Mettler-Toledo International Inc Valuation – March 2019 #MTD

Company Profile (excerpt from Reuters): Mettler-Toledo International Inc., incorporated on December 6, 1991, is a supplier of precision instruments and services. The Company operates through five segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company is also a provider of analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development, and process analytics instruments used for in-line measurement in production processes. In addition, the Company is also a supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. The Company serves food and beverage producers; food retailers; chemical, specialty chemicals and cosmetics companies, and the transportation and logistics industry, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MTD – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,570,648,912 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.42 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 134.87% Pass
6. Moderate PEmg Ratio PEmg < 20 38.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 30.56 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 1.42 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.16 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $18.41
MG Growth Estimate 10.18%
MG Value $531.23
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $266.95
MG Value based on 0% Growth $156.49
Market Implied Growth Rate 14.96%
Current Price $707.41
% of Intrinsic Value 133.17%

Mettler-Toledo 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, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $10.97 in 2015 to an estimated $18.41 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.96% 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 Mettler-Toledo International Inc. revealed the company was trading above its Graham Number of $109.73. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 38.42, which was below the industry average of 53.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-38.56.

Mettler-Toledo 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) -$38.56
Graham Number $109.73
PEmg 38.42
Current Ratio 1.42
PB Ratio 30.56
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,045,860,000
Total Current Liabilities $734,434,000
Long-Term Debt $985,021,000
Total Assets $2,618,847,000
Intangible Assets $752,088,000
Total Liabilities $2,028,784,000
Shares Outstanding (Diluted Average) 25,491,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $22.60
Dec2018 $19.88
Dec2017 $14.24
Dec2016 $14.22
Dec2015 $12.48
Dec2014 $11.44
Dec2013 $9.96
Dec2012 $9.14
Dec2011 $8.21
Dec2010 $6.80
Dec2009 $5.03
Dec2008 $5.79
Dec2007 $4.70
Dec2006 $3.86
Dec2005 $2.52
Dec2004 $2.37
Dec2003 $2.11
Dec2002 $2.21
Dec2001 $1.68
Dec2000 $1.66
Dec1999 $1.16

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $18.41
Dec2018 $15.69
Dec2017 $13.22
Dec2016 $12.29
Dec2015 $10.97
Dec2014 $9.85
Dec2013 $8.64
Dec2012 $7.65
Dec2011 $6.64
Dec2010 $5.65
Dec2009 $4.84
Dec2008 $4.45
Dec2007 $3.56
Dec2006 $2.86
Dec2005 $2.30
Dec2004 $2.13
Dec2003 $1.93

Recommended Reading:

Other ModernGraham posts about the company

Mettler-Toledo International Inc Valuation – June 2018 $MTD
Mettler-Toledo International Inc Valuation – Initial Coverage $MTD

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Agilent Technologies Inc Valuation – March 2019 #A
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Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT

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.

Ametek Inc Valuation – March 2019 #AME

Company Profile (excerpt from Reuters): AMETEK, Inc., incorporated on May 8, 1986, is a manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The Company operates through two segments: Electronic Instruments (EIG) and Electromechanical (EMG). EIG designs and manufactures instruments for the process, power and industrial and aerospace markets. EMG is a differentiated supplier of precision motion control solutions, thermal management systems, specialty metals and electrical interconnects. Its end markets include aerospace and defense, medical, automation, mass transit, petrochemical and other industrial markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AME – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,072,893,170 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 121.55% Pass
6. Moderate PEmg Ratio PEmg < 20 24.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.34 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 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.94 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.27
MG Growth Estimate 7.03%
MG Value $73.71
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $47.38
MG Value based on 0% Growth $27.77
Market Implied Growth Rate 7.93%
Current Price $79.57
% of Intrinsic Value 107.95%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.22 in 2015 to an estimated $3.27 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 7.93% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into AMETEK, Inc. revealed the company was trading above its Graham Number of $40.56. The company pays a dividend of $0.56 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 24.35, which was below the industry average of 35.5, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.17.

