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

Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
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.

Murphy Oil Corporation Valuation – March 2017 $MUR

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

Company Profile (obtained from Google Finance): Murphy Oil Corporation 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, including the United States, Canada, Malaysia and all other countries. The Company’s principal exploration and production activities are conducted in the United States by Murphy Exploration & Production Company-USA (Murphy Expro USA), in Malaysia, Australia, Brunei, Vietnam, and Namibia by Murphy Exploration & Production Company-International (Murphy Expro International) and its subsidiaries, and in Western Canada and offshore Eastern Canada by Murphy Oil Company Ltd. (MOCL) and its subsidiaries. The Company’s crude oil, condensate and natural gas liquids production averages to approximately 136,634 barrels per day.

MUR Chart

MUR data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MUR – March 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,235,128,528 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 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 -186.32% Fail
6. Moderate PEmg Ratio PEmg < 20 -13.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.03 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 42.69 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$2.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$30.97
MG Value based on 0% Growth -$18.16
Market Implied Growth Rate -11.11%
Current Price $29.31
% 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 $5.05 in 2013 to an estimated $-2.14 for 2017. 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 $0. The company pays a dividend of $1.2 per share, for a yield of 4.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -13.72, which was below the industry average of 69.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.19.

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) -$22.19
Graham Number $0.00
PEmg -13.72
Current Ratio 1.04
PB Ratio 1.03
Current Dividend $1.20
Dividend Yield 4.09%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $1,559,183,000
Total Current Liabilities $1,502,432,000
Long-Term Debt $2,422,700,000
Total Assets $10,295,860,000
Intangible Assets $0
Total Liabilities $5,379,181,000
Shares Outstanding (Diluted Average) 172,173,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.51
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
Dec1997 $0.74

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.14
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
Dec2001 $1.21

Recommended Reading:

Other ModernGraham posts about the company

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

Suncor Energy Inc Valuation – Initial Coverage $TSE:SU
CST Brands Inc Valuation – Initial Coverage $CST
Valero Energy Corp Valuation – February 2017 $VLO
Tidewater Inc Valuation – February 2017 $TDW
Occidental Petroleum Corp Valuation – February 2017 $OXY
Carrizo Oil & Gas Inc Valuation – Initial Coverage $CRZO
Denbury Resources Inc Valuation – February 2017 $DNR
California Resources Corp Valuation – Initial Coverage $CRC
Crew Energy Inc Valuation – Initial Coverage $TSE:CR
Exxon Mobil Corp Valuation – February 2017 $XOM

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 Corporation Valuation – November 2015 Update $MUR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Murphy Oil Corporation (MUR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Murphy Oil Corporation 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. This business maintains upstream operating offices in locations, including Calgary, Alberta and Kuala Lumpur, Malaysia. The Company’s crude oil, condensate and natural gas liquids production, as of 2014 averaged 151,647 barrels per day. The Company has operations in United States, Canada, Malaysia and all other countries, including Australia, Brunei, Vietnam, Suriname, Cameroon and Equatorial Guinea, among others. As of December 31, 2014, total United States proved reserves were 204.9 million barrels of crude oil, 29.1 million barrels of natural gas liquids and 226 billion cubic feet of natural gas. In Canada, it owns an interest in three non-operated assets, the Hibernia and Terra Nova fields offshore Newfoundland in the Jeanne d’Arc Basin and Syncrude Canada Ltd.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MUR – November 2015

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 $5,305,242,237 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.31 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 -101.46% Fail
6. Moderate PEmg Ratio PEmg < 20 -127.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.88 Fail
Score
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 1.31 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 6.47 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

MUR value Chart November 2015

EPSmg -$0.24
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Value based on 3% Growth -$3.52
MG Value based on 0% Growth -$2.06
Market Implied Growth Rate -67.79%
Current Price $30.84
% of Intrinsic Value N/A

