People’s United Financial Inc Valuation – January 2019 $PBCT

Company Profile (excerpt from Reuters): People’s United Financial, Inc., incorporated on November 2, 2006, is a bank holding company and a financial holding company of People’s United Bank (the Bank). The Bank is engaged in providing commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company operates through two segments: Commercial Banking and Retail Banking. Commercial Banking segment is engaged in commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. It also offers cash management, correspondent banking, municipal banking, institutional trust services, corporate trust, insurance services and private banking, among others. Retail Banking segment provides consumer lending (including residential mortgage and home equity lending) and consumer deposit gathering activities. The Retail Banking segment also includes brokerage, financial advisory services, investment management services, and life insurance and non-institutional trust services.

PBCT Chart

PBCT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PBCT – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,586,245,271 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 192.59% Pass
5. Moderate PEmg Ratio PEmg < 20 14.28 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.86 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.04
MG Growth Estimate 6.90%
MG Value $23.12
Opinion Undervalued
MG Grade A+
MG Value based on 3% Growth $15.03
MG Value based on 0% Growth $8.81
Market Implied Growth Rate 2.89%
Current Price $14.80
% of Intrinsic Value 64.01%

People’s United Financial, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. 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 $0.71 in 2014 to an estimated $1.04 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.89% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into People’s United Financial, Inc. revealed the company was trading below its Graham Number of $21.65. The company pays a dividend of $0.69 per share, for a yield of 4.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.28, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

People’s United Financial, Inc. fares extremely well in the ModernGraham grading system, scoring an A+.

Stage 3: Information for Further Research

Graham Number $21.65
PEmg 14.28
PB Ratio 0.86
Dividend Yield 4.65%
TTM Dividend $0.69
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $3,281,300,000
Total Assets $44,133,200,000
Intangible Assets $2,568,900,000
Total Liabilities $38,174,300,000
Shares Outstanding (Diluted Average) 345,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.27
Dec2017 $0.97
Dec2016 $0.92
Dec2015 $0.86
Dec2014 $0.84
Dec2013 $0.74
Dec2012 $0.72
Dec2011 $0.55
Dec2010 $0.23
Dec2009 $0.30
Dec2008 $0.41
Dec2007 $0.52
Dec2006 $0.41
Dec2005 $0.46
Dec2004 $0.68
Dec2003 $0.22
Dec2002 $0.19
Dec2001 $0.26
Dec2000 $0.38
Dec1999 $0.81
Dec1998 $0.64

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.04
Dec2017 $0.90
Dec2016 $0.85
Dec2015 $0.79
Dec2014 $0.71
Dec2013 $0.60
Dec2012 $0.50
Dec2011 $0.39
Dec2010 $0.34
Dec2009 $0.40
Dec2008 $0.46
Dec2007 $0.48
Dec2006 $0.44
Dec2005 $0.42
Dec2004 $0.38
Dec2003 $0.28
Dec2002 $0.36

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
People’s United Financial Inc Valuation – March 2018 $PBCT

Other ModernGraham posts about related companies

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CVB Financial Corp Valuation – September 2018 $CVBF
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S&T Bancorp Inc Valuation – August 2018 $STBA
Central Pacific Financial Corp Valuation – August 2018 $CPF
Synovus Financial Corp Valuation – August 2018 $SNV
Columbia Banking System Inc Valuation – August 2018 $COLB
Canadian Imperial Bank of Commerce Valuation – July 2018 $TSE:CM
ServisFirst Bancshares Inc Valuation – July 2018 $SFBS

Disclaimer:

The author held a long position in PBCT but did not hold a position 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.  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.

People’s United Financial Inc Valuation – March 2018 $PBCT

Company Profile (obtained from Marketwatch): People’s United Financial, Inc. is a bank and financial holding company, which engages in the provision of commercial banking, retail and business banking, and wealth management services to individual, corporate and municipal customers. It operates through the Commercial Banking and Retail Banking segments. The Commercial Banking segment consists commercial real estate lending, commercial and industrial lending, and commercial deposit gathering activities. This segment also includes the equipment financing operations of People’s Capital and Leasing Corp. and People’s United Equipment Finance Corp, as well as cash management, correspondent banking and municipal banking. The Retail Banking segment comprises consumer lending, and consumer deposit gathering activities, consumer lending (including residential mortgage and home equity lending), and merchant services. This segment also provides brokerage, financial advisory services, investment management services and life insurance provided by People’s Securities, Inc. and non-institutional trust services. The company was founded on November 2, 2006 and is headquartered in Bridgeport, CT.

