Mid-America Apartment Communities Inc Valuation – March 2019 #MAA

Company Profile (excerpt from Reuters): Mid-America Apartment Communities, Inc. (MAA), incorporated on September 22, 1993, is a multifamily focused, self-administered and self-managed real estate investment trust (REIT). The Company owns, operates, acquires and develops apartment communities primarily located in the Southeast and Southwest regions of the United States. It operates through three segments: Large market same store, Secondary market same store and Non-Same Store and Other. Its Large market same store communities are communities in markets with a population of at least one million and at least 1% of the total public multifamily REIT units that it has owned and that have been stabilized for at least a full 12 months. Its Secondary market same store communities are communities in markets with populations of more than one million but less than 1% of the total public multifamily REIT units or markets with populations of less than one million that it has owned and that have been stabilized for at least a full 12 months. Its Non-same store communities and other includes recent acquisitions and communities in development or lease-up communities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAA – 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 $12,056,183,749 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.08 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 52.37% Pass
6. Moderate PEmg Ratio PEmg < 20 44.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.89 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 0.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.93 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.39
MG Growth Estimate -2.51%
MG Value $8.32
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $34.69
MG Value based on 0% Growth $20.34
Market Implied Growth Rate 17.88%
Current Price $105.90
% of Intrinsic Value 1273.44%

Mid-America Apartment Communities 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 ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.87 in 2015 to an estimated $2.39 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.88% 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 Mid-America Apartment Communities Inc revealed the company was trading above its Graham Number of $48.81. The company pays a dividend of $3.69 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 44.27, which was below the industry average of 61.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-43.18.

Mid-America Apartment Communities 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) -$43.18
Graham Number $48.81
PEmg 44.27
Current Ratio 0.08
PB Ratio 1.89
Current Dividend $3.69
Dividend Yield 3.48%
Number of Consecutive Years of Dividend Growth 8

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 $34,259,000
Total Current Liabilities $413,850,000
Long-Term Debt $4,528,328,000
Total Assets $11,323,781,000
Intangible Assets $3,900,000
Total Liabilities $4,951,592,000
Shares Outstanding (Diluted Average) 113,881,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.96
Dec2018 $1.93
Dec2017 $2.86
Dec2016 $2.69
Dec2015 $4.41
Dec2014 $1.97
Dec2013 $2.25
Dec2012 $2.56
Dec2011 $1.31
Dec2010 $0.56
Dec2009 $0.85
Dec2008 $0.64
Dec2007 $1.01
Dec2006 $0.29
Dec2005 $0.25
Dec2004 $0.50
Dec2003 -$0.07
Dec2002 -$0.11
Dec2001 $0.72
Dec2000 $0.78
Dec1999 $0.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.39
Dec2018 $2.66
Dec2017 $2.97
Dec2016 $2.94
Dec2015 $2.87
Dec2014 $1.98
Dec2013 $1.83
Dec2012 $1.47
Dec2011 $0.91
Dec2010 $0.70
Dec2009 $0.71
Dec2008 $0.61
Dec2007 $0.53
Dec2006 $0.25
Dec2005 $0.24
Dec2004 $0.27
Dec2003 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Mid-America Apartment Communities Inc Valuation – June 2018 $MAA
Mid-America Apartment Communities Inc Valuation – Initial Coverage $MAA

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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.

Micron Technology Inc Valuation – March 2019 #MU

Company Profile (excerpt from Reuters): Micron Technology, Inc., incorporated on April 6, 1984, is engaged in semiconductor systems. The Company’s portfolio of memory technologies, including dynamic random-access memory (DRAM), negative-AND (NAND) Flash and NOR Flash are the basis for solid-state drives, modules, multi-chip packages and other system solutions. Its business segments include Compute and Networking Business Unit (CNBU), which includes memory products sold into compute, networking, graphics and cloud server markets; Mobile Business Unit (MBU), which includes memory products sold into smartphone, tablet and other mobile-device markets; Storage Business Unit (SBU), which includes memory products sold into enterprise, client, cloud and removable storage markets, and SBU also includes products sold to Intel through its Intel/Micron Flash Technology (IMFT) joint venture, and Embedded Business Unit (EBU), which includes memory products sold into automotive, industrial, connected home and consumer electronics markets. The Company’s memory solutions enable computing, consumer, enterprise storage, networking, mobile, embedded and automotive applications. The Company markets its products through internal sales force, independent sales representatives and distributors primarily to original equipment manufacturers (OEMs) and retailers located around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MU – 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 $43,788,097,359 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.90 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 2068.37% Pass
6. Moderate PEmg Ratio PEmg < 20 6.67 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.32 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 2.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.33 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.86
MG Growth Estimate 15.00%
MG Value $225.48
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $84.92
MG Value based on 0% Growth $49.78
Market Implied Growth Rate -0.91%
Current Price $39.07
% of Intrinsic Value 17.33%

