347,000,000
Long-Term Debt $8,659,000,000
Total Assets $19,221,000,000
Intangible Assets $202,000,000
Total Liabilities $14,595,000,000
Shares Outstanding (Diluted Average) 147,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.33
Dec2016 $10.63
Dec2015 $8.40
Dec2014 $8.46
Dec2013 $4.96
Dec2012 $2.79
Dec2011 $3.34
Dec2010 $3.85
Dec2009 $3.30
Dec2008 $3.91
Dec2007 $6.08
Dec2006 $5.02
Dec2005 $3.39
Dec2004 $2.59
Dec2003 $2.52
Dec2002 $3.06
Dec2001 $2.27
Dec2000 $3.13
Dec1999 $0.19
Dec1998 $2.29
Dec1997 $2.95

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.75
Dec2016 $8.32
Dec2015 $6.64
Dec2014 $5.40
Dec2013 $3.80
Dec2012 $3.29
Dec2011 $3.73
Dec2010 $4.09
Dec2009 $4.25
Dec2008 $4.55
Dec2007 $4.56
Dec2006 $3.63
Dec2005 $2.88
Dec2004 $2.66
Dec2003 $2.54
Dec2002 $2.43
Dec2001 $2.13

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Norfolk Southern Corp Valuation – August 2016 $NSC
CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
Kansas City Southern Analysis – August 2015 Update $KSU
CSX Corporation Annual Valuation – 2014 $CSX
Union Pacific Corporation Annual Valuation – 2014 $UNP

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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