PBCT Chart

PBCT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PBCT – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,627,255,795 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 185.32% Pass
5. Moderate PEmg Ratio PEmg < 20 18.76 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.13 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.02
MG Growth Estimate 6.53%
MG Value $21.99
Opinion Fairly Valued
MG Grade A
MG Value based on 3% Growth $14.79
MG Value based on 0% Growth $8.67
Market Implied Growth Rate 5.13%
Current Price $19.14
% of Intrinsic Value 87.04%

People’s United Financial, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.71 in 2014 to an estimated $1.02 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 5.13% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into People’s United Financial, Inc. revealed the company was trading below its Graham Number of $21.22. The company pays a dividend of $0.69 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.76, which was below the industry average of 20.84, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

People’s United Financial, Inc. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $21.22
PEmg 18.76
PB Ratio 1.13
Dividend Yield 3.59%
TTM Dividend $0.69
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $3,883,800,000
Total Assets $44,453,400,000
Intangible Assets $2,560,000,000
Total Liabilities $38,633,500,000
Shares Outstanding (Diluted Average) 342,333,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.22
Dec2017 $0.97
Dec2016 $0.92
Dec2015 $0.86
Dec2014 $0.84
Dec2013 $0.74
Dec2012 $0.72
Dec2011 $0.55
Dec2010 $0.24
Dec2009 $0.30
Dec2008 $0.41
Dec2007 $0.52
Dec2006 $0.41
Dec2005 $0.46
Dec2004 $0.68
Dec2003 $0.22
Dec2002 $0.19
Dec2001 $0.26
Dec2000 $0.38
Dec1999 $0.81
Dec1998 $0.64

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.02
Dec2017 $0.90
Dec2016 $0.85
Dec2015 $0.79
Dec2014 $0.71
Dec2013 $0.60
Dec2012 $0.50
Dec2011 $0.40
Dec2010 $0.34
Dec2009 $0.40
Dec2008 $0.46
Dec2007 $0.48
Dec2006 $0.44
Dec2005 $0.42
Dec2004 $0.38
Dec2003 $0.28
Dec2002 $0.36

Recommended Reading:

Other ModernGraham posts about the company

People’s United Financial Inc Valuation – June 2016 $PBCT
10 Companies Benjamin Graham Would Invest In Today – March 2016
Dividend Growth Stocks for Intelligent Investors – February 2016
13 Best Stocks For Value Investors This Week – 12/12/15
People’s United Financial Corp Valuation – December 2015 Update $PBCT

Other ModernGraham posts about related companies

JPMorgan Chase & Co Valuation – February 2018 $JPM
Opus Bank Valuation – Initial Coverage $OPB
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Dime Community Bancshares Inc Valuation – Initial Coverage $DCOM
LegacyTexas Financial Group Inc Valuation – Initial Coverage $LTXB
SunTrust Banks Inc Valuation – April 2017 $STI
Toronto-Dominion Bank Valuation – Initial Coverage $TSE:TD
Texas Capital Banchares Inc Valuation – Initial Coverage $TCBI
TCF Financial Corp Valuation – Initial Coverage $TCB

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.

People’s United Financial Inc Valuation – June 2016 $PBCT

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 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how People’s United Financial Inc (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. (People’s United) is the bank holding company for People’s United Bank, National Association (the Bank). The principal business of the Company is to provide, through the Bank and its subsidiaries, commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company’s segments include Commercial Banking, Retail Banking, Wealth Management, Treasury and Other. The Treasury area manages the Company’s securities portfolio, short-term investments, brokered deposits and wholesale borrowings. Its traditional banking activities include secured and unsecured commercial and consumer loans, originating mortgage loans secured by residential and commercial properties, and accepting consumer, commercial and municipal deposits. The Bank provides specialized financial services, such as personal, institutional and employee benefit trust; cash management, and municipal banking and finance.