Murphy Oil Corp does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned by the low current ratio, insufficient earnings growth or stability over the last ten years, and high PEmg and PB ratios.  The Enterprising Investor has concerns with the level of debt in relation to the current assets, and the lack of earnings growth or stability over the last five years. As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $4.94 in 2011 to an estimated loss of $0.24 for 2015.  This level of demonstrated earnings growth does not support a positive valuation.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

MUR Charts November 2015

Net Current Asset Value (NCAV) -$25.75
Graham Number #NUM!
PEmg -127.09
Current Ratio 1.31
PB Ratio 0.88
Dividend Yield 4.54%
Number of Consecutive Years of Dividend Growth 17

 

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $2,165,803,000
Total Current Liabilities $1,651,235,000
Long-Term Debt $3,327,689,000
Total Assets $12,627,960,000
Intangible Assets $0
Total Liabilities $6,599,508,000
Shares Outstanding (Diluted Average) 172,205,000

Earnings Per Share History

Next Fiscal Year Estimate -$11.21
Dec14 $5.03
Dec13 $5.94
Dec12 $4.99
Dec11 $4.49
Dec10 $4.13
Dec09 $4.35
Dec08 $9.06
Dec07 $4.01
Dec06 $3.41
Dec05 $4.55
Dec04 $3.77
Dec03 $1.59
Dec02 $0.61
Dec01 $1.81
Dec00 $1.64
Dec99 $0.67
Dec98 -$0.08
Dec97 $0.74
Dec96 $0.77
Dec95 -$0.66

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate -$0.24
Dec14 $5.13
Dec13 $5.05
Dec12 $4.87
Dec11 $4.94
Dec10 $5.11
Dec09 $5.43
Dec08 $5.63
Dec07 $3.76
Dec06 $3.36
Dec05 $3.04
Dec04 $2.15
Dec03 $1.32
Dec02 $1.10
Dec01 $1.21
Dec00 $0.86
Dec99 $0.41

Recommended Reading:

Other ModernGraham posts about the company

26 Companies in the Spotlight This Week – 11/22/14
Murphy Oil Corporation Annual Valuation – 2014 $MUR

Other ModernGraham posts about related companies

Denbury Resources Inc. Valuation – November 2015 Update $DNR
Western Refining Inc. Valuation – October 2015 Update $WNR
Valero Energy Corporation Valuation – October 2015 Update $VLO
Schlumberger Limited Valuation – October 2015 Update $SLB
National Oilwell Varco Inc. Valuation – October 2015 Update $NOV
Tesoro Corporation Analysis – October 2015 Update $TSO
Cameron International Company Analysis – September 2015 Update $CAM
Halliburton Company Analysis – September 2015 Update $HAL
Kinder Morgan Inc. Analysis – September 2015 Update $KMI
Range Resources Corporation Analysis – August 2015 Update $RRC

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 Corporation Annual Valuation – 2014 $MUR

220px-Murphy_Oil_Logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – November 2014.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Murphy Oil Corporation (MUR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Murphy Oil Corporation is a worldwide oil and gas exploration and production company with retail and wholesale gasoline marketing operations in the United States and refining and marketing operations in the United Kingdom. In August 2013, the Company announced that it has completed the spin-off of its United States retail marketing business into an independent public company called Murphy USA Inc.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

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

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

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

Valuation Summary

Key Data:

Recent Price $51.05
MG Value $24.75
MG Opinion Overvalued
Value Based on 3% Growth $66.45
Value Based on 0% Growth $38.95
Market Implied Growth Rate 1.32%
Net Current Asset Value (NCAV) -$34.41
PEmg 11.14
Current Ratio 1.25
PB Ratio 1.09

Balance Sheet – September 2014

Current Assets $3,287,000,000
Current Liabilities $2,620,000,000
Total Debt $3,986,000,000
Total Assets $17,846,000,000
Intangible Assets $38,000,000
Total Liabilities $9,443,000,000
Outstanding Shares 178,900,000