Micron Technology, 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, and the poor dividend history. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.6 in 2015 to an estimated $5.86 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.91% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Micron Technology, Inc. revealed the company was trading below its Graham Number of $57.76. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 6.67, 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 $4.41.

Micron Technology, 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) $4.41
Graham Number $57.76
PEmg 6.67
Current Ratio 2.90
PB Ratio 1.32
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 11/1/2018
Total Current Assets $15,039,000,000
Total Current Liabilities $5,189,000,000
Long-Term Debt $3,227,000,000
Total Assets $44,595,000,000
Intangible Assets $1,584,000,000
Total Liabilities $9,856,000,000
Shares Outstanding (Diluted Average) 1,174,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.33
Aug2018 $11.51
Aug2017 $4.41
Aug2016 -$0.27
Aug2015 $2.47
Aug2014 $2.54
Aug2013 $1.13
Aug2012 -$1.04
Aug2011 $0.17
Aug2010 $1.85
Aug2009 -$2.35
Aug2008 -$2.10
Aug2007 -$0.42
Aug2006 $0.57
Aug2005 $0.29
Aug2004 $0.24
Aug2003 -$2.11
Aug2002 -$1.51
Aug2001 -$1.05
Aug2000 $2.56
Aug1999 -$0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.86
Aug2018 $5.46
Aug2017 $2.31
Aug2016 $1.16
Aug2015 $1.60
Aug2014 $1.09
Aug2013 $0.22
Aug2012 -$0.38
Aug2011 -$0.23
Aug2010 -$0.45
Aug2009 -$1.33
Aug2008 -$0.64
Aug2007 -$0.04
Aug2006 -$0.07
Aug2005 -$0.53
Aug2004 -$0.75
Aug2003 -$0.98

Recommended Reading:

Other ModernGraham posts about the company

Micron Technology Inc Valuation – May 2018 $MU
Micron Technology Inc Valuation – February 2017 $MU
Micron Technology Inc. Valuation – November 2015 Update $MU
30 Companies in the Spotlight This Week – 11/15/14
Micron Technology Inc. Annual Valuation – 2014 $MU

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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.

JM Smucker Co Valuation – March 2019 #SJM

Company Profile (excerpt from Reuters): The J. M. Smucker Company, incorporated on October 26, 1921, is a manufacturer and marketer of branded food and beverage products and pet food and pet snacks in North America. The Company’s segments include U.S. Retail Coffee, U.S. Retail Consumer Foods, U.S. Retail Pet Foods, and International and Foodservice. The Company’s U.S. retail market segments consist of the sale of branded food products to consumers through retail outlets in North America. In the U.S. retail market segments, the Company’s products are sold to food retailers, food wholesalers, drug stores, club stores, mass merchandisers, discount and dollar stores, military commissaries, natural foods stores and distributors, and pet specialty stores. In International and Foodservice, the Company’s products are distributed domestically and in foreign countries through retail channels and foodservice distributors and operators, such as restaurants, lodging, schools and universities, healthcare operators.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SJM – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,657,929,787 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.95 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 84.50% Pass
6. Moderate PEmg Ratio PEmg < 20 14.51 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.45 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 0.95 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -58.60 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 $7.06
MG Growth Estimate 9.27%
MG Value $191.00
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $102.44
MG Value based on 0% Growth $60.05
Market Implied Growth Rate 3.00%
Current Price $102.49
% of Intrinsic Value 53.66%

J M Smucker Co 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 $4.37 in 2015 to an estimated $7.06 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3% 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 J M Smucker Co revealed the company was trading above its Graham Number of $94.73. The company pays a dividend of $3.09 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.51, 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 $-63.43.