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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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[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of PBCT – June 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,771,826,748 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 106.45% Pass
5. Moderate PEmg Ratio PEmg < 20 18.44 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.97 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

PBCT value chart June 2016

EPSmg $0.83
MG Growth Estimate 9.53%
MG Value $22.89
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $12.04
MG Value based on 0% Growth $7.06
Market Implied Growth Rate 4.97%
Current Price $15.32
% of Intrinsic Value 66.93%

People’s United Financial, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . The Enterprising Investor has no initial concerns. 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 $0.51 in 2012 to an estimated $0.83 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.97% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

People’s United Financial, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

PBCT charts June 2016

Graham Number $17.28
PEmg 18.44
PB Ratio 0.97
Dividend Yield 4.39%
Number of Consecutive Years of Dividend Growth 20

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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 3/1/2016
Long-Term Debt $4,113,500,000
Total Assets $39,263,800,000
Intangible Assets $2,078,900,000
Total Liabilities $34,472,600,000
Shares Outstanding (Diluted Average) 301,900,000

Earnings Per Share History

Next Fiscal Year Estimate $0.86
Dec2015 $0.86
Dec2014 $0.84
Dec2013 $0.74
Dec2012 $0.72
Dec2011 $0.57
Dec2010 $0.24
Dec2009 $0.30
Dec2008 $0.42
Dec2007 $0.52
Dec2006 $0.41
Dec2005 $0.46
Dec2004 $0.68
Dec2003 $0.22
Dec2002 $0.19
Dec2001 $0.26
Dec2000 $0.79
Dec1999 $0.81
Dec1998 $0.64
Dec1997 $0.67
Dec1996 $0.58

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.83
Dec2015 $0.79
Dec2014 $0.71
Dec2013 $0.60
Dec2012 $0.51
Dec2011 $0.40
Dec2010 $0.34
Dec2009 $0.40
Dec2008 $0.47
Dec2007 $0.48
Dec2006 $0.44
Dec2005 $0.42
Dec2004 $0.41
Dec2003 $0.33
Dec2002 $0.44
Dec2001 $0.59
Dec2000 $0.73

Recommended Reading:

Other ModernGraham posts about the company

10 Companies Benjamin Graham Would Invest In Today – March 2016
Dividend Growth Stocks for Intelligent Investors – February 2016
13 Best Stocks For Value Investors This Week – 12/12/15
People’s United Financial Corp Valuation – December 2015 Update $PBCT
Dividend Growth Stocks for the Intelligent Investor – November 2015

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Comerica Inc Stock Valuation – February 2016 $CMA
U.S. Bancorp Valuation – February 2016 $USB
JP Morgan Chase Valuation – January 2016 Update $JPM
Bank of New York Mellon Valuation – January 2016 Update $BK
Fifth Third Bancorp Valuation – January 2016 Update $FITB

Disclaimer:

The author held a long position in People’s United Financial Inc but did not hold a position 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.  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.

People’s United Financial Corp Valuation – December 2015 Update $PBCT

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 People’s United Financial Corp (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. is a savings and loan holding company. It is a holding company for People’s United Bank (the Bank), a federally-chartered stock savings bank headquartered in Bridgeport, Connecticut. The principal business of the Company is to provide, through the Bank and its subsidiaries, commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company’s operates through three segments: Commercial Banking, Retail Banking and Wealth Management. In addition, the Treasury area manages the Company’s securities portfolio, short-term investments, brokered deposits and wholesale borrowings. In addition to traditional banking activities, the Bank provides specialized financial services: personal, institutional and employee benefit trust; cash management, and municipal banking and finance.

[level-free]

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

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

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of PBCT – December 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,028,872,142 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 80.60% Pass
5. Moderate PEmg Ratio PEmg < 20 20.68 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.03 Pass
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

PBCT value Chart December 2015

EPSmg $0.78
MG Growth Estimate 14.67%
MG Value $29.70
Opinion Undervalued
MG Value based on 3% Growth $11.38
MG Value based on 0% Growth $6.67
Market Implied Growth Rate 6.09%
Current Price $16.23
% of Intrinsic Value 54.66%

People’s United Financial Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg ratio.  The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.40 in 2011 to an estimated $0.78 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.09% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above 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 People’s United Financial Corp (PBCT)?  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

PBCT Charts December 2015

Graham Number $16.99
PEmg 20.68
PB Ratio 1.03
Dividend Yield 4.10%
Number of Consecutive Years of Dividend Growth 20

 

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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
Long-Term Debt $3,209,400,000
Total Assets $37,477,700,000
Intangible Assets $2,084,700,000
Total Liabilities $32,746,900,000
Shares Outstanding (Diluted Average) 301,000,000

