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Mondelez International Inc Valuation – March 2019 #MDLZ

Company Profile (excerpt from Reuters): Mondelez International, Inc., incorporated on January 10, 2005, is a snack company. The Company manufactures and markets snack food and beverage products for consumers. The Company operates through four segments: Latin America, Asia, Middle East, and Africa (AMEA), Europe and North America. As of December 31, 2016, its brands spanned five product categories, including Biscuits (including cookies, crackers and salted snacks); Chocolate; Gum and candy; Beverages (including coffee and powdered beverages), and Cheese and grocery. The Company’s portfolio includes various snack brands, including Nabisco, Oreo, LU and belVita biscuits; Cadbury, Milka, Cadbury Dairy Milk and Toblerone chocolate; Trident gum; Halls candy, and Tang powdered beverages.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MDLZ – 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 $71,479,143,112 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.45 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 7.34% Fail
6. Moderate PEmg Ratio PEmg < 20 22.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.83 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.37 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 $2.23
MG Growth Estimate -2.26%
MG Value $8.89
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $32.33
MG Value based on 0% Growth $18.95
Market Implied Growth Rate 6.85%
Current Price $49.50
% of Intrinsic Value 556.80%

MONDELEZ INTERNATIONAL INC Common Stock does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $2.62 in 2015 to an estimated $2.23 for 2019. 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 MONDELEZ INTERNATIONAL INC Common Stock revealed the company was trading above its Graham Number of $31.21. The company pays a dividend of $0.96 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 22.2, which was below the industry average of 26.89, 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 $-19.99.

MONDELEZ INTERNATIONAL INC Common Stock 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) -$19.99
Graham Number $31.21
PEmg 22.20
Current Ratio 0.45
PB Ratio 2.83
Current Dividend $0.96
Dividend Yield 1.94%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $7,604,000,000
Total Current Liabilities $16,737,000,000
Long-Term Debt $12,532,000,000
Total Assets $62,729,000,000
Intangible Assets $38,727,000,000
Total Liabilities $37,016,000,000
Shares Outstanding (Diluted Average) 1,471,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.45
Dec2018 $2.28
Dec2017 $1.85
Dec2016 $1.04
Dec2015 $4.44
Dec2014 $1.28
Dec2013 $2.19
Dec2012 $1.73
Dec2011 $2.01
Dec2010 $2.39
Dec2009 $2.03
Dec2008 $1.90
Dec2007 $1.62
Dec2006 $1.85
Dec2005 $1.55
Dec2004 $1.55
Dec2003 $2.01
Dec2002 $1.96
Dec2001 $1.17
Dec2000 $1.38
Dec1999 $1.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.23
Dec2018 $2.14
Dec2017 $2.10
Dec2016 $2.19
Dec2015 $2.62
Dec2014 $1.78
Dec2013 $2.05
Dec2012 $1.99
Dec2011 $2.07
Dec2010 $2.06
Dec2009 $1.86
Dec2008 $1.75
Dec2007 $1.68
Dec2006 $1.74
Dec2005 $1.67
Dec2004 $1.69
Dec2003 $1.69

Recommended Reading:

Other ModernGraham posts about the company

Mondelez International Inc Valuation – June 2018 $MDLZ
Mondelez International Inc Valuation – March 2017 $MDLZ
Mondelez International Inc Valuation – August 2016 $MDLZ
5 Speculative and Overvalued Companies to Avoid – July 2015
Mondelez International Inc. Analysis – 2015 Update $MDLZ

Other ModernGraham posts about related companies

JM Smucker Co Valuation – March 2019 #SJM
Lamb Weston Holdings Inc Valuation – March 2019 #LW
Kraft Heinz Co Valuation – March 2019 #KHC
Sysco Corp Valuation – March 2019 $SYY
General Mills Inc Valuation – February 2019 $GIS
McCormick & Co Valuation – February 2019 $MKC
Archer-Daniels Midland Co Valuation – February 2019 $ADM
Conagra Brands Inc Valuation – February 2019 $CAG
Monster Beverage Corp Valuation – February 2019 $MNST
Campbell Soup Co Valuation – January 2019 $CPB

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.