J M Smucker Co performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$63.43
Graham Number $94.73
PEmg 14.51
Current Ratio 0.95
PB Ratio 1.45
Current Dividend $3.09
Dividend Yield 3.01%
Number of Consecutive Years of Dividend Growth 17

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 1/1/2019
Total Current Assets $1,726,200,000
Total Current Liabilities $1,816,400,000
Long-Term Debt $5,285,800,000
Total Assets $16,927,600,000
Intangible Assets $13,197,900,000
Total Liabilities $8,906,000,000
Shares Outstanding (Diluted Average) 113,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.74
Apr2018 $11.78
Apr2017 $5.10
Apr2016 $5.76
Apr2015 $3.33
Apr2014 $5.42
Apr2013 $5.00
Apr2012 $4.06
Apr2011 $4.05
Apr2010 $4.15
Apr2009 $3.11
Apr2008 $3.00
Apr2007 $2.76
Apr2006 $2.45
Apr2005 $2.24
Apr2004 $2.24
Apr2003 $2.02
Apr2002 $1.31
Apr2001 $1.12
Apr2000 $0.97
Apr1999 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.06
Apr2018 $7.24
Apr2017 $4.96
Apr2016 $4.83
Apr2015 $4.37
Apr2014 $4.77
Apr2013 $4.32
Apr2012 $3.88
Apr2011 $3.66
Apr2010 $3.34
Apr2009 $2.86
Apr2008 $2.67
Apr2007 $2.45
Apr2006 $2.22
Apr2005 $2.00
Apr2004 $1.76
Apr2003 $1.46

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies for Value Investors with a Low Beta – May 2018
J M Smucker Co Valuation – May 2018 $SJM
J M Smucker Co Valuation – February 2017 $SJM
J.M. Smucker Co Valuation – August 2016 $SJM
J.M. Smucker Co Valuation – February 2016 $SJM

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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.

Charter Communications Inc Valuation – February 2019 $CHTR

Company Profile (excerpt from Reuters): Charter Communications, Inc., incorporated on July 9, 2003, is a holding company. The Company is a cable operator in the United States and a broadband communications services company. The Company operates in cable services segment. As of December 31, 2016, the Company was engaged in providing video, Internet and voice services to approximately 26.2 million residential and business customers. In addition, it sells video and online advertising inventory to local, regional and national advertising customers and fiber-delivered communications and managed information technology (IT) solutions to enterprise customers. The Company also owns and operates regional sports networks and local sports, news and lifestyle channels and sells security and home management services to the residential marketplace.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CHTR – February 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $78,923,408,111 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.23 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -562.00% Fail
6. Moderate PEmg Ratio PEmg < 20 30.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.82 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 0.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.43 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $11.58
MG Growth Estimate 15.00%
MG Value $445.83
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $167.91
MG Value based on 0% Growth $98.43
Market Implied Growth Rate 10.88%
Current Price $350.44
% of Intrinsic Value 78.60%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $-2.46 in 2015 to an estimated $11.58 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.88% 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 Charter Communications Inc revealed the company was trading above its Graham Number of $124.38. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 30.26, which was below the industry average of 92.4, 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 $-430.86.

Charter Communications 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) -$430.86
Graham Number $124.38
PEmg 30.26
Current Ratio 0.23
PB Ratio 1.82
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 12/1/2018
Total Current Assets $2,730,000,000
Total Current Liabilities $12,095,000,000
Long-Term Debt $69,537,000,000
Total Assets $146,130,000,000
Intangible Assets $106,914,000,000
Total Liabilities $101,858,000,000
Shares Outstanding (Diluted Average) 230,069,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.27
Dec2018 $5.22
Dec2017 $34.09
Dec2016 $15.94
Dec2015 -$2.68
Dec2014 -$1.88
Dec2013 -$1.83
Dec2012 -$3.37
Dec2011 -$3.75
Dec2010 -$2.31
Dec2009 $0.00
Dec2008 -$7.26
Dec2007 -$4.61
Dec2006 -$4.57
Dec2005 -$3.46
Dec2004 -$16.00
Dec2003 -$0.91
Dec2002 -$9.46
Dec2001 -$4.79
Dec2000 -$4.20
Dec1999 -$2.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $11.58
Dec2018 $13.54
Dec2017 $14.71
Dec2016 $3.75
Dec2015 -$2.46
Dec2014 -$2.44
Dec2013 -$2.57
Dec2012 -$3.07
Dec2011 -$3.14
Dec2010 -$3.14
Dec2009 -$3.70
Dec2008 -$6.09
Dec2007 -$5.64
Dec2006 -$6.40
Dec2005 -$7.18
Dec2004 -$8.39
Dec2003 -$4.51

Recommended Reading:

Other ModernGraham posts about the company

Charter Communications Inc Valuation – May 2018 $CHTR
Charter Communications Inc Valuation – Initial Coverage $CHTR

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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.