Earnings Per Share History

Next Fiscal Year Estimate $0.84
Dec14 $0.84
Dec13 $0.74
Dec12 $0.72
Dec11 $0.55
Dec10 $0.24
Dec09 $0.30
Dec08 $0.41
Dec07 $0.52
Dec06 $0.41
Dec05 $0.46
Dec04 $0.68
Dec03 $0.22
Dec02 $0.19
Dec01 $0.26
Dec00 $0.38
Dec99 $0.81
Dec98 $0.64
Dec97 $0.67
Dec96 $0.58
Dec95 $0.52

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.78
Dec14 $0.71
Dec13 $0.60
Dec12 $0.50
Dec11 $0.40
Dec10 $0.34
Dec09 $0.40
Dec08 $0.46
Dec07 $0.48
Dec06 $0.44
Dec05 $0.42
Dec04 $0.38
Dec03 $0.28
Dec02 $0.36
Dec01 $0.48
Dec00 $0.60
Dec99 $0.69

Recommended Reading:

Other ModernGraham posts about the company

Dividend Growth Stocks for the Intelligent Investor – November 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – November 2015
The Best Companies of the Banking Industry – October 2015
Dividend Growth Stocks for the Intelligent Investor – October 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015

Other ModernGraham posts about related companies

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U.S. Bancorp Valuation – November 2015 Update $USB
Starwood Property Trust Inc. Valuation – October 2015 Update $STWD
The Best Companies of the Banking Industry – October 2015
Comerica Inc. Valuation – October 2015 Update $CMA
Bank of New York Mellon Corporation Analysis – October 2015 Update $BK

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.

People’s United Financial Inc. Analysis – August 2015 Update $PBCT

In the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.

We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.

In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  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.  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 People’s United Financial Inc. (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. is a savings and loan holding company. It is a holding company for People’s United Bank (the Bank), a federally-chartered stock savings bank headquartered in Bridgeport, Connecticut. The principal business of the Company is to provide, through the Bank and its subsidiaries, commercial banking, retail banking and wealth management services to individual, corporate and municipal customers. The Company’s operates through three segments: Commercial Banking, Retail Banking and Wealth Management. In addition, the Treasury area manages the Company’s securities portfolio, short-term investments, brokered deposits and wholesale borrowings. In addition to traditional banking activities, the Bank provides specialized financial services: personal, institutional and employee benefit trust; cash management, and municipal banking and finance.
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Downloadable PDF version of this valuation:

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

Stage 2: Determination of Intrinsic Value

EPSmg 0.78
MG Growth Estimate 14.42%
MG Value $29.05
Opinion Undervalued
MG Value based on 3% Growth $11.28
MG Value based on 0% Growth $6.61
Market Implied Growth Rate 5.44%
Current Price $15.08
% of Intrinsic Value 51.91%

People’s United Financial Inc. is suitable for either the Defensive Investor or the Enterprising Investor.  The company passes all of the requirements of both investor types, a rare accomplishment indicative of the strong fundamentals.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the next stage of the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.40 in 2011 to an estimated $0.78 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.44% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above 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 People’s United Financial Inc. (PBCT)?  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

PBCT charts August 2015

PEmg 19.36
PB Ratio 0.96
Dividend Yield 4.40%
Number of Consecutive Years of Dividend Growth 20

 

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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

Long-Term Debt $3,646,000,000
Total Assets $37,183,200,000
Intangible Assets $2,090,600,000
Total Liabilities $32,497,500,000
Shares Outstanding (Diluted Average) 300,100,000

Earnings Per Share History

Next Fiscal Year Estimate $0.82
Dec14 $0.84
Dec13 $0.74
Dec12 $0.72
Dec11 $0.55
Dec10 $0.24
Dec09 $0.30
Dec08 $0.41
Dec07 $0.52
Dec06 $0.41
Dec05 $0.46
Dec04 $0.68
Dec03 $0.22
Dec02 $0.19
Dec01 $0.26
Dec00 $0.38
Dec99 $0.81
Dec98 $0.64
Dec97 $0.67
Dec96 $0.58
Dec95 $0.52

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.78
Dec14 $0.71
Dec13 $0.60
Dec12 $0.50
Dec11 $0.40
Dec10 $0.34
Dec09 $0.40
Dec08 $0.46
Dec07 $0.48
Dec06 $0.44
Dec05 $0.42
Dec04 $0.38
Dec03 $0.28
Dec02 $0.36
Dec01 $0.48
Dec00 $0.60
Dec99 $0.69