Earnings Per Share

2014 (estimate) $3.38
2013 $5.94
2012 $4.99
2011 $4.49
2010 $4.13
2009 $4.35
2008 $9.06
2007 $4.01
2006 $3.41
2005 $4.55
2004 $3.77

Earnings Per Share – ModernGraham

2014 (estimate) $4.58
2013 $5.05
2012 $4.87
2011 $4.94
2010 $5.11
2009 $5.43

Dividend History

Conclusion:

Murphy Oil Corporation does not qualify for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned by the low current ratio and the level of earnings growth over the last ten years, while the Enterprising Investor is concerned by the high level of debt relative to the current assets along with the lack of earnings growth over the last five years.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  From a valuation side of things, the company appears to be overvalued after seeing its EPSmg (normalized earnings) drop from $5.11 in 2010 to only an estimated $4.58 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 1.32% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

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

Disclaimer:  The author did not hold a position in Murphy Oil Corporation (MUR) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Monster Beverage Corp Valuation – February 2019 $MNST

Company Profile (excerpt from Reuters): Monster Beverage Corporation, incorporated on August 12, 2014, develops, markets, sells and distributes energy drink beverages, sodas and/or concentrates for energy drink beverages, primarily under various brand names, including Monster Energy, Monster Rehab, Monster Energy Extra Strength Nitrous Technology, Java Monster, Muscle Monster, Mega Monster Energy, Punch Monster, Juice Monster, Ubermonster, BU, Mutant Super Soda, Nalu, NOS, Burn, Mother, Ultra, Play and Power Play, Gladiator, Relentless, Samurai, BPM and Full Throttle. The Company has three segments: Monster Energy Drinks segment, which consists of its Monster Energy drinks, as well as Mutant Super Soda drinks; Strategic Brands segment, which includes various energy drink brands owned through The Coca-Cola Company (TCCC), and Other segment (Other), which includes the American Fruits & Flavors (AFF) third-party products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MNST – 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 $31,972,320,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.28 Pass
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 242.61% Pass
6. Moderate PEmg Ratio PEmg < 20 42.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.32 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 3.28 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.37
MG Growth Estimate 14.50%
MG Value $51.42
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $19.88
MG Value based on 0% Growth $11.66
Market Implied Growth Rate 16.83%
Current Price $57.82
% of Intrinsic Value 112.45%

Monster Beverage Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. 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 $0.7 in 2014 to an estimated $1.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.83% 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 Monster Beverage Corp revealed the company was trading above its Graham Number of $16.22. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 42.16, which was above the industry average of 26.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.1.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.10
Graham Number $16.22
PEmg 42.16
Current Ratio 3.28
PB Ratio 8.32
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 9/1/2018
Total Current Assets $2,152,671,000
Total Current Liabilities $656,362,000
Long-Term Debt $0
Total Assets $4,871,359,000
Intangible Assets $2,373,891,000
Total Liabilities $978,092,000
Shares Outstanding (Diluted Average) 559,955,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Dec2017 $1.42
Dec2016 $1.19
Dec2015 $0.95
Dec2014 $0.92
Dec2013 $0.65
Dec2012 $0.62
Dec2011 $0.51
Dec2010 $0.38
Dec2009 $0.37
Dec2008 $0.19
Dec2007 $0.25
Dec2006 $0.17
Dec2005 $0.11
Dec2004 $0.04
Dec2003 $0.01
Dec2002 $0.01
Dec2001 $0.01
Dec2000 $0.01
Dec1999 $0.01
Dec1998 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.37
Dec2017 $1.15
Dec2016 $0.96
Dec2015 $0.81
Dec2014 $0.70
Dec2013 $0.56
Dec2012 $0.48
Dec2011 $0.39
Dec2010 $0.31
Dec2009 $0.25
Dec2008 $0.18
Dec2007 $0.16
Dec2006 $0.09
Dec2005 $0.05
Dec2004 $0.02
Dec2003 $0.01
Dec2002 $0.01

Recommended Reading:

Other ModernGraham posts about the company

Monster Beverage Corp Valuation – April 2018 $MNST
Monster Beverage Corp Valuation – July 2016 $MNST
Monster Beverage Corp Valuation – January 2016 Update $MNST
Monster Beverage Corporation Analysis – October 2015 Update $MNST
Monster Beverage Analysis – July 2015 Update $MNST

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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.