Mondelez International Inc Valuation – June 2018 $MDLZ

Company Profile (excerpt from Reuters): Robert Half International Inc. is engaged in providing specialized staffing and risk consulting services. The Company provides staffing and risk consulting services through the divisions: Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group and Protiviti. The Company operates through three segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services. The temporary and consultant segment provides specialized staffing in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and Web design fields. The permanent placement segment provides full-time personnel in the accounting, finance, administrative and office, and information technology fields. The risk consulting segment provides business and technology risk consulting and internal audit services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MDLZ – 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 $60,920,305,581 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.50 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 -16.80% Fail
6. Moderate PEmg Ratio PEmg < 20 18.83 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.34 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 0.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.56 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 $2.19
MG Growth Estimate 3.44%
MG Value $33.74
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $31.80
MG Value based on 0% Growth $18.64
Market Implied Growth Rate 5.16%
Current Price $41.30
% of Intrinsic Value 122.40%

MONDELEZ INTERNATIONAL INC Common Stock 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 Overvalued after growing its EPSmg (normalized earnings) from $1.78 in 2014 to an estimated $2.19 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.16% 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 MONDELEZ INTERNATIONAL INC Common Stock revealed the company was trading above its Graham Number of $30.72. The company pays a dividend of $0.82 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 18.83, which was below the industry average of 24.35, 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 $-19.66.

MONDELEZ INTERNATIONAL INC Common Stock 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) -$19.66
Graham Number $30.72
PEmg 18.83
Current Ratio 0.50
PB Ratio 2.34
Current Dividend $0.82
Dividend Yield 1.99%
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 3/1/2018
Total Current Assets $8,370,000,000
Total Current Liabilities $16,798,000,000
Long-Term Debt $13,180,000,000
Total Assets $64,503,000,000
Intangible Assets $40,111,000,000
Total Liabilities $37,953,000,000
Shares Outstanding (Diluted Average) 1,505,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.39
Dec2017 $1.91
Dec2016 $1.05
Dec2015 $4.44
Dec2014 $1.28
Dec2013 $2.19
Dec2012 $1.73
Dec2011 $2.01
Dec2010 $2.39
Dec2009 $2.03
Dec2008 $1.90
Dec2007 $1.62
Dec2006 $1.85
Dec2005 $1.55
Dec2004 $1.55
Dec2003 $2.01
Dec2002 $1.96
Dec2001 $1.17
Dec2000 $1.38
Dec1999 $1.20
Dec1998 $1.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.19
Dec2017 $2.12
Dec2016 $2.20
Dec2015 $2.62
Dec2014 $1.78
Dec2013 $2.05
Dec2012 $1.99
Dec2011 $2.07
Dec2010 $2.06
Dec2009 $1.86
Dec2008 $1.75
Dec2007 $1.68
Dec2006 $1.74
Dec2005 $1.67
Dec2004 $1.69
Dec2003 $1.69
Dec2002 $1.48

Recommended Reading:

Other ModernGraham posts about the company

Mondelez International Inc Valuation – March 2017 $MDLZ
Mondelez International Inc Valuation – August 2016 $MDLZ
5 Speculative and Overvalued Companies to Avoid – July 2015
Mondelez International Inc. Analysis – 2015 Update $MDLZ
Mondelez International Annual Valuation – 2014 $MDLZ

Other ModernGraham posts about related companies

Hormel Foods Corp Valuation – June 2018 $HRL
J M Smucker Co Valuation – May 2018 $SJM
Kraft Heinz Co Valuation – May 2018 $KHC
Dr Pepper Snapple Group Inc Valuation – May 2018 $DPS
Sysco Corp Valuation – May 2018 $SYY
General Mills Inc Valuation – May 2018 $GIS
Archer-Daniels Midland Co Valuation – May 2018 $ADM
Conagra Brands Inc Valuation – May 2018 $CAG
McCormick & Co Inc Valuation – May 2018 $MKC
Monster Beverage Corp Valuation – April 2018 $MNST

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.

Mondelez International Inc Valuation – March 2017 $MDLZ

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

Company Profile (obtained from Google Finance): Mondelez International, Inc. is a snack company. The Company manufactures and markets snack food and beverage products for consumers. It operates through four segments: Latin America, Asia, Middle East, and Africa (AMEA), Europe and North America. As of December 31, 2016, its brands spanned five product categories: Biscuits (including cookies, crackers and salted snacks); Chocolate; Gum and candy; Beverages (including coffee and powdered beverages), and Cheese and grocery. Itsportfolio includes various snack brands, including Nabisco, Oreo, LU and belVita biscuits; Cadbury, Milka, Cadbury Dairy Milk and Toblerone chocolate; Trident gum; Halls candy, and Tang powdered beverages. The Company sells its products to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores, value stores and retail food outlets. As of December 31, 2016, it sold its products to consumers in approximately 165 countries.