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – August 2015
10 Companies Benjamin Graham Would Invest In Today – August 2015
5 Undervalued Companies for Defensive Investors With High Dividend Yields – July 2015
5 Undervalued Companies for Defensive Investors With High Dividend Yields – June 2015
10 Companies Benjamin Graham Would Invest In Today – June 2015

Other ModernGraham posts about related companies

KeyCorp Analysis – August 2015 Update $KEY
State Street Corporation Analysis – August 2015 Update $STT
BB&T Corporation Analysis – August 2015 Update $BBT
PNC Financial Services Group Inc. Analysis – August 2015 Update $PNC
US Bancorp Analysis – August 2015 Update $USB
Comerica Incorporated Analysis – July 2015 Update $CMA
Starwood Property Trust Inc. Analysis – Initial Coverage $STWD
Fifth Third Bancorp Analysis – July 2015 Update $FITB
Huntington Bancshares Analysis – June 2015 Update $HBAN
JPMorgan Chase Analysis – June 2015 Update $JPM

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.  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 review our detailed disclaimer.

People’s United Financial Inc. Quarterly Valuation – May 2015 $PBCT

PeoplesUnitedBankIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  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.  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 People’s United Financial Inc. (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. is a savings and loan holding company. The Company through People’s United Bank and its subsidiaries, provides commercial banking, retail and business banking and wealth management services to individual, corporate and municipal customers. The Company offers: brokerage, financial advisory services, investment management services and life insurance, equipment financing and other insurance services. The Company’s operating segments include: Commercial Banking, and Retail and Business Banking. The Company’s commercial banking consists of commercial real estate lending, commercial and industrial lending and commercial deposit gathering activities. The Company’s retail and business banking includes business lending, consumer and business deposit gathering activities, consumer lending and merchant services.

Defensive Investor – must pass all 6 of the following tests: Score = 6/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. 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 – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – PASS
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $15.42
MG Value $29.37
MG Opinion Undervalued
Value Based on 3% Growth $11.33
Value Based on 0% Growth $6.64
Market Implied Growth Rate 5.62%
PEmg 19.74
PB Ratio 0.99

Balance Sheet – March 2015

Total Debt $3,209,000,000
Total Assets $36,407,000,000
Intangible Assets $2,097,000,000
Total Liabilities $31,725,000,000
Outstanding Shares 299,100,000

Earnings Per Share

2015 (estimate) $0.83
2014 $0.84
2013 $0.74
2012 $0.72
2011 $0.55
2010 $0.24
2009 $0.30
2008 $0.41
2007 $0.52
2006 $0.41
2005 $0.46

Earnings Per Share – ModernGraham 

2015 (estimate) $0.78
2014 $0.71
2013 $0.60
2012 $0.50
2011 $0.40
2010 $0.34

Dividend History

Conclusion

People’s United Financial Inc. qualifies for both the Defensive Investor and the Enterprising Investor.  In fact, the company passes all of the requirements of both investor types, indicating it is in a very strong financial position.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $0.40 in 2011 to an estimated $0.78 for 2015.  This level of demonstrated growth outpaces the market’s implied estimate of 5.62% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

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

Disclaimer:  The author did not hold a position in any of the companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

People’s United Financial Inc. Quarterly Valuation – February 2015 $PBCT

PeoplesUnitedBankIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  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.  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 People’s United Financial Inc. (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. is a savings and loan holding company. The Company through People’s United Bank and its subsidiaries, provides commercial banking, retail and business banking and wealth management services to individual, corporate and municipal customers. The Company offers: brokerage, financial advisory services, investment management services and life insurance, equipment financing and other insurance services. The Company’s operating segments include: Commercial Banking, and Retail and Business Banking. The Company’s commercial banking consists of commercial real estate lending, commercial and industrial lending and commercial deposit gathering activities. The Company’s retail and business banking includes business lending, consumer and business deposit gathering activities, consumer lending and merchant services.