SBA Communications Corp Valuation – January 2019 $SBAC

Company Profile (excerpt from Reuters): SBA Communications Corporation, incorporated on December 23, 1996, is an independent owner and operator of wireless communications tower structures, rooftops and other structures that support antennas used for wireless communications. The Company’s operating segments include site leasing and site development. The site leasing business includes segments, domestic site leasing and international site leasing. The Company’s primary business line is its site leasing business. In its site leasing business, the Company leases antenna space to wireless service providers on towers that it owns or operates, and manages rooftop and tower sites for property owners under various contractual arrangements. The Company owns approximately 25,460 towers. The Company also manages or leases approximately 5,500 actual or potential towers. The Company’s other business line is its site development business, through which it assists wireless service providers in developing and maintaining their own wireless service networks. The Company’s principal operations are in the United States and its territories. In addition, it owns and operates towers in Canada, Central America and South America.

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBAC – 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 $18,326,242,846 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.23 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -138.56% Fail
6. Moderate PEmg Ratio PEmg < 20 895.24 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -6.04 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 1.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 156.23 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.18
MG Growth Estimate 15.00%
MG Value $7.03
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $2.65
MG Value based on 0% Growth $1.55
Market Implied Growth Rate 443.37%
Current Price $163.53
% of Intrinsic Value 2325.29%

SBA Communications Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the 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 earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.75 in 2014 to an estimated $0.18 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 443.37% 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 SBA Communications Corporation revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 895.24, which was above the industry average of 25.67. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-86.39.

SBA Communications Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$86.39
Graham Number $0.00
PEmg 895.24
Current Ratio 1.23
PB Ratio -6.04
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 9/1/2018
Total Current Assets $327,663,000
Total Current Liabilities $265,512,000
Long-Term Debt $9,710,145,000
Total Assets $7,213,823,000
Intangible Assets $3,387,955,000
Total Liabilities $10,358,906,000
Shares Outstanding (Diluted Average) 116,114,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.08
Dec2017 $0.86
Dec2016 $0.61
Dec2015 -$1.37
Dec2014 -$0.19
Dec2013 -$0.44
Dec2012 -$1.51
Dec2011 -$1.14
Dec2010 -$1.68
Dec2009 -$1.20
Dec2008 -$0.61
Dec2007 -$0.74
Dec2006 -$1.36
Dec2005 -$1.28
Dec2004 -$2.52
Dec2003 -$3.36
Dec2002 -$5.29
Dec2001 -$2.99
Dec2000 -$0.70
Dec1999 -$1.77
Dec1998 -$2.64

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.18
Dec2017 $0.12
Dec2016 -$0.36
Dec2015 -$0.87
Dec2014 -$0.75
Dec2013 -$1.08
Dec2012 -$1.34
Dec2011 -$1.20
Dec2010 -$1.19
Dec2009 -$0.98
Dec2008 -$1.01
Dec2007 -$1.43
Dec2006 -$2.10
Dec2005 -$2.68
Dec2004 -$3.24
Dec2003 -$3.34
Dec2002 -$3.11

Recommended Reading:

Other ModernGraham posts about the company

SBA Communications Corp Valuation – Initial Coverage $SBAC

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Frontier Communications Corp Valuation – August 2018 $FTR
Consolidated Communications Holdings Inc Valuation – August 2018 $CNSL
Comtech Telecommunications Corp Valuation – August 2018 $CMTL
Shaw Communications Inc Valuation – July 2018 $TSE:SJR.B
ARRIS International PLC Valuation – July 2018 $ARRS

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.