MDLZ Chart

MDLZ 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 MDLZ – 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 $66,121,306,719 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 18.20% Fail
6. Moderate PEmg Ratio PEmg < 20 20.30 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.72 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 0.59 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.23 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 $2.14
MG Growth Estimate 0.75%
MG Value $21.46
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $31.10
MG Value based on 0% Growth $18.23
Market Implied Growth Rate 5.90%
Current Price $43.53
% of Intrinsic Value 202.80%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.04 in 2013 to an estimated $2.14 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.9% 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 Mondelez International Inc revealed the company was trading above its Graham Number of $26.94. The company pays a dividend of $0.72 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 20.3, which was below the industry average of 34.94, 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 $-17.73.

Mondelez International 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) -$17.73
Graham Number $26.94
PEmg 20.30
Current Ratio 0.59
PB Ratio 2.72
Current Dividend $0.72
Dividend Yield 1.65%
Number of Consecutive Years of Dividend Growth 4

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $8,480,000,000
Total Current Liabilities $14,417,000,000
Long-Term Debt $13,217,000,000
Total Assets $61,538,000,000
Intangible Assets $38,377,000,000
Total Liabilities $36,377,000,000
Shares Outstanding (Diluted Average) 1,573,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.98
Dec2016 $1.05
Dec2015 $4.44
Dec2014 $1.28
Dec2013 $2.19
Dec2012 $1.71
Dec2011 $2.01
Dec2010 $2.39
Dec2009 $2.03
Dec2008 $1.90
Dec2007 $1.62
Dec2006 $1.85
Dec2005 $1.55
Dec2004 $1.55
Dec2003 $2.01
Dec2002 $1.96
Dec2001 $1.17
Dec2000 $1.38
Dec1999 $1.20
Dec1998 $1.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.14
Dec2016 $2.20
Dec2015 $2.62
Dec2014 $1.78
Dec2013 $2.04
Dec2012 $1.98
Dec2011 $2.07
Dec2010 $2.06
Dec2009 $1.86
Dec2008 $1.75
Dec2007 $1.68
Dec2006 $1.74
Dec2005 $1.67
Dec2004 $1.69
Dec2003 $1.69
Dec2002 $1.48
Dec2001 $1.15

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – July 2015
Mondelez International Inc. Analysis – 2015 Update $MDLZ
Mondelez International Annual Valuation – 2014 $MDLZ

Other ModernGraham posts about related companies

Calavo Growers Inc Valuation – Initial Coverage $CVGW
Hormel Foods Corp Valuation – March 2017 $HRL
Lancaster Colony Corp Valuation – Initial Coverage $LANC
J M Smucker Co Valuation – February 2017 $SJM
Kraft Heinz Co Valuation – Initial Coverage $KHC
Dr Pepper Snapple Group Inc Valuation – January 2017 $DPS
J&J Snack Foods Corp Valuation – Initial Coverage $JJSF
Sysco Corporation Valuation – January 2017 $SYY
General Mills Inc Valuation – January 2017 $GIS
Coca-Cola European Partners PLC Valuation – January 2017 $CCE

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.

Mondelez International Inc Valuation – August 2016 $MDLZ

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

Company Profile (obtained from Google Finance): Mondelez International, Inc. is a snack company. The Company manufactures and markets snack food and beverage products for consumers in approximately 165 countries around the world. The Company operates through five segments: Latin America; Asia Pacific; Eastern Europe, Middle East, and Africa (EEMEA); Europe, and North America. Its portfolio includes over seven brands, including Nabisco, Oreo and LU biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolates, and Trident gum, as well as over 50 brands. The Company’s brands span five product categories: biscuits (including cookies, crackers and salted snacks); chocolate; gum and candy; beverages (including coffee and powdered beverages), and cheese and grocery. The Company’s other brands include Oreo, Chips Ahoy!, Ritz, TUC/Club Social and belVita biscuits; Cadbury Dairy Milk, Milka and Lacta chocolate; Trident gum; Hall’s candy, and Tang powdered beverages.

MDLZ Chart

MDLZ data by YCharts

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

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

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of MDLZ – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $66,826,088,147 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 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 34.23% Pass
6. Moderate PEmg Ratio PEmg < 20 17.82 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.47 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.38 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

MDLZ value chart August 2016

EPSmg $2.42
MG Growth Estimate 3.34%
MG Value $36.78
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $35.13
MG Value based on 0% Growth $20.59
Market Implied Growth Rate 4.66%
Current Price $43.17
% of Intrinsic Value 117.37%

Mondelez International Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.98 in 2012 to an estimated $2.42 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.66% 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 Mondelez International Inc revealed the company was trading above its Graham Number of $26.28. The company pays a dividend of $0.68 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 17.82, which was below the industry average of 30.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.94.