AMETEK, 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) -$11.17
Graham Number $40.56
PEmg 24.35
Current Ratio 1.46
PB Ratio 4.34
Current Dividend $0.56
Dividend Yield 0.70%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,836,144,000
Total Current Liabilities $1,258,704,000
Long-Term Debt $2,273,837,000
Total Assets $8,662,288,000
Intangible Assets $6,015,804,000
Total Liabilities $4,420,366,000
Shares Outstanding (Diluted Average) 231,335,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.00
Dec2018 $3.34
Dec2017 $2.94
Dec2016 $2.19
Dec2015 $2.45
Dec2014 $2.37
Dec2013 $2.10
Dec2012 $1.88
Dec2011 $1.58
Dec2010 $1.18
Dec2009 $0.85
Dec2008 $1.02
Dec2007 $0.94
Dec2006 $0.76
Dec2005 $0.57
Dec2004 $0.47
Dec2003 $0.37
Dec2002 $0.37
Dec2001 $0.29
Dec2000 $0.31
Dec1999 $0.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.27
Dec2018 $2.82
Dec2017 $2.51
Dec2016 $2.26
Dec2015 $2.22
Dec2014 $2.02
Dec2013 $1.73
Dec2012 $1.47
Dec2011 $1.21
Dec2010 $1.00
Dec2009 $0.88
Dec2008 $0.85
Dec2007 $0.72
Dec2006 $0.57
Dec2005 $0.46
Dec2004 $0.39
Dec2003 $0.34

Recommended Reading:

Other ModernGraham posts about the company

Ametek Inc Valuation – April 2018 $AME
AMETEK Inc Valuation – December 2016 $AME
Ametek Inc Valuation – August 2016 $AME
5 Undervalued Stocks Near Lows for Enterprising Value Investors – Aug 2016
5 Companies for Enterprising Investors Near 52 Week Lows – June 2016

Other ModernGraham posts about related companies

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FLIR Systems Inc Valuation – February 2019 $FLIR
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Microchip Technology Inc Valuation – February 2019 $MCHP
Broadcom Inc Valuation – February 2019 $AVGO
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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.

Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH

Company Profile (excerpt from Reuters): Zimmer Biomet Holdings, Inc., incorporated on January 12, 2001, is engaged in designing, manufacturing and marketing of orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; office-based technologies; spine, craniomaxillofacial and thoracic products; dental implants, and related surgical products. The Company’s products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. The Company manages its operations through three geographic operating segments: the Americas, consisting principally of the United States and other North, Central and South American markets; EMEA, consisting principally of Europe and the Middle East and African markets, and Asia Pacific, consisting primarily of Japan and other Asian and Pacific markets. The Company’s product category segments include Americas Spine, Office Based Technologies, Craniomaxillofacial and Thoracic (CMF), and Dental.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ZBH – 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 $21,078,879,093 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.89 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 46.03% Pass
6. Moderate PEmg Ratio PEmg < 20 22.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.74 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 1.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.05 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.61
MG Growth Estimate 1.45%
MG Value $52.60
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $66.86
MG Value based on 0% Growth $39.20
Market Implied Growth Rate 6.96%
Current Price $103.34
% of Intrinsic Value 196.46%

Zimmer Biomet 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, poor dividend history, and the high PEmg ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.2 in 2014 to an estimated $4.61 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.96% 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 Zimmer Biomet Holdings Inc revealed the company was trading above its Graham Number of $77.93. The company pays a dividend of $0.96 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 22.41, which was below the industry average of 52.7, 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 $-42.09.