AvalonBay Communities Inc Valuation – December 2018 $AVB

Company Profile (excerpt from Reuters): AvalonBay Communities, Inc., incorporated on March 13, 1995, is a real estate investment trust (REIT). The Company is focused on the development, redevelopment, acquisition, ownership and operation of multifamily communities primarily in New England, the New York/New Jersey metro area, the Mid-Atlantic, the Pacific Northwest, and Northern and Southern California. The Company’s segments include Established Communities, Other Stabilized Communities and Development/Redevelopment Communities. Established Communities are operating communities that were owned and had stabilized occupancy and operating expenses. Other Stabilized Communities are all other operating communities that have stabilized occupancy and operating expenses, but that were not owned or had not achieved stabilization, as well as communities that are planned for disposition. Development/Redevelopment Communities consist of communities that are under construction, communities where substantial redevelopment is in progress and communities under lease-up. As of June 30, 2017, the Company owned or held a direct or indirect ownership interest in 287 apartment communities containing 83,123 apartment homes in 10 states and the District of Columbia, of which 23 communities were under development and nine communities were under redevelopment. The Company operates its apartment communities under three core brands: Avalon, AVA and Eaves by Avalon.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AVB – December 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 $25,171,790,614 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 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 114.99% Pass
6. Moderate PEmg Ratio PEmg < 20 30.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.42 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 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -40.50 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 $6.01
MG Growth Estimate 6.84%
MG Value $133.38
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $87.18
MG Value based on 0% Growth $51.11
Market Implied Growth Rate 10.89%
Current Price $182.11
% of Intrinsic Value 136.54%

AvalonBay Communities 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 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 $4.13 in 2014 to an estimated $6.01 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.89% 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 AvalonBay Communities Inc revealed the company was trading above its Graham Number of $93.82. The company pays a dividend of $5.68 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.29, which was below the industry average of 80.08, 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 $-56.29.

AvalonBay Communities 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) -$56.29
Graham Number $93.82
PEmg 30.29
Current Ratio 0.72
PB Ratio 2.42
Current Dividend $5.68
Dividend Yield 3.12%
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 9/1/2018
Total Current Assets $478,342,000
Total Current Liabilities $664,357,000
Long-Term Debt $7,533,228,000
Total Assets $18,662,119,000
Intangible Assets $0
Total Liabilities $8,264,721,000
Shares Outstanding (Diluted Average) 138,323,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.20
Dec2017 $6.35
Dec2016 $7.52
Dec2015 $5.51
Dec2014 $5.21
Dec2013 $2.78
Dec2012 $4.32
Dec2011 $4.87
Dec2010 $2.07
Dec2009 $1.93
Dec2008 $5.17
Dec2007 $4.38
Dec2006 $3.42
Dec2005 $4.05
Dec2004 $2.92
Dec2003 $3.73
Dec2002 $2.23
Dec2001 $3.02
Dec2000 $2.53
Dec1999 $2.03
Dec1998 $1.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.01
Dec2017 $6.10
Dec2016 $5.68
Dec2015 $4.68
Dec2014 $4.13
Dec2013 $3.46
Dec2012 $3.75
Dec2011 $3.54
Dec2010 $3.05
Dec2009 $3.62
Dec2008 $4.31
Dec2007 $3.82
Dec2006 $3.45
Dec2005 $3.37
Dec2004 $2.99
Dec2003 $2.91
Dec2002 $2.45

Recommended Reading:

Other ModernGraham posts about the company

AvalonBay Communities Inc Valuation – February 2018 $AVB
AvalonBay Communities Inc Valuation – May 2016 $AVB
AvalonBay Communities Inc. Annual Valuation – 2014 $AVB

Other ModernGraham posts about related companies

Alexandria Real Estate Equities Inc Valuation – November 2018 $ARE
LaSalle Hotel Properties Valuation – September 2018 $LHO
Cousins Properties Inc Valuation – September 2018 $CUZ
Cominar Real Estate Investment Trust Valuation – September 2018 $TSE:CUF.UN
CareTrust REIT Inc Valuation – August 2018 $CTRE
Lamar Advertising Co Valuation – August 2018 $LAMR
Uniti Group Inc Valuation – August 2018 $UNIT
Kite Realty Group Trust Valuation – August 2018 $KRG
Kilroy Realty Corp Valuation – August 2018 $KRC
Crombie Real Estate Investment Trust Valuation – August 2018 $TSE-CRR.UN

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.