Mondelez International Inc receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

MDLZ charts August 2016

Net Current Asset Value (NCAV) -$16.94
Graham Number $26.28
PEmg 17.82
Current Ratio 0.69
PB Ratio 2.47
Current Dividend $0.68
Dividend Yield 1.58%
Number of Consecutive Years of Dividend Growth 3

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $8,979,000,000
Total Current Liabilities $12,996,000,000
Long-Term Debt $13,578,000,000
Total Assets $63,271,000,000
Intangible Assets $39,522,000,000
Total Liabilities $35,679,000,000
Shares Outstanding (Diluted Average) 1,576,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.73
Dec2015 $4.44
Dec2014 $1.28
Dec2013 $2.19
Dec2012 $1.71
Dec2011 $2.01
Dec2010 $2.39
Dec2009 $2.03
Dec2008 $1.90
Dec2007 $1.62
Dec2006 $1.85
Dec2005 $1.55
Dec2004 $1.55
Dec2003 $2.01
Dec2002 $1.96
Dec2001 $1.17
Dec2000 $1.38
Dec1999 $1.20
Dec1998 $1.12

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.42
Dec2015 $2.62
Dec2014 $1.78
Dec2013 $2.04
Dec2012 $1.98
Dec2011 $2.07
Dec2010 $2.06
Dec2009 $1.86
Dec2008 $1.75
Dec2007 $1.68
Dec2006 $1.74
Dec2005 $1.67
Dec2004 $1.69
Dec2003 $1.69
Dec2002 $1.48
Dec2001 $1.15
Dec2000 $1.00

Recommended Reading:

Other ModernGraham posts about the company

Sorry, there was a technical error when trying to pull the prior posts for this company!

Other ModernGraham posts about related companies

J.M. Smucker Co Valuation – August 2016 $SJM
General Mills Inc Valuation – August 2016 $GIS
Archer Daniels Midland Co – August 2016 $ADM
Coca-Cola Co Valuation – July 2016 $KO
Monster Beverage Corp Valuation – July 2016 $MNST
Campbell Soup Company Valuation – July 2016 $CPB
Kellogg Company Valuation – July 2016 $K
Hershey Co Valuation – July 2016 $HSY
PepsiCo Inc Valuation – July 2016 $PEP
Mead Johnson Nutrition Valuation – June 2016 $MJN

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.

Mondelez International Inc. Analysis – 2015 Update $MDLZ

220px-Mondelez_International.svgBenjamin 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 5 Most Undervalued Companies for the Defensive Investor – June 2015.  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 Mondelez International (MDLZ) fares in the ModernGraham valuation model.

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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $41.10
MG Value $6.80
MG Opinion Overvalued
Value Based on 3% Growth $24.41
Value Based on 0% Growth $14.31
Market Implied Growth Rate 7.96%
Net Current Asset Value (NCAV) -$16.69
PEmg 24.42
Current Ratio 0.72
PB Ratio 2.79

Balance Sheet – March 2015

Current Assets $11,864,000,000
Current Liabilities $16,466,000,000
Total Debt $12,822,000,000
Total Assets $64,206,000,000
Intangible Assets $41,790,000,000
Total Liabilities $39,660,000,000
Outstanding Shares 1,665,000,000

Earnings Per Share

2015 (estimate) $1.63
2014 $1.28
2013 $2.19
2012 $1.71
2011 $1.99
2010 $2.39
2009 $2.03
2008 $1.22
2007 $1.62
2006 $1.85
2005 $1.72

Earnings Per Share – ModernGraham

2015 (estimate) $1.68
2014 $1.78
2013 $2.04
2012 $1.93
2011 $1.98
2010 $1.92

Dividend History

Mondelez is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the the low current ratio, the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the lack of earnings growth over the last five years and the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $1.98 in 2011 to only an estimated $1.68 for 2015.  This lack of earnings growth does not support the market’s implied estimate of 7.96% annual earnings growth over the next 7-10 years, leading the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value well below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Mondelez International (MDLZ)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

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.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Mondelez International Annual Valuation – 2014 $MDLZ