Zimmer Biomet 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) -$42.09
Graham Number $77.93
PEmg 22.41
Current Ratio 1.89
PB Ratio 1.74
Current Dividend $0.96
Dividend Yield 0.93%
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 9/1/2018
Total Current Assets $4,513,300,000
Total Current Liabilities $2,391,200,000
Long-Term Debt $8,597,400,000
Total Assets $25,382,000,000
Intangible Assets $18,421,000,000
Total Liabilities $13,159,000,000
Shares Outstanding (Diluted Average) 205,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.66
Dec2017 $8.90
Dec2016 $1.51
Dec2015 $0.77
Dec2014 $4.20
Dec2013 $4.54
Dec2012 $4.29
Dec2011 $4.03
Dec2010 $2.97
Dec2009 $3.32
Dec2008 $3.72
Dec2007 $3.26
Dec2006 $3.40
Dec2005 $2.93
Dec2004 $2.19
Dec2003 $1.64
Dec2002 $1.31
Dec2001 $0.77
Dec2000 $0.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.61
Dec2017 $4.39
Dec2016 $2.44
Dec2015 $3.13
Dec2014 $4.20
Dec2013 $4.08
Dec2012 $3.79
Dec2011 $3.51
Dec2010 $3.28
Dec2009 $3.40
Dec2008 $3.33
Dec2007 $2.98
Dec2006 $2.66
Dec2005 $2.11
Dec2004 $1.59
Dec2003 $1.17
Dec2002 $0.82

Recommended Reading:

Other ModernGraham posts about the company

Zimmer Biomet Holdings Inc Valuation – March 2018 $ZBH
Zimmer Biomet Holdings Inc Valuation – June 2016 $ZBH
Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

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Chartwell Retirement Residences Valuation – August 2018 $TSE:CSH.UN
STERIS PLC Valuation – August 2018 $STE
CryoLife Inc Valuation – August 2018 $CRY
Charles River Laboratories International Inc Valuation – August 2018 $CRL
Surmodics Inc Valuation – August 2018 $SRDX

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.

MetLife Inc Valuation – January 2019 $MET

Company Profile (excerpt from Reuters): MetLife, Inc. (MetLife), incorporated on August 10, 1999, is a provider of life insurance, annuities, employee benefits and asset management. The Company’s segments include U.S.; Asia; Latin America; Europe, the Middle East and Africa (EMEA); MetLife Holdings, and Corporate & Other. In the United States, the Company provides a range of insurance and financial services products, including life, dental, disability, property and casualty, guaranteed interest, stable value and annuities to both individuals and groups. Outside the United States, the Company provides life, medical, dental, credit and other accident and health insurance, as well as annuities, endowment and retirement and savings products to both individuals and groups.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MET – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $41,989,964,657 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 45.90% Pass
5. Moderate PEmg Ratio PEmg < 20 12.39 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.82 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.43
MG Growth Estimate -1.32%
MG Value $20.10
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $49.78
MG Value based on 0% Growth $29.18
Market Implied Growth Rate 1.95%
Current Price $42.55
% of Intrinsic Value 211.68%

Metlife 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 over the last ten years. The Enterprising Investor has concerns regarding the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.77 in 2014 to an estimated $3.43 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Metlife Inc revealed the company was trading below its Graham Number of $71.76. The company pays a dividend of $1.6 per share, for a yield of 3.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.39, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $71.76
PEmg 12.39
PB Ratio 0.82
Dividend Yield 3.76%
TTM Dividend $1.60
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 9/1/2018
Long-Term Debt & Capital Lease Obligation $16,554,000,000
Total Assets $698,451,000,000
Intangible Assets $9,440,000,000
Total Liabilities $646,642,000,000
Shares Outstanding (Diluted Average) 1,000,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.07
Dec2017 $3.62
Dec2016 $0.67
Dec2015 $4.62
Dec2014 $5.42
Dec2013 $2.91
Dec2012 $1.12
Dec2011 $5.76
Dec2010 $2.86
Dec2009 -$2.89
Dec2008 $4.14
Dec2007 $5.48
Dec2006 $7.99
Dec2005 $6.16
Dec2004 $3.65
Dec2003 $2.94
Dec2002 $2.20
Dec2001 $0.62
Dec2000 $1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.43
Dec2017 $3.23
Dec2016 $3.00
Dec2015 $4.10
Dec2014 $3.77
Dec2013 $2.61
Dec2012 $2.37
Dec2011 $3.02
Dec2010 $2.27
Dec2009 $2.71
Dec2008 $5.50
Dec2007 $5.87
Dec2006 $5.57
Dec2005 $3.95
Dec2004 $2.62
Dec2003 $1.89
Dec2002 $1.20