Marathon Oil Corp Valuation – January 2019 $MRO

Company Profile (excerpt from Reuters): Marathon Oil Corporation, incorporated on May 30, 2001, is an exploration and production (E&P) company. The Company operates through two segments: United States E&P, International E&P. The United States E&P segment explores for, produces and markets crude oil and condensate, natural gas liquids (NGLs) and natural gas in the United States. The International E&P segment explores for, produces and markets crude oil and condensate, NGLs and natural gas outside of the United States, and produces and markets products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol, in Equatorial Guinea (E.G.).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MRO – 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 $13,312,884,632 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.43 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 -186.73% Fail
6. Moderate PEmg Ratio PEmg < 20 -7.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.13 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 1.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.96 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 -$2.17
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$31.52
MG Value based on 0% Growth -$18.48
Market Implied Growth Rate -7.93%
Current Price $16.02
% of Intrinsic Value N/A

Marathon 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 $3.38 in 2014 to an estimated $-2.17 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 Marathon Oil Corporation revealed the company was trading below its Graham Number of $16.13. The company pays a dividend of $0.2 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was -7.37, which was below the industry average of 41.28, 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 $-7.86.

Marathon Oil Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.86
Graham Number $16.13
PEmg -7.37
Current Ratio 1.43
PB Ratio 1.13
Current Dividend $0.20
Dividend Yield 1.25%
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 $3,065,000,000
Total Current Liabilities $2,142,000,000
Long-Term Debt $5,498,000,000
Total Assets $21,778,000,000
Intangible Assets $97,000,000
Total Liabilities $9,734,000,000
Shares Outstanding (Diluted Average) 849,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.84
Dec2017 -$6.73
Dec2016 -$2.61
Dec2015 -$3.26
Dec2014 $4.46
Dec2013 $2.47
Dec2012 $2.23
Dec2011 $4.13
Dec2010 $3.61
Dec2009 $2.06
Dec2008 $4.95
Dec2007 $5.69
Dec2006 $7.25
Dec2005 $4.22
Dec2004 $1.86
Dec2003 $2.13
Dec2002 $0.83
Dec2001 $0.53
Dec2000 $0.68
Dec1999 $0.87
Dec1998 $0.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.17
Dec2017 -$2.83
Dec2016 -$0.37
Dec2015 $1.17
Dec2014 $3.38
Dec2013 $2.86
Dec2012 $3.17
Dec2011 $3.79
Dec2010 $3.98
Dec2009 $4.39
Dec2008 $5.30
Dec2007 $5.06
Dec2006 $4.25
Dec2005 $2.47
Dec2004 $1.47
Dec2003 $1.18
Dec2002 $0.72

Recommended Reading:

Other ModernGraham posts about the company

Marathon Oil Corp Valuation – March 2018 $MRO
Marathon Oil Corp Valuation – July 2016 $MRO
18 Companies in the Spotlight This Week – 3/21/15
Marathon Oil Corporation Annual Valuation – 2015 $MRO
19 Companies in the Spotlight This Week – 3/15/14

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Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
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Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

HollyFrontier Corp Valuation – January 2019 $HFC

Company Profile (excerpt from Reuters): HollyFrontier Corporation, incorporated on January 25, 1947, is an independent petroleum refiner. The Company produces various light products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. The Company operates through two segments: Refining and Holly Energy Partners, L.P. (HEP). The Refining segment includes the operations of the Company’s El Dorado, Kansas (the El Dorado Refinery); refinery facilities located in Tulsa, Oklahoma (collectively, the Tulsa Refineries); a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the Navajo Refinery); refinery located in Cheyenne, Wyoming (the Cheyenne Refinery); a refinery in Woods Cross, Utah (the Woods Cross Refinery), and HollyFrontier Asphalt Company (HFC Asphalt). The HEP segment involves all of the operations of HEP.