Defensive Investor – must pass all 6 of the following tests: Score = 5/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. 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 – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $14.89
MG Value $27.36
MG Opinion Undervalued
Value Based on 3% Growth $10.30
Value Based on 0% Growth $6.04
Market Implied Growth Rate 6.23%
PEmg 20.95
PB Ratio 0.96

Balance Sheet – December 2014

Total Debt $3,325,000,000
Total Assets $35,997,000,000
Intangible Assets $2,103,000,000
Total Liabilities $31,364,000,000
Outstanding Shares 298,700,000

Earnings Per Share

2014 $0.84
2013 $0.74
2012 $0.72
2011 $0.55
2010 $0.24
2009 $0.30
2008 $0.41
2007 $0.52
2006 $0.41
2005 $0.46
2004 $0.68

Earnings Per Share – ModernGraham 

2014 $0.71
2013 $0.60
2012 $0.50
2011 $0.40
2010 $0.34
2009 $0.40

Dividend History

Conclusion:

People’s United Financial Inc. qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the high PEmg ratio, while the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $0.34 in 2010 to $0.71 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 6.23% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

Be sure to check out previous ModernGraham valuations of People’s United Financial Inc. (PBCT) for greater perspective!

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 People’s United Financial Inc. (PBCT)?  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 People’s United Financial Inc. (PBCT) or in any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

People’s United Financial Inc. Quarterly Valuation – November 2014 $PBCT

PeoplesUnitedBankIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  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.  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 People’s United Financial Inc. (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. (People’s United Financial) is a savings and loan holding company. The principal business of People’s United Financial is to provide, through People’s United Bank and its subsidiaries, commercial banking, retail and business banking, and wealth management services to individual, corporate and municipal customers. Traditional banking activities are conducted primarily within New England and southeastern New York, and include extending secured and unsecured commercial and consumer loans, originating mortgage loans secured by residential and commercial properties, and accepting consumer, commercial and municipal deposits. In addition to traditional banking activities, People’s United Bank provides specialized financial services tailored to specific markets including: personal, institutional and employee benefit trust; cash management; and municipal banking and finance.

Defensive Investor – must pass all 6 of the following tests: Score = 5/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. 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 – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $14.78
MG Value $27.23
MG Opinion Undervalued
Value Based on 3% Growth $10.26
Value Based on 0% Growth $6.01
Market Implied Growth Rate 6.20%
PEmg 20.90
PB Ratio 0.95

Balance Sheet – September 2014

Total Debt $3,493,000,000
Total Assets $34,775,000,000
Intangible Assets $2,109,000,000
Total Liabilities $30,120,000,000
Outstanding Shares 298,400,000

Earnings Per Share

2014 (estimate) $0.83
2013 $0.74
2012 $0.72
2011 $0.55
2010 $0.24
2009 $0.30
2008 $0.41
2007 $0.52
2006 $0.41
2005 $0.46
2004 $0.68

Earnings Per Share – ModernGraham 

2014 (estimate) $0.71
2013 $0.60
2012 $0.50
2011 $0.40
2010 $0.34
2009 $0.40

Dividend History

Conclusion:

People’s United Financial qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the high PEmg ratio, while the company passes all of the Enterprising Investor’s requirements.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $0.34 in 2010 to an estimated $0.71 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 6.2% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

Be sure to check out previous ModernGraham valuations of People’s United Financial Inc. (PBCT) for a broader perspective!

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 People’s United Financial Inc. (PBCT)?  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 People’s United Financial Inc. (PBCT) or in any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

People’s United Financial Quarterly Valuation – August 2014 $PBCT

PeoplesUnitedBankIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  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.  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 People’s United Financial (PBCT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. (People’s United Financial) is a savings and loan holding company. The principal business of People’s United Financial is to provide, through People’s United Bank and its subsidiaries, commercial banking, retail and business banking, and wealth management services to individual, corporate and municipal customers. Traditional banking activities are conducted primarily within New England and southeastern New York, and include extending secured and unsecured commercial and consumer loans, originating mortgage loans secured by residential and commercial properties, and accepting consumer, commercial and municipal deposits. In addition to traditional banking activities, People’s United Bank provides specialized financial services tailored to specific markets including: personal, institutional and employee benefit trust; cash management; and municipal banking and finance.
PBCT Chart

PBCT data by YCharts

Defensive Investor – must pass all 6 of the following tests: Score = 5/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. 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 – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $14.63
MG Value $27.57
MG Opinion Undervalued
Value Based on 3% Growth $10.38
Value Based on 0% Growth $6.09
Market Implied Growth Rate 5.97%
PEmg 20.43
PB Ratio 0.97