Recommended Reading:

Other ModernGraham posts about the company

MetLife Inc Valuation – March 2018 $MET
Best Stocks Below Their Graham Number – February 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017
Best Stocks Below Their Graham Number – January 2017

Other ModernGraham posts about related companies

Aflac Inc Valuation – January 2019 $AFL
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Progressive Corp Valuation – January 2019 $PGR
Lincoln National Corp Valuation – January 2019 $LNC
Cincinnati Financial Corp Valuation – January 2019 $CINF
Aon PLC Valuation – November 2018 $AON
Travelers Companies Inc Valuation – November 2018 $TRV
Stewart Information Services Corp Valuation – August 2018 $STC
Kemper Corp Valuation – August 2018 $KMPR
CNO Financial Group Inc Valuation – August 2018 $CNO

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.

Kennametal Inc Valuation – August 2018 $KMT

Company Profile (excerpt from Reuters): Kennametal Inc. (Kennametal), incorporated on June 25, 1943, is a supplier of tooling, engineered components and materials consumed in production processes. The Company operates through two segments: Industrial and Infrastructure. The Company provides wear-resistant products, application engineering and services backed by material science serving customers across diverse sectors of industrial production, transportation, earthworks, energy, construction, process industries and aerospace. Kennametal solutions are built across technology platforms, including precision-engineered metalworking tools and components, surface technologies and earth cutting tools that are mission-critical to customer operations battling conditions associated with wear fatigue, corrosion and high temperatures.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KMT – 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 $3,272,088,191 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.74 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -14.51% Fail
6. Moderate PEmg Ratio PEmg < 20 35.65 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.62 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 1.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.90 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.09
MG Growth Estimate 15.00%
MG Value $41.94
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $15.80
MG Value based on 0% Growth $9.26
Market Implied Growth Rate 13.57%
Current Price $38.83
% of Intrinsic Value 92.59%

Kennametal 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 or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings stability over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.15 in 2015 to an estimated $1.09 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 13.57% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Kennametal Inc. revealed the company was trading above its Graham Number of $31.63. The company pays a dividend of $0.8 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 35.65, which was above the industry average of 29.32. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.8.

Kennametal 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) -$1.80
Graham Number $31.63
PEmg 35.65
Current Ratio 1.74
PB Ratio 2.62
Current Dividend $0.80
Dividend Yield 2.06%
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 6/1/2018
Total Current Assets $1,546,166,000
Total Current Liabilities $886,531,000
Long-Term Debt $591,505,000
Total Assets $2,925,737,000
Intangible Assets $478,270,000
Total Liabilities $1,695,410,000
Shares Outstanding (Diluted Average) 83,038,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.04
Jun2018 $2.42
Jun2017 $0.61
Jun2016 -$2.83
Jun2015 -$4.71
Jun2014 $1.99
Jun2013 $2.52
Jun2012 $3.77
Jun2011 $2.76
Jun2010 $0.57
Jun2009 -$1.64
Jun2008 $2.15
Jun2007 $2.22
Jun2006 $3.24
Jun2005 $1.57
Jun2004 $1.01
Jun2003 $0.26
Jun2002 -$3.40
Jun2001 $0.87
Jun2000 $0.85
Jun1999 $0.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.09
Jun2018 -$0.09
Jun2017 -$1.06
Jun2016 -$1.21
Jun2015 $0.15
Jun2014 $2.50
Jun2013 $2.36
Jun2012 $2.03
Jun2011 $1.18
Jun2010 $0.69
Jun2009 $1.01
Jun2008 $2.23
Jun2007 $2.07
Jun2006 $1.51
Jun2005 $0.45
Jun2004 -$0.10
Jun2003 -$0.49

Recommended Reading:

Other ModernGraham posts about the company

Kennametal Inc Valuation – Initial Coverage $KMT

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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.