Downloadable PDF version of this valuation:

ModernGraham Valuation of HFC – 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 $9,387,931,192 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.50 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 33.29% Fail
6. Moderate PEmg Ratio PEmg < 20 13.96 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 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 2.50 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.04 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.88
MG Growth Estimate -0.59%
MG Value $28.38
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $56.27
MG Value based on 0% Growth $32.99
Market Implied Growth Rate 2.73%
Current Price $54.18
% of Intrinsic Value 190.94%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.04 in 2014 to an estimated $3.88 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.73% 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 HollyFrontier Corp revealed the company was trading below its Graham Number of $69.4. The company pays a dividend of $1.32 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.96, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.07.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.07
Graham Number $69.40
PEmg 13.96
Current Ratio 2.50
PB Ratio 1.46
Current Dividend $1.32
Dividend Yield 2.44%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,857,725,000
Total Current Liabilities $1,540,635,000
Long-Term Debt $2,409,148,000
Total Assets $11,495,126,000
Intangible Assets $2,691,357,000
Total Liabilities $4,931,614,000
Shares Outstanding (Diluted Average) 176,927,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.07
Dec2017 $4.52
Dec2016 -$1.48
Dec2015 $3.90
Dec2014 $1.42
Dec2013 $3.64
Dec2012 $8.38
Dec2011 $6.42
Dec2010 $0.97
Dec2009 $0.20
Dec2008 $1.19
Dec2007 $2.99
Dec2006 $2.29
Dec2005 $1.33
Dec2004 $0.65
Dec2003 $0.36
Jul2002 $0.25
Jul2001 $0.60
Jul2000 $0.09
Jul1999 $0.15
Jul1998 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.88
Dec2017 $2.32
Dec2016 $1.87
Dec2015 $3.95
Dec2014 $4.04
Dec2013 $4.87
Dec2012 $4.80
Dec2011 $2.80
Dec2010 $1.16
Dec2009 $1.37
Dec2008 $1.87
Dec2007 $1.98
Dec2006 $1.31
Dec2005 $0.76
Dec2004 $0.45
Dec2003 $0.33
Jul2002 $0.29

Recommended Reading:

Other ModernGraham posts about the company

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

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CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

Hess Corp Valuation – January 2019 $HES

Company Profile (excerpt from Reuters): Hess Corporation, incorporated on February 7, 1920, is an exploration and production company. The Company is engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGL) and natural gas. The Company’s segments include Exploration and Production, and Bakken Midstream. Its Exploration and Production segment explores for, develops, produces, purchases and sells crude oil, NGLs and natural gas with production operations primarily in the United States, Denmark, the Malaysia/Thailand Joint Development Area (JDA), Malaysia and Norway. The Bakken Midstream segment provides fee-based services, including crude oil and natural gas gathering, processing of natural gas and the fractionation of NGLs, transportation of crude oil by rail car, terminaling and loading crude oil and NGLs, and the storage and terminaling of propane, primarily in the Bakken shale play of North Dakota.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HES – 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 $15,319,242,358 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.30 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 -351.35% Fail
6. Moderate PEmg Ratio PEmg < 20 -5.79 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.38 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 2.30 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.60 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 -$8.92
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$129.41
MG Value based on 0% Growth -$75.86
Market Implied Growth Rate -7.15%
Current Price $51.68
% of Intrinsic Value N/A

Hess 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 high PEmg and PB ratios. 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 $8.75 in 2014 to an estimated $-8.92 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 Hess Corp. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was -5.79, which was below the industry average of 41.28, 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 $-20.12.