Balance Sheet – 6/30/2014

Total Debt $3,840,700,000
Total Assets $33,921,200,000
Intangible Assets $2,114,900,000
Total Liabilities $29,285,700,000
Outstanding Shares 307,700,000

Earnings Per Share

2014 (estimate) $0.84
2013 $0.75
2012 $0.72
2011 $0.57
2010 $0.24
2009 $0.30
2008 $0.42
2007 $0.52
2006 $0.40
2005 $0.42
2004 -$0.02

Earnings Per Share – ModernGraham 

2014 (estimate) $0.72
2013 $0.61
2012 $0.51
2011 $0.40
2010 $0.34
2009 $0.40

Dividend History
PBCT Dividend Chart

PBCT Dividend data by YCharts

Conclusion:

People’s United Financial qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the high PEmg ratio, but the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $0.34 in 2010 to an estimated $0.72 for 2014.  This level of demonstrated growth outpaces the market’s implied estimate of 5.97% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

Be sure to check out the previous ModernGraham valuations of People’s United Financial (PBCT) for more perspective!

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 People’s United Financial (PBCT)?  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 People’s United Financial (PBCT) or in any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

People’s United Financial (PBCT) Quarterly Valuation – May 2014

PeoplesUnitedBankIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to widdle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  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.  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 People’s United Financial fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): People’s United Financial, Inc. (People’s United Financial) is a savings and loan holding company. The principal business of People’s United Financial is to provide, through People’s United Bank and its subsidiaries, commercial banking, retail and business banking, and wealth management services to individual, corporate and municipal customers. Traditional banking activities are conducted primarily within New England and southeastern New York, and include extending secured and unsecured commercial and consumer loans, originating mortgage loans secured by residential and commercial properties, and accepting consumer, commercial and municipal deposits. In addition to traditional banking activities, People’s United Bank provides specialized financial services tailored to specific markets including: personal, institutional and employee benefit trust; cash management; and municipal banking and finance.

PBCT Chart

PBCT data by YCharts

Defensive Investor – must pass all 6 of the following tests: Score = 5/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  3. Dividend Record – has paid a dividend for at least 10 straight years – PASS
  4. 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 – PASS
  5. Moderate PEmg ratio – PEmg is less than 20 – FAIL
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass all 3 of the following tests or be suitable for a defensive investor: Score = 3/3

  1. Earnings Stability – positive earnings per share for at least 5 years – PASS
  2. Dividend Record – currently pays a dividend – PASS
  3. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $14.20
MG Value $27.18
MG Opinion Undervalued
Value Based on 3% Growth $10.24
Value Based on 0% Growth $6.00
Market Implied Growth Rate 5.81%
PEmg 20.11
PB Ratio 0.95

Balance Sheet – 3/31/2014

Total Debt $3,265,100,000
Total Assets $33,112,400,000
Intangible Assets $2,121,100,000
Total Liabilities $28,516,600,000
Outstanding Shares 307,500,000

Earnings Per Share

2014 (estimate) $0.81
2013 $0.75
2012 $0.72
2011 $0.57
2010 $0.24
2009 $0.30
2008 $0.42
2007 $0.52
2006 $0.40
2005 $0.42
2004 -$0.02

Earnings Per Share – ModernGraham 

2014 (estimate) $0.71
2013 $0.61
2012 $0.51
2011 $0.40
2010 $0.34
2009 $0.40

Dividend History

PBCT Dividend Chart

PBCT Dividend data by YCharts

Conclusion:

People’s United Financial is suitable for Enterprising Investors but not for Defensive Investors.  The Defensive Investor is concerned with the high PEmg ratio, but the company passes all of the requirements for the Enterprising Investor.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing the company to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from a $0.34 in 2010 to an estimated $0.71 for 2014.  This level of demonstrated growth surpasses the market’s implied estimate of 5.81% earnings growth and leads the ModernGraham valuation model to return an estimate of intrinsic value that is well above the price at this time.

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 People’s United Financial (PBCT)?  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.

If you like our valuations, why not check out ModernGraham Stocks & Screens?  It’s a great way to review the valuations while screening for things like low PE ratio, undervalued companies, etc.!

Disclaimer:  The author did not hold a position in People’s United FInancial (PBCT) or any of the other companies listed in this article at the time of publication and had no intention of changing that position within the next 72 hours.

Logo taken from the Wikipedia; this article is not affiliated with the company in any manner.

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