220px-Mondelez_International.svgBenjamin 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 5 Highest Dividend Yields Among Undervalued Companies for the Defensive Investor.  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 specific look at how Mondelez International (MDLZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Mondelez International, Inc. (Mondelez International) is a snack manufacturing company. The Company manufactures and markets food and beverage products for consumers in approximately 165 countries globally. The Company’s portfolio includes nine brands including Oreo, Nabisco and LU biscuits; Milka, Cadbury Dairy Milk and Cadbury chocolates; Trident gum; Jacobs coffee; and Tang powdered beverage. The Company’s portfolio of snack foods and refreshments also includes 53 brands. The Company operates in five segments: Latin America, Asia Pacific, Eastern Europe, Middle East and Africa, Europe and North America. The Company has operations in more than 80 countries and sells its products in approximately 165 countries. On February 22, 2013, it acquired the remaining interest in a biscuit operation in Morocco, which is a wholly owned subsidiary within its EEMEA segment.

MDLZ Chart

MDLZ data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 3/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 2/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $37.23
MG Value $7.72
MG Opinion Overvalued
Value Based on 3% Growth $20.84
Value Based on 0% Growth $12.22
Market Implied Growth Rate 8.70%
Net Current Asset Value (NCAV) -$16.28
PEmg 25.90
Current Ratio 0.89
PB Ratio 1.99

Balance Sheet – 3/31/2014

Current Assets $13,702,000,000
Current Liabilities $15,325,000,000
Total Debt $14,772,000,000
Total Assets $72,960,000,000
Intangible Assets $47,400,000,000
Total Liabilities $41,311,000,000
Outstanding Shares 1,695,740,000

Earnings Per Share

2014 (estimate) $1.68
2013 $1.29
2012 $0.86
2011 $1.99
2010 $1.44
2009 $2.03
2008 $1.22
2007 $1.62
2006 $1.85
2005 $1.72
2004 $1.55

Earnings Per Share – ModernGraham

2014 (estimate) $1.44
2013 $1.38
2012 $1.46
2011 $1.72
2010 $1.60
2009 $1.69

Dividend History

MDLZ Dividend Chart

MDLZ Dividend data by YCharts

Conclusion:

Mondelez is not suitable for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor has major concerns with the low current ratio, the lack of sufficient earnings growth over the last ten years, and the poor PEmg and PB ratios.  The Enterprising Investor also has concerns with the level of debt relative to the current assets and the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities through a review of ModernGraham’s valuation of Pepsico (PEP) and ModernGraham’s valuation of General Mills (GIS).  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $1.60 in 2010 to an estimated $1.44 for 2014.  This demonstrated drop in earnings does not support the market’s implied estimate of 8.70% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the market price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Mondelez International (MDLZ)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Mondelez International (MDLZ) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia; this article is not affiliated with the company in any manner.

Coca-Cola Co Valuation – April 2019 #KO

Company Profile (excerpt from Reuters): The Coca-Cola Company, incorporated on September 5, 1919, is a beverage company. The Company owns or licenses and markets non-alcoholic beverage brands, primarily sparkling beverages and a range of still beverages, such as waters, flavored waters and enhanced waters, juices and juice drinks, ready-to-drink teas and coffees, sports drinks, dairy and energy drinks. The Company’s segments include Europe, Middle East and Africa; Latin America; North America; Asia Pacific; Bottling Investments, and Corporate. The Company owns and markets a range of non-alcoholic sparkling beverage brands, including Coca-Cola, Diet Coke, Fanta and Sprite. As of December 31, 2016, the Company owned or licensed and marketed over 500 non-alcoholic beverage brands. The Company markets, manufactures and sells beverage concentrates, which are referred to as beverage bases, and syrups, including fountain syrups (concentrate business or concentrate operations), and finished sparkling and still beverages (finished product business or finished product operations). The Company makes its beverage products available to consumers across the world through its network of Company-owned or -controlled bottling and distribution operations, as well as bottling partners, distributors, wholesalers and retailers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KO – April 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $198,666,736,888 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.05 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 -39.21% Fail
6. Moderate PEmg Ratio PEmg < 20 31.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.50 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 1.05 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 17.98 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 $1.46
MG Growth Estimate -2.50%
MG Value $5.11
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $21.14
MG Value based on 0% Growth $12.39
Market Implied Growth Rate 11.69%
Current Price $46.47
% of Intrinsic Value 909.65%

The Coca-Cola Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $1.75 in 2015 to an estimated $1.46 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.69% 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 below the price.

At the time of valuation, further research into The Coca-Cola Co revealed the company was trading above its Graham Number of $13.61. The company pays a dividend of $1.56 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 31.87, which was above the industry average of 27.84. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.79.