Verizon Communications Inc Valuation – November 2018 $VZ

Company Profile (excerpt from Reuters): Verizon Communications Inc., incorporated on October 7, 1983, is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc, a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, BUILD Studios, Yahoo Finance and Yahoo Mail.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VZ – November 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 $248,416,727,707 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 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 335.73% Pass
6. Moderate PEmg Ratio PEmg < 20 12.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.44 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 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -105.07 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 $4.87
MG Growth Estimate 15.00%
MG Value $187.32
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $70.55
MG Value based on 0% Growth $41.36
Market Implied Growth Rate 1.93%
Current Price $60.15
% of Intrinsic Value 32.11%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.11 in 2014 to an estimated $4.87 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.93% 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 above the price.

At the time of valuation, further research into Verizon Communications Inc. revealed the company was trading above its Graham Number of $32.89. The company pays a dividend of $2.34 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.36, which was below the industry average of 30.21, 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 $-42.59.

Verizon Communications 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) -$42.59
Graham Number $32.89
PEmg 12.36
Current Ratio 0.97
PB Ratio 4.44
Current Dividend $2.34
Dividend Yield 3.88%
Number of Consecutive Years of Dividend Growth 11

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 $33,154,000,000
Total Current Liabilities $34,167,000,000
Long-Term Debt $106,440,000,000
Total Assets $265,562,000,000
Intangible Assets $132,937,000,000
Total Liabilities $209,475,000,000
Shares Outstanding (Diluted Average) 4,140,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.55
Dec2017 $7.36
Dec2016 $3.21
Dec2015 $4.37
Dec2014 $2.42
Dec2013 $4.00
Dec2012 $0.31
Dec2011 $0.85
Dec2010 $0.90
Dec2009 $1.72
Dec2008 -$0.77
Dec2007 $1.90
Dec2006 $2.12
Dec2005 $2.65
Dec2004 $2.79
Dec2003 $1.12
Dec2002 $1.49
Dec2001 $0.14
Dec2000 $4.31
Dec1999 $2.97
Dec1998 $1.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.87
Dec2017 $4.77
Dec2016 $3.27
Dec2015 $3.00
Dec2014 $2.11
Dec2013 $1.82
Dec2012 $0.69
Dec2011 $0.89
Dec2010 $1.00
Dec2009 $1.21
Dec2008 $1.21
Dec2007 $2.18
Dec2006 $2.22
Dec2005 $2.06
Dec2004 $1.83
Dec2003 $1.57
Dec2002 $1.92

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2018
10 Low PE Stock Picks for the Defensive Investor – June 2018
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2018
10 Undervalued Companies for the Defensive Investor – June 2018
5 Undervalued Companies for Value Investors with a Low Beta – May 2018

Other ModernGraham posts about related companies

Lumentum Holdings Inc Valuation – October 2018 $LITE
Windstream Holdings Inc Valuation – September 2018 $WIN
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Frontier Communications Corp Valuation – August 2018 $FTR
Consolidated Communications Holdings Inc Valuation – August 2018 $CNSL
Comtech Telecommunications Corp Valuation – August 2018 $CMTL
Shaw Communications Inc Valuation – July 2018 $TSE:SJR.B
ARRIS International PLC Valuation – July 2018 $ARRS
Iridium Communications Inc Valuation – July 2018 $IRDM
CenturyLink Inc Valuation – June 2018 $CTL

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.