Commercial Metals Co Valuation – July 2018 $CMC

Company Profile (excerpt from Reuters): Commercial Metals Company (CMC), incorporated on August 29, 1946, together with its subsidiaries, is engaged in manufacturing, recycling and marketing steel and metal products, related materials and services through a network, including steel mills, such as minimills or micro-mills, steel fabrication and processing facilities, construction-related product warehouses, metal recycling facilities and marketing and distribution offices in the United States and in strategic international markets. The Company operates in five business segments across two geographic divisions, which include CMC Americas Division, which includes three segments, including Americas Recycling, Americas Mills and Americas Fabrication, and CMC International Division, which includes two segments, including International Mill, and International Marketing and Distribution.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMC – 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 $2,636,401,087 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.90 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 -172.46% Fail
6. Moderate PEmg Ratio PEmg < 20 30.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.83 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.77 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.73
MG Growth Estimate 3.98%
MG Value $12.03
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $10.59
MG Value based on 0% Growth $6.21
Market Implied Growth Rate 11.13%
Current Price $22.47
% of Intrinsic Value 186.75%

Commercial Metals Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.58 in 2014 to an estimated $0.73 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.13% 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 Commercial Metals Company revealed the company was trading above its Graham Number of $17.61. The company pays a dividend of $0.48 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 30.75, which was below the industry average of 31.68, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.71.

Commercial Metals Company receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.71
Graham Number $17.61
PEmg 30.75
Current Ratio 3.90
PB Ratio 1.83
Current Dividend $0.48
Dividend Yield 2.14%
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 5/1/2018
Total Current Assets $1,994,956,000
Total Current Liabilities $511,936,000
Long-Term Debt $1,139,103,000
Total Assets $3,245,493,000
Intangible Assets $64,316,000
Total Liabilities $1,792,591,000
Shares Outstanding (Diluted Average) 118,255,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.14
Aug2017 $0.39
Aug2016 $0.47
Aug2015 $0.67
Aug2014 $0.95
Aug2013 $0.66
Aug2012 $1.78
Aug2011 -$1.13
Aug2010 -$1.81
Aug2009 $0.18
Aug2008 $1.97
Aug2007 $2.92
Aug2006 $2.89
Aug2005 $2.32
Aug2004 $1.11
Aug2003 $0.17
Aug2002 $0.36
Aug2001 $0.23
Aug2000 $0.39
Aug1999 $0.40
Aug1998 $0.35

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.73
Aug2017 $0.56
Aug2016 $0.73
Aug2015 $0.77
Aug2014 $0.58
Aug2013 $0.24
Aug2012 $0.09
Aug2011 -$0.37
Aug2010 $0.42
Aug2009 $1.71
Aug2008 $2.40
Aug2007 $2.37
Aug2006 $1.85
Aug2005 $1.17
Aug2004 $0.54
Aug2003 $0.27
Aug2002 $0.33

Recommended Reading:

Other ModernGraham posts about the company

15 Best Stocks for Value Investors This Week – 1/14/17
Commercial Metals Company Valuation – Initial Coverage $CMC

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Steel Dynamics Inc Valuation – Initial Coverage $STLD
Carpenter Technology Corp Valuation – Initial Coverage $CRS
Commercial Metals Company Valuation – Initial Coverage $CMC
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Nucor Corporation Valuation – December 2016 $NUE
Nucor Corp Valuation – August 2016 $NUE

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.