The Coca-Cola Co receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.79
Graham Number $13.61
PEmg 31.87
Current Ratio 1.05
PB Ratio 10.50
Current Dividend $1.56
Dividend Yield 3.36%
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 $30,634,000,000
Total Current Liabilities $29,223,000,000
Long-Term Debt $25,364,000,000
Total Assets $83,216,000,000
Intangible Assets $17,270,000,000
Total Liabilities $64,158,000,000
Shares Outstanding (Diluted Average) 4,305,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.07
Dec2018 $1.50
Dec2017 $0.29
Dec2016 $1.49
Dec2015 $1.67
Dec2014 $1.60
Dec2013 $1.90
Dec2012 $1.97
Dec2011 $1.85
Dec2010 $2.53
Dec2009 $1.47
Dec2008 $1.25
Dec2007 $1.29
Dec2006 $1.08
Dec2005 $1.02
Dec2004 $1.00
Dec2003 $0.89
Dec2002 $0.62
Dec2001 $0.80
Dec2000 $0.44
Dec1999 $0.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.46
Dec2018 $1.20
Dec2017 $1.17
Dec2016 $1.65
Dec2015 $1.75
Dec2014 $1.85
Dec2013 $1.96
Dec2012 $1.93
Dec2011 $1.84
Dec2010 $1.73
Dec2009 $1.29
Dec2008 $1.18
Dec2007 $1.11
Dec2006 $0.99
Dec2005 $0.92
Dec2004 $0.83
Dec2003 $0.71

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Dow Components – January 2019
Coca-Cola Co Valuation – November 2018 $KO
10 Most Overvalued Stocks of the S&P 500 – July 2018
5 Overvalued Dow Components – June 2018
5 Overvalued Dow Components – February 2018

Other ModernGraham posts about related companies

Tyson Foods Inc Valuation – March 2019 #TSN
Mondelez International Inc Valuation – March 2019 #MDLZ
Hormel Foods Corp Valuation – March 2019 #HRL
JM Smucker Co Valuation – March 2019 #SJM
Lamb Weston Holdings Inc Valuation – March 2019 #LW
Kraft Heinz Co Valuation – March 2019 #KHC
Sysco Corp Valuation – March 2019 $SYY
General Mills Inc Valuation – February 2019 $GIS
McCormick & Co Valuation – February 2019 $MKC
Archer-Daniels Midland Co Valuation – February 2019 $ADM

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.

Tyson Foods Inc Valuation – March 2019 #TSN

Company Profile (excerpt from Reuters): Tyson Foods, Inc., incorporated on January 31, 1986, is a food company, which is engaged in offering chicken, beef and pork, as well as prepared foods. The Company offers food products under Tyson, Jimmy Dean, Hillshire Farm, Sara Lee, Ball Park, Wright, Aidells and State Fair brands. The Company operates through four segments: Chicken, Beef, Pork and Prepared Foods. It operates a vertically integrated chicken production process, which consists of breeding stock, contract growers, feed production, processing, further-processing, marketing and transportation of chicken and related allied products, including animal and pet food ingredients. Through its subsidiary, Cobb-Vantress, Inc. (Cobb), the Company is engaged in supplying poultry breeding stock across the world. It produces a range of fresh, frozen and refrigerated food products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSN – 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 $20,499,693,600 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.85 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 225.35% Pass
6. Moderate PEmg Ratio PEmg < 20 12.02 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.92 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 0.85 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.15 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 $5.78
MG Growth Estimate 15.00%
MG Value $222.38
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $83.75
MG Value based on 0% Growth $49.10
Market Implied Growth Rate 1.76%
Current Price $69.43
% of Intrinsic Value 31.22%

Tyson Foods, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.38 in 2015 to an estimated $5.78 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.76% 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 Tyson Foods, Inc. revealed the company was trading above its Graham Number of $65.79. The company pays a dividend of $1.13 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 12.02, which was below the industry average of 26.89, 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 $-34.9.