Murphy Oil Corp Valuation – August 2018 $MUR

Company Profile (excerpt from Reuters): Murphy Oil Corporation (Murphy), incorporated on June 29, 1964, is an oil and gas exploration and production company. The Company’s exploration and production business explores for and produces crude oil, natural gas and natural gas liquids across the world. The Company’s exploration and production activities are subdivided into four geographic segments: the United States, Canada, Malaysia and all other countries. The Company explores for and produces crude oil, natural gas and natural gas liquids around the world. This business maintains upstream operating offices in several locations around the world, including Houston, Texas, Calgary, Alberta, and Kuala Lumpur, Malaysia.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MUR – 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 $5,542,518,868 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 -114.11% Fail
6. Moderate PEmg Ratio PEmg < 20 -18.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.16 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 7.04 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$24.33
MG Value based on 0% Growth -$14.26
Market Implied Growth Rate -13.57%
Current Price $31.27
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.13 in 2014 to an estimated $-1.68 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Murphy Oil Corporation revealed the company was trading above its Graham Number of $30.85. The company pays a dividend of $1 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -18.64, which was below the industry average of 59.52, 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 $-22.75.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.75
Graham Number $30.85
PEmg -18.64
Current Ratio 1.46
PB Ratio 1.16
Current Dividend $1.00
Dividend Yield 3.20%
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 $1,315,355,000
Total Current Liabilities $903,557,000
Long-Term Debt $2,897,345,000
Total Assets $9,945,449,000
Intangible Assets $0
Total Liabilities $5,273,811,000
Shares Outstanding (Diluted Average) 173,983,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.58
Dec2017 -$1.81
Dec2016 -$1.60
Dec2015 -$13.03
Dec2014 $5.03
Dec2013 $5.94
Dec2012 $4.99
Dec2011 $4.49
Dec2010 $4.13
Dec2009 $4.35
Dec2008 $9.06
Dec2007 $4.01
Dec2006 $3.41
Dec2005 $4.55
Dec2004 $3.77
Dec2003 $1.59
Dec2002 $0.61
Dec2001 $1.81
Dec2000 $1.64
Dec1999 $0.67
Dec1998 -$0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.68
Dec2017 -$2.57
Dec2016 -$1.88
Dec2015 -$0.85
Dec2014 $5.13
Dec2013 $5.05
Dec2012 $4.87
Dec2011 $4.94
Dec2010 $5.11
Dec2009 $5.43
Dec2008 $5.63
Dec2007 $3.76
Dec2006 $3.36
Dec2005 $3.04
Dec2004 $2.15
Dec2003 $1.32
Dec2002 $1.10

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Murphy Oil Corporation Valuation – March 2017 $MUR
Murphy Oil Corporation Valuation – November 2015 Update $MUR
26 Companies in the Spotlight This Week – 11/22/14
Murphy Oil Corporation Annual Valuation – 2014 $MUR

Other ModernGraham posts about related companies

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Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN
Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG
Kelt Exploration Ltd Valuation – August 2018 $TSE-KEL
Canadian Natural Resources Ltd Valuation – August 2018 $TSE:CNQ
SM Energy Co Valuation – August 2018 $SM

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.

Frontier Communications Corp Valuation – August 2018 $FTR

Company Profile (excerpt from Reuters): Frontier Communications Corporation (Frontier), incorporated on November 12, 1935, is a provider of communications services in the United States. The Company offers a portfolio of communications services for residential and business customers. Its products and services include data and Internet services, video services, voice services, access services and customer premise equipment (CPE). The Company offers a range of broadband services. The principal residential service it provides is broadband Internet service. Its commercial services include Ethernet, Dedicated Internet, Multiprotocol Label Switching (MPLS), Time Division Multiplexing (TDM) data transport services and optical transport services. It also offers wireless broadband services (using unlicensed spectrum) in various markets utilizing networks that it owns or operates. In addition, the Company offers its Frontier Secure suite of products, including computer security, cloud backup and sharing, identity protection and equipment insurance.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FTR – 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 $601,000,782 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.47 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 -422.72% Fail
6. Moderate PEmg Ratio PEmg < 20 -0.57 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.18 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 0.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.96 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 -$9.97
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$144.62
MG Value based on 0% Growth -$84.78
Market Implied Growth Rate -4.53%
Current Price $5.68
% of Intrinsic Value N/A

Frontier Communications Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the 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 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 $2.01 in 2014 to an estimated $-9.97 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Frontier Communications Corp revealed the company was trading above its Graham Number of $0. The company pays a dividend of $3.38 per share, for a yield of 59.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -0.57, which was below the industry average of 37.58, 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 $-267.87.

Frontier Communications Corp 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) -$267.87
Graham Number $0.00
PEmg -0.57
Current Ratio 0.47
PB Ratio 0.18
Current Dividend $3.38
Dividend Yield 59.42%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,428,000,000
Total Current Liabilities $3,056,000,000
Long-Term Debt $16,209,000,000
Total Assets $24,730,000,000
Intangible Assets $8,784,000,000
Total Liabilities $22,329,000,000
Shares Outstanding (Diluted Average) 78,026,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$3.19
Dec2017 -$25.99
Dec2016 -$7.61
Dec2015 -$4.41
Dec2014 $1.95
Dec2013 $1.65
Dec2012 $1.95
Dec2011 $2.25
Dec2010 $3.45
Dec2009 $5.70
Dec2008 $8.55
Dec2007 $9.75
Dec2006 $15.90
Dec2005 $9.00
Dec2004 $3.45
Dec2003 $9.60
Dec2002 -$36.45
Dec2001 -$5.70
Dec2000 -$1.65
Dec1999 $8.25
Dec1998 $3.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$9.97
Dec2017 -$11.20
Dec2016 -$2.97
Dec2015 -$0.21
Dec2014 $2.01
Dec2013 $2.36
Dec2012 $3.27
Dec2011 $4.60
Dec2010 $6.74
Dec2009 $8.85
Dec2008 $10.06
Dec2007 $10.39
Dec2006 $7.24
Dec2005 $0.60
Dec2004 -$4.45
Dec2003 -$7.33
Dec2002 -$12.68