Wheaton Precious Metals Corp Valuation – July 2018 $TSE-WPM

Company Profile (excerpt from Reuters): Wheaton Precious Metals Corp, formerly Silver Wheaton Corp, is a Canada-based pure precious metals streaming company engaged in the sale of silver and gold. The Company operates through eight segments: the silver produced by the San Dimas, Penasquito and Antamina mines, the gold produced by the Sudbury and Salobo mines, the silver and gold produced by the Constancia mine and the Other mines, and corporate operations. The Company has entered into long-term purchase agreements and early deposit long-term purchase agreement associated with silver and gold (precious metal purchase agreements), relating to mining assets, whereby Silver Wheaton acquires silver and gold production at various mines. The San Dimas gold-silver deposit is located in the San Dimas district on the border of Durango and Sinaloa states. The Company holds interest in Los Filos mine, Zinkgruvan mining operations, Stratoni mine, Keno Hill silver, Cozamin mine, Aljustrel mine, 777 mine and Constancia mines.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-WPM – 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 $9,660,783,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.51 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 -36.79% Fail
6. Moderate PEmg Ratio PEmg < 20 72.04 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.95 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 2.51 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.25 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 $0.39
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $5.64
MG Value based on 0% Growth $3.31
Market Implied Growth Rate 31.77%
Current Price $28.03
% of Intrinsic Value N/A

Wheaton Precious Metals Corp 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 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 $1.08 in 2014 to an estimated $0.39 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 31.77% 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 Wheaton Precious Metals Corp revealed the company was trading above its Graham Number of $15.65. The company pays a dividend of $0.42 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 72.04, which was above the industry average of 46.07. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.73.

Wheaton Precious Metals Corp 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) -$1.73
Graham Number $15.65
PEmg 72.04
Current Ratio 2.51
PB Ratio 1.95
Current Dividend $0.42
Dividend Yield 1.50%
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 3/1/2018
Total Current Assets $154,240,000
Total Current Liabilities $61,522,000
Long-Term Debt $857,475,000
Total Assets $7,291,421,000
Intangible Assets $0
Total Liabilities $921,092,000
Shares Outstanding (Diluted Average) 443,181,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.77
Dec2017 $0.17
Dec2016 $0.60
Dec2015 -$0.56
Dec2014 $0.65
Dec2013 $1.12
Dec2012 $1.63
Dec2011 $1.59
Dec2010 $0.44
Dec2009 $0.40
Dec2008 $0.09
Dec2007 $0.37
Dec2006 $0.43
Dec2005 $0.17
Aug2004 -$0.10
Aug2003 $0.04
Aug2002 -$0.10
Aug2001 -$0.01
Aug2000 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.39
Dec2017 $0.26
Dec2016 $0.44
Dec2015 $0.53
Dec2014 $1.08
Dec2013 $1.21
Dec2012 $1.12
Dec2011 $0.76
Dec2010 $0.35
Dec2009 $0.30
Dec2008 $0.23
Dec2007 $0.26
Dec2006 $0.17
Dec2005 $0.03
Aug2004 -$0.04
Aug2003 -$0.01
Aug2002 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

Silver Wheaton Corp Valuation – December 2016 $SLW
Silver Wheaton Corp Valuation – August 2016 $SLW
Silver Wheaton Corporation – February 2016 Update $SLW
Silver Wheaton Corporation Valuation – October 2015 Update $SLW
Silver Wheaton Corporation Valuation – Initial Coverage $SLW

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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.

Mettler-Toledo International Inc Valuation – June 2018 $MTD

Company Profile (excerpt from Reuters): Mettler-Toledo International Inc., incorporated on December 6, 1991, is a supplier of precision instruments and services. The Company operates through five segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company is also a provider of analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development, and process analytics instruments used for in-line measurement in production processes. In addition, the Company is also a supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. The Company serves food and beverage producers; food retailers; chemical, specialty chemicals and cosmetics companies, and the transportation and logistics industry, among others.

MTD Chart

MTD data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MTD – 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 $14,580,337,829 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 142.47% Pass
6. Moderate PEmg Ratio PEmg < 20 36.39 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 26.72 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 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $15.78
MG Growth Estimate 9.04%
MG Value $419.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $228.78
MG Value based on 0% Growth $134.11
Market Implied Growth Rate 13.95%
Current Price $574.19
% of Intrinsic Value 136.93%

Mettler-Toledo 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, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $9.85 in 2014 to an estimated $15.78 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.95% 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 Mettler-Toledo International Inc. revealed the company was trading above its Graham Number of $98.52. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 36.39, which was below the industry average of 46.81, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-39.23.