Hess 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) -$20.12
Graham Number $0.00
PEmg -5.79
Current Ratio 2.30
PB Ratio 1.38
Current Dividend $1.00
Dividend Yield 1.93%
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 $4,501,000,000
Total Current Liabilities $1,958,000,000
Long-Term Debt $6,609,000,000
Total Assets $21,467,000,000
Intangible Assets $360,000,000
Total Liabilities $10,421,000,000
Shares Outstanding (Diluted Average) 294,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.52
Dec2017 -$13.12
Dec2016 -$19.92
Dec2015 -$10.78
Dec2014 $7.53
Dec2013 $14.82
Dec2012 $5.95
Dec2011 $5.01
Dec2010 $6.47
Dec2009 $2.27
Dec2008 $7.24
Dec2007 $5.74
Dec2006 $6.08
Dec2005 $3.93
Dec2004 $3.19
Dec2003 $2.37
Dec2002 -$0.83
Dec2001 $3.42
Dec2000 $3.79
Dec1999 $1.62
Dec1998 -$1.71

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$8.92
Dec2017 -$9.85
Dec2016 -$5.64
Dec2015 $2.51
Dec2014 $8.75
Dec2013 $8.54
Dec2012 $5.40
Dec2011 $5.20
Dec2010 $5.38
Dec2009 $4.91
Dec2008 $5.90
Dec2007 $4.90
Dec2006 $3.97
Dec2005 $2.75
Dec2004 $2.24
Dec2003 $1.87
Dec2002 $1.50

Recommended Reading:

Other ModernGraham posts about the company

Hess Corp Valuation – March 2018 $HES
Hess Corp Valuation – July 2016 $HES
47 Companies in the Spotlight This Week – 5/16/15
Hess Corporation Annual Valuation – 2015 $HES
10 Companies Benjamin Graham Would Invest In Today – May 2015

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Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
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Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

Cimarex Energy Co Valuation – January 2019 $XEC

Company Profile (excerpt from Reuters): Cimarex Energy Co., incorporated on February 14, 2002, is an independent oil and gas exploration and production company. The Company operates in exploration and production (E&P) segment. The Company’s operations are located mainly in Oklahoma, Texas and New Mexico. The Company’s E&P activities take place primarily in two areas: the Permian Basin and the Mid-Continent region. Its Permian Basin region encompasses west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. As of fiscal year ended December 31, 2016 (fiscal 2016), its activities in the Mid-Continent were focused in the Woodford shale and the Meramec horizon, both in Oklahoma. During fiscal 2016, production from the Mid-Continent averaged 457 millions of cubic feet equivalent (MMcfe) per day, or 47% of total company production.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEC – 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 $6,962,019,156 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 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 -20.71% Fail
6. Moderate PEmg Ratio PEmg < 20 -107.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.26 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 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.56 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 -$0.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$9.79
MG Value based on 0% Growth -$5.74
Market Implied Growth Rate -58.16%
Current Price $72.81
% of Intrinsic Value N/A

Cimarex Energy Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings 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 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 $5.81 in 2014 to an estimated $-0.68 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 Cimarex Energy Co revealed the company was trading above its Graham Number of $62.01. The company pays a dividend of $0.32 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was -107.81, which was below the industry average of 41.28, 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 $-14.54.