Tyson Foods, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$34.90
Graham Number $65.79
PEmg 12.02
Current Ratio 0.85
PB Ratio 1.92
Current Dividend $1.13
Dividend Yield 1.62%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $6,301,000,000
Total Current Liabilities $7,430,000,000
Long-Term Debt $8,075,000,000
Total Assets $32,335,000,000
Intangible Assets $18,255,000,000
Total Liabilities $19,076,000,000
Shares Outstanding (Diluted Average) 366,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.50
Sep2018 $8.19
Sep2017 $4.79
Sep2016 $4.53
Sep2015 $2.95
Sep2014 $2.37
Sep2013 $2.12
Sep2012 $1.58
Sep2011 $1.97
Sep2010 $2.13
Sep2009 -$1.49
Sep2008 $0.24
Sep2007 $0.75
Sep2006 -$0.58
Sep2005 $1.04
Sep2004 $1.13
Sep2003 $0.96
Sep2002 $1.08
Sep2001 $0.40
Sep2000 $0.67
Sep1999 $1.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.78
Sep2018 $5.46
Sep2017 $3.85
Sep2016 $3.16
Sep2015 $2.38
Sep2014 $2.08
Sep2013 $1.71
Sep2012 $1.30
Sep2011 $1.01
Sep2010 $0.42
Sep2009 -$0.29
Sep2008 $0.38
Sep2007 $0.52
Sep2006 $0.51
Sep2005 $1.01
Sep2004 $0.95
Sep2003 $0.84

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies for Value Investors with a Low Beta – January 2019
10 Undervalued Stocks for the Enterprising Investor – January 2019
Most Undervalued Stocks of the S&P 500 – August 2018
10 Undervalued Stocks for the Enterprising Investor – August 2018
5 Companies for Enterprising Investors Near 52 Week Lows – July 2018

Other ModernGraham posts about related companies

Mondelez International Inc Valuation – March 2019 #MDLZ
Hormel Foods Corp Valuation – March 2019 #HRL
JM Smucker Co Valuation – March 2019 #SJM
Lamb Weston Holdings Inc Valuation – March 2019 #LW
Kraft Heinz Co Valuation – March 2019 #KHC
Sysco Corp Valuation – March 2019 $SYY
General Mills Inc Valuation – February 2019 $GIS
McCormick & Co Valuation – February 2019 $MKC
Archer-Daniels Midland Co Valuation – February 2019 $ADM
Conagra Brands Inc Valuation – February 2019 $CAG

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.

Lancaster Colony Corp Valuation – August 2018 $LANC

Company Profile (excerpt from Reuters): Lancaster Colony Corporation, incorporated on October 11, 1991, is a manufacturer and marketer of specialty food products for the retail and foodservice channels. The Company’s food products include Salad dressings and sauces, Vegetable dips and fruit dips, Frozen garlic breads, Frozen Parkerhouse style yeast rolls and dinner rolls, Premium dry egg noodles, Frozen specialty noodles, Croutons and salad toppings, Flatbread wraps and pizza crusts, and Caviar. Its brands include Marzetti, Marzetti Simply Dressed, Cardini’s, Girard’s, Katherine’s Kitchen, New York BRAND Bakery, Mamma Bella, Mamma Bella’s, Sister Schubert’s, Mary B’s, Inn Maid, Amish Kitchen, Reames, Aunt Vi’s, Flatout and Romanoff.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LANC – 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 $4,225,881,575 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.04 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 23.38% Fail
6. Moderate PEmg Ratio PEmg < 20 33.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.48 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 4.04 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.65
MG Growth Estimate 4.96%
MG Value $85.67
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $67.41
MG Value based on 0% Growth $39.51
Market Implied Growth Rate 12.29%
Current Price $153.79
% of Intrinsic Value 179.51%

Lancaster Colony Corp. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.49 in 2015 to an estimated $4.65 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.29% 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 Lancaster Colony Corp. revealed the company was trading above its Graham Number of $51.52. The company pays a dividend of $2.35 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 33.08, which was above the industry average of 26.3. Finally, the company was trading above its Net Current Asset Value (NCAV) of $8.25.

Lancaster Colony 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) $8.25
Graham Number $51.52
PEmg 33.08
Current Ratio 4.04
PB Ratio 6.48
Current Dividend $2.35
Dividend Yield 1.53%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $378,877,000
Total Current Liabilities $93,767,000
Long-Term Debt $0
Total Assets $804,491,000
Intangible Assets $0
Total Liabilities $152,209,000
Shares Outstanding (Diluted Average) 27,467,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.97
Jun2018 $4.92
Jun2017 $4.20
Jun2016 $4.44
Jun2015 $3.72
Jun2014 $2.74
Jun2013 $3.99
Jun2012 $3.51
Jun2011 $3.84
Jun2010 $4.07
Jun2009 $3.17
Jun2008 $1.28
Jun2007 $1.45
Jun2006 $2.48
Jun2005 $2.56
Jun2004 $2.04
Jun2003 $3.11
Jun2002 $2.49
Jun2001 $2.37
Jun2000 $2.51
Jun1999 $2.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.65
Jun2018 $4.33
Jun2017 $3.96
Jun2016 $3.79
Jun2015 $3.49
Jun2014 $3.46
Jun2013 $3.79
Jun2012 $3.52
Jun2011 $3.27
Jun2010 $2.82
Jun2009 $2.19
Jun2008 $1.79
Jun2007 $2.14
Jun2006 $2.50
Jun2005 $2.51
Jun2004 $2.49
Jun2003 $2.66

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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.