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Frontier Communications Corp Valuation – February 2017 $FTR
Frontier Communications Corp Valuation – November 2015 Update $FTR
Frontier Communications Corp Annual Valuation – 2014 $FTR

Other ModernGraham posts about related companies

Consolidated Communications Holdings Inc Valuation – August 2018 $CNSL
Comtech Telecommunications Corp Valuation – August 2018 $CMTL
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ARRIS International PLC Valuation – July 2018 $ARRS
Iridium Communications Inc Valuation – July 2018 $IRDM
CenturyLink Inc Valuation – June 2018 $CTL
American Tower Corp Valuation – June 2018 $AMT
Charter Communications Inc Valuation – May 2018 $CHTR
DISH Network Corp Valuation – Initial Coverage $DISH
AT&T Inc Valuation – April 2018 $T

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.

Multi-Color Corp Valuation – August 2018 $LABL

Company Profile (excerpt from Reuters): Multi-Color Corporation (Multi-Color), incorporated on April 15, 1985, is engaged in label solutions business, supporting brands, including producers of home and personal care, wine and spirit, food and beverage, healthcare and specialty consumer products. The Company serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China and Southeast Asia with a range of label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer. The Company also provides a range of print methods, including flexographic, lithographic, rotogravure, letterpress and digital, and in-house prepress services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LABL – 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 $1,252,349,622 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.97 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 202.06% Pass
6. Moderate PEmg Ratio PEmg < 20 16.39 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.76 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 1.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.73
MG Growth Estimate 12.99%
MG Value $128.53
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $54.06
MG Value based on 0% Growth $31.69
Market Implied Growth Rate 3.94%
Current Price $61.10
% of Intrinsic Value 47.54%

Multi-Color Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2 in 2015 to an estimated $3.73 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.94% 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 Multi-Color Corporation revealed the company was trading above its Graham Number of $59.67. The company pays a dividend of $0.2 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was 16.39, which was below the industry average of 33.97, 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 $-73.5.

Multi-Color Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$73.50
Graham Number $59.67
PEmg 16.39
Current Ratio 1.97
PB Ratio 1.76
Current Dividend $0.20
Dividend Yield 0.33%
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 $594,478,000
Total Current Liabilities $301,932,000
Long-Term Debt $1,581,974,000
Total Assets $2,819,043,000
Intangible Assets $1,705,262,000
Total Liabilities $2,104,478,000
Shares Outstanding (Diluted Average) 20,545,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.27
Mar2018 $3.87
Mar2017 $3.58
Mar2016 $2.82
Mar2015 $2.71
Mar2014 $1.70
Mar2013 $1.86
Mar2012 $1.32
Mar2011 $1.40
Mar2010 $1.16
Mar2009 $0.92
Mar2008 $2.18
Mar2007 $1.08
Mar2006 $0.95
Mar2005 $0.80
Mar2004 $0.66
Mar2003 $0.66
Mar2002 $0.51
Mar2001 $0.40
Mar2000 $0.60
Mar1999 $0.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.73
Mar2018 $3.28
Mar2017 $2.84
Mar2016 $2.34
Mar2015 $2.00
Mar2014 $1.59
Mar2013 $1.47
Mar2012 $1.31
Mar2011 $1.32
Mar2010 $1.28
Mar2009 $1.28
Mar2008 $1.36
Mar2007 $0.91
Mar2006 $0.78
Mar2005 $0.67
Mar2004 $0.59
Mar2003 $0.53

Recommended Reading:

Other ModernGraham posts about the company

11 Best Stocks for Value Investors This Week – 3/4/17
Multi-Color Corporation Valuation – Initial Coverage $LABL

Other ModernGraham posts about related companies

Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN
Verisk Analytics Inc Valuation – June 2018 $VRSK
Robert Half International Inc Valuation – June 2018 $RHI

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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