Mettler-Toledo 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) -$39.23
Graham Number $98.52
PEmg 36.39
Current Ratio 1.46
PB Ratio 26.72
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 $927,372,000
Total Current Liabilities $636,882,000
Long-Term Debt $978,715,000
Total Assets $2,511,907,000
Intangible Assets $769,511,000
Total Liabilities $1,951,160,000
Shares Outstanding (Diluted Average) 26,096,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $20.13
Dec2017 $14.24
Dec2016 $14.22
Dec2015 $12.48
Dec2014 $11.44
Dec2013 $9.96
Dec2012 $9.14
Dec2011 $8.21
Dec2010 $6.80
Dec2009 $5.03
Dec2008 $5.79
Dec2007 $4.70
Dec2006 $3.86
Dec2005 $2.52
Dec2004 $2.37
Dec2003 $2.11
Dec2002 $2.21
Dec2001 $1.68
Dec2000 $1.66
Dec1999 $1.16
Dec1998 $0.92

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $15.78
Dec2017 $13.22
Dec2016 $12.29
Dec2015 $10.97
Dec2014 $9.85
Dec2013 $8.64
Dec2012 $7.65
Dec2011 $6.64
Dec2010 $5.65
Dec2009 $4.84
Dec2008 $4.45
Dec2007 $3.56
Dec2006 $2.86
Dec2005 $2.30
Dec2004 $2.13
Dec2003 $1.93
Dec2002 $1.73

Recommended Reading:

Other ModernGraham posts about the company

Mettler-Toledo International Inc Valuation – Initial Coverage $MTD

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Baxter International Inc Valuation – May 2018 $BAX
Boston Scientific Corp Valuation – May 2018 $BSX
Centene Corp Valuation – May 2018 $CNC
Abbott Laboratories Valuation – May 2018 $ABT
Becton Dickinson and Co Valuation – May 2018 $BDX

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.

Ametek Inc Valuation – April 2018 $AME

Company Profile (excerpt from Reuters): AMETEK, Inc., incorporated on May 8, 1986, is a manufacturer of electronic instruments and electromechanical devices with operations in North America, Europe, Asia and South America. The Company operates through two segments: Electronic Instruments (EIG) and Electromechanical (EMG). EIG designs and manufactures instruments for the process, power and industrial and aerospace markets. EMG is a differentiated supplier of precision motion control solutions, thermal management systems, specialty metals and electrical interconnects. Its end markets include aerospace and defense, medical, automation, mass transit, petrochemical and other industrial markets.

AME Chart

AME data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AME – April 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 $17,326,052,345 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.70 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 123.45% Pass
6. Moderate PEmg Ratio PEmg < 20 27.89 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.32 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 1.70 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.34 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 $2.68
MG Growth Estimate 4.97%
MG Value $49.49
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $38.91
MG Value based on 0% Growth $22.81
Market Implied Growth Rate 9.69%
Current Price $74.83
% of Intrinsic Value 151.20%

AMETEK, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Overvalued after growing its EPSmg (normalized earnings) from $2.02 in 2014 to an estimated $2.68 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.69% 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 AMETEK, Inc. revealed the company was trading above its Graham Number of $33.89. The company pays a dividend of $0.36 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 27.89, which was below the industry average of 51.31, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.89.