SpartanNash Co Valuation – August 2018 $SPTN

Company Profile (excerpt from Reuters): SpartanNash Company, incorporated on April 16, 1918, is a multi-regional grocery distributor and grocery retailer. The Company’s core businesses include distributing grocery products to independent grocery retailers (independent retailers), select national retailers, its corporate owned retail stores, and the United States military commissaries. The Company operates through three segments: Food Distribution, Military and Retail. The Company’s Food Distribution segment provides a range of nationally branded and private brand grocery products and perishable food products to independent retailers, food service distributors and the Company’s corporate owned retail stores. The Company’s Military segment contracts with manufacturers to distribute a range of grocery products primarily to military commissaries and exchanges located in the United States, the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain and Egypt. As of December 31, 2016, the Company’s Retail segment operated 157 corporate owned retail stores in the Midwest and Great Lakes regions primarily under the banners of Family Fare Supermarkets, VG’s Food and Pharmacy, D&W Fresh Markets, Sun Mart and Family Fresh Market.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPTN – 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 $868,419,305 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.12 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 -45.02% Fail
6. Moderate PEmg Ratio PEmg < 20 23.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.17 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 2.12 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.41 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 $0.99
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $14.36
MG Value based on 0% Growth $8.42
Market Implied Growth Rate 7.65%
Current Price $23.58
% of Intrinsic Value N/A

SpartanNash Co 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, 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 $1.39 in 2014 to an estimated $0.99 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.65% 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 SpartanNash Co revealed the company was trading below its Graham Number of $31.45. The company pays a dividend of $0.66 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 23.8, which was below the industry average of 26.3, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.01.

SpartanNash Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.01
Graham Number $31.45
PEmg 23.80
Current Ratio 2.12
PB Ratio 1.17
Current Dividend $0.66
Dividend Yield 2.80%
Number of Consecutive Years of Dividend Growth 6

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $985,166,000
Total Current Liabilities $464,513,000
Long-Term Debt $733,367,000
Total Assets $2,016,937,000
Intangible Assets $311,213,000
Total Liabilities $1,304,893,000
Shares Outstanding (Diluted Average) 35,480,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.22
Dec2017 -$1.41
Dec2016 $1.51
Dec2015 $1.66
Dec2014 $1.55
Mar2013 $1.25
Mar2012 $1.39
Mar2011 $1.42
Mar2010 $1.14
Mar2009 $1.66
Mar2008 $1.58
Mar2007 $1.18
Mar2006 $0.86
Mar2005 $0.91
Mar2004 -$0.33
Mar2003 -$6.15
Mar2002 $0.50
Mar2001 $1.35
Mar2000 $1.28
Mar1999 $1.02
Mar1998 $0.94

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.99
Dec2017 $0.55
Dec2016 $1.52
Dec2015 $1.50
Dec2014 $1.39
Mar2013 $1.33
Mar2012 $1.40
Mar2011 $1.40
Mar2010 $1.35
Mar2009 $1.39
Mar2008 $1.11
Mar2007 $0.35
Mar2006 -$0.32
Mar2005 -$0.86
Mar2004 -$1.38
Mar2003 -$1.41
Mar2002 $0.98

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Other ModernGraham posts about the company

SpartanNash Co Valuation – Initial Coverage $SPTN

Other ModernGraham posts about related companies

Core-Mark Holding Co Inc Valuation – August 2018 $CORE
J&J Snack Foods Corp Valuation – August 2018 $JJSF
Coca-Cola European Partners PLC Valuation – July 2018 $CCE
Seneca Foods Corp Valuation – July 2018 $SENEA
Saputo Inc Valuation – July 2018 $TSE-SAP
Ingredion Inc Valuation – July 2018 $INGR
B&G Foods Inc Valuation – July 2018 $BGS
Tyson Foods Inc Valuation – June 2018 $TSN
Mondelez International Inc Valuation – June 2018 $MDLZ
Hormel Foods Corp Valuation – June 2018 $HRL

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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