Cimarex Energy Co 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) -$14.54
Graham Number $62.01
PEmg -107.81
Current Ratio 1.69
PB Ratio 2.26
Current Dividend $0.32
Dividend Yield 0.44%
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 $1,427,715,000
Total Current Liabilities $845,345,000
Long-Term Debt $1,488,147,000
Total Assets $5,818,435,000
Intangible Assets $620,232,000
Total Liabilities $2,792,613,000
Shares Outstanding (Diluted Average) 93,867,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.35
Dec2017 $5.19
Dec2016 -$4.38
Dec2015 -$27.75
Dec2014 $6.00
Dec2013 $6.47
Dec2012 $4.07
Dec2011 $6.15
Dec2010 $6.70
Dec2009 -$3.82
Dec2008 -$11.22
Dec2007 $4.09
Dec2006 $4.11
Dec2005 $4.90
Dec2004 $3.59
Dec2003 $2.22
Dec2002 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.68
Dec2017 -$3.76
Dec2016 -$6.53
Dec2015 -$5.40
Dec2014 $5.81
Dec2013 $5.11
Dec2012 $3.08
Dec2011 $1.85
Dec2010 -$0.21
Dec2009 -$2.57
Dec2008 -$0.93
Dec2007 $4.07
Dec2006 $3.78
Dec2005 $3.21
Dec2004 $2.05
Dec2003 $1.09
Dec2002 $0.44

Recommended Reading:

Other ModernGraham posts about the company

Cimarex Energy Co Valuation – Initial Coverage $XEC

Other ModernGraham posts about related companies

EQT Corp Valuation – January 2019 $EQT
Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
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Murphy Oil Corp Valuation – August 2018 $MUR
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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.

EQT Corp Valuation – January 2019 $EQT

Company Profile (excerpt from Reuters): EQT Corporation (EQT), incorporated on June 10, 2008, is a natural gas company. The Company operates through three segments: EQT Production, EQT Gathering and EQT Transmission. EQT Production is a natural gas producer in the Appalachian Basin. EQT Gathering and EQT Transmission provide gathering, transmission and storage services for the Company’s produced gas, as well as for independent third parties across the Appalachian Basin.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EQT – 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 $5,398,930,337 Pass
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 -109.58% Fail
6. Moderate PEmg Ratio PEmg < 20 -175.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.34 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 0.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.53 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 -$0.12
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$1.75
MG Value based on 0% Growth -$1.03
Market Implied Growth Rate -92.01%
Current Price $21.18
% of Intrinsic Value N/A

EQT 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 $2.31 in 2014 to an estimated $-0.12 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 EQT Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.12 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was -175.52, which was below the industry average of 41.28, 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 $-43.19.

EQT 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) -$43.19
Graham Number $0.00
PEmg -175.52
Current Ratio 0.47
PB Ratio 0.34
Current Dividend $0.12
Dividend Yield 0.57%
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 $1,234,658,000
Total Current Liabilities $2,646,076,000
Long-Term Debt $7,808,570,000
Total Assets $28,661,329,000
Intangible Assets $2,672,901,000
Total Liabilities $12,443,937,000
Shares Outstanding (Diluted Average) 259,560,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$5.90
Dec2017 $8.04
Dec2016 -$2.71
Dec2015 $0.56
Dec2014 $2.54
Dec2013 $2.57
Dec2012 $1.22
Dec2011 $3.19
Dec2010 $1.57
Dec2009 $1.19
Dec2008 $2.00
Dec2007 $2.10
Dec2006 $1.80
Dec2005 $2.10
Dec2004 $2.22
Dec2003 $1.34
Dec2002 $1.14
Dec2001 $1.13
Dec2000 $0.80
Dec1999 $0.51
Dec1998 -$0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.12
Dec2017 $2.58
Dec2016 $0.18
Dec2015 $1.75
Dec2014 $2.31
Dec2013 $2.11
Dec2012 $1.86
Dec2011 $2.13
Dec2010 $1.64
Dec2009 $1.73
Dec2008 $2.01
Dec2007 $1.99
Dec2006 $1.86
Dec2005 $1.79
Dec2004 $1.53
Dec2003 $1.12
Dec2002 $0.90

Recommended Reading:

Other ModernGraham posts about the company

EQT Corporation Valuation – March 2018 $EQT
EQT Corporation Valuation – July 2016 $EQT
5 Speculative and Overvalued Companies to Avoid – May 2015
47 Companies in the Spotlight This Week – 5/16/15
EQT Corporation Annual Valuation – 2015 $EQT

Other ModernGraham posts about related companies

Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW

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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