AMETEK, 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) -$7.89
Graham Number $33.89
PEmg 27.89
Current Ratio 1.70
PB Ratio 4.32
Current Dividend $0.36
Dividend Yield 0.48%
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 12/1/2017
Total Current Assets $1,934,655,000
Total Current Liabilities $1,138,663,000
Long-Term Debt $1,866,166,000
Total Assets $7,796,064,000
Intangible Assets $5,128,984,000
Total Liabilities $3,768,431,000
Shares Outstanding (Diluted Average) 232,535,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.93
Dec2017 $2.94
Dec2016 $2.19
Dec2015 $2.45
Dec2014 $2.37
Dec2013 $2.10
Dec2012 $1.88
Dec2011 $1.58
Dec2010 $1.18
Dec2009 $0.85
Dec2008 $1.02
Dec2007 $0.94
Dec2006 $0.76
Dec2005 $0.57
Dec2004 $0.47
Dec2003 $0.37
Dec2002 $0.37
Dec2001 $0.29
Dec2000 $0.31
Dec1999 $0.27
Dec1998 $0.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.68
Dec2017 $2.51
Dec2016 $2.26
Dec2015 $2.22
Dec2014 $2.02
Dec2013 $1.73
Dec2012 $1.47
Dec2011 $1.21
Dec2010 $1.00
Dec2009 $0.88
Dec2008 $0.85
Dec2007 $0.72
Dec2006 $0.57
Dec2005 $0.46
Dec2004 $0.39
Dec2003 $0.34
Dec2002 $0.31

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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.

Zimmer Biomet Holdings Inc Valuation – March 2018 $ZBH

Company Profile (obtained from Marketwatch): Zimmer Biomet Holdings, Inc. designs, manufactures and markets orthopaedic reconstructive products, sports medicine, extremities and trauma products; craniomaxillofacial and thoracic products; dental implants; and related surgical products. The company operates through three geographical segments: America, Europe and Asia Pacific. The Americas segment comprises principally of the U.S. and includes other North, Central and South American markets. The Europe segment comprises principally of Europe and includes the Middle East and African markets. The Asia Pacific segment comprises primarily of Japan and includes other Asian and Pacific markets. Its products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Zimmer Biomet Holdings was founded by Justin O. Zimmer in 1927 and is headquartered in Warsaw, IN.

ZBH Chart

ZBH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ZBH – March 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 $24,470,897,660 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 73.55% Pass
6. Moderate PEmg Ratio PEmg < 20 21.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.96 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 $5.56
MG Growth Estimate 4.83%
MG Value $100.95
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $80.59
MG Value based on 0% Growth $47.24
Market Implied Growth Rate 6.62%
Current Price $120.86
% of Intrinsic Value 119.73%

Zimmer Biomet Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.2 in 2014 to an estimated $5.56 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.62% 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 Zimmer Biomet Holdings Inc revealed the company was trading above its Graham Number of $98.9. The company pays a dividend of $0.96 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 21.75, which was below the industry average of 43.8, 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 $-47.61.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.61
Graham Number $98.90
PEmg 21.75
Current Ratio 1.50
PB Ratio 2.10
Current Dividend $0.96
Dividend Yield 0.79%
Number of Consecutive Years of Dividend Growth 2

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $4,515,300,000
Total Current Liabilities $3,020,200,000
Long-Term Debt $8,917,500,000
Total Assets $25,964,500,000
Intangible Assets $19,021,800,000
Total Liabilities $14,228,700,000
Shares Outstanding (Diluted Average) 204,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.50
Dec2017 $8.90
Dec2016 $1.51
Dec2015 $0.77
Dec2014 $4.20
Dec2013 $4.54
Dec2012 $4.29
Dec2011 $4.03
Dec2010 $2.97
Dec2009 $3.32
Dec2008 $3.72
Dec2007 $3.26
Dec2006 $3.40
Dec2005 $2.93
Dec2004 $2.19
Dec2003 $1.64
Dec2002 $1.31
Dec2001 $0.77
Dec2000 $0.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.56
Dec2017 $4.39
Dec2016 $2.44
Dec2015 $3.13
Dec2014 $4.20
Dec2013 $4.08
Dec2012 $3.79
Dec2011 $3.51
Dec2010 $3.28
Dec2009 $3.40
Dec2008 $3.33
Dec2007 $2.98
Dec2006 $2.66
Dec2005 $2.11
Dec2004 $1.59
Dec2003 $1.17
Dec2002 $0.82

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Other ModernGraham posts about the company

Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

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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.

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