Norfolk Southern Corp Valuation – February 2019 $NSC

Company Profile (excerpt from Reuters): Norfolk Southern Corporation, incorporated on August 24, 2009, is a holding company engaged principally in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest, and through interchange with rail carriers, to and from the rest of the United States. It also transports overseas freight through several Atlantic and Gulf Coast ports. It offers an intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – 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 $49,083,342,742 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 157.89% Pass
6. Moderate PEmg Ratio PEmg < 20 17.13 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.26 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 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.49 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.71
MG Growth Estimate 13.24%
MG Value $374.73
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $155.35
MG Value based on 0% Growth $91.07
Market Implied Growth Rate 4.31%
Current Price $183.52
% of Intrinsic Value 48.97%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.69 in 2015 to an estimated $10.71 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.31% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $114.11. The company pays a dividend of $3.04 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 17.13, which was below the industry average of 19.16, 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 $-69.65.

Norfolk Southern 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) -$69.65
Graham Number $114.11
PEmg 17.13
Current Ratio 0.72
PB Ratio 3.26
Current Dividend $3.04
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,862,000,000
Total Current Liabilities $2,591,000,000
Long-Term Debt $10,560,000,000
Total Assets $36,239,000,000
Intangible Assets $0
Total Liabilities $20,877,000,000
Shares Outstanding (Diluted Average) 273,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.10
Dec2018 $9.51
Dec2017 $18.61
Dec2016 $5.62
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.71
Dec2018 $10.36
Dec2017 $9.98
Dec2016 $5.67
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16

Other ModernGraham posts about related companies

CSX Corp Valuation – February 2019 $CSX
Union Pacific Corp Valuation – February 2019 $UNP
Canadian Pacific Railway Ltd Valuation – August 2018 $TSE-CP
Canadian National Railway Co Valuation – August 2018 $TSE:CNR
Kansas City Southern Valuation – May 2018 $KSU
Norfolk Southern Corp Valuation – April 2018-corrected
Norfolk Southern Corp Valuation – April 2018 $NSC
CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP

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.

Regions Financial Corp Valuation – January 2019 $RF

Company Profile (excerpt from Reuters): Regions Financial Corporation, incorporated on February 13, 2004, is a financial holding company. The Company conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank, which is a member of the Federal Reserve System. The Company operates in three segments: Corporate Bank, Consumer Bank and Wealth Management. The Company provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of asset management, wealth management, securities brokerage, insurance brokerage, trust services, merger and acquisition advisory services, and other specialty financing. As of December 31, 2016, the Company operated 1,906 automatic teller machines (ATMs) and over 1,527 banking offices in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, and Texas.

Downloadable PDF version of this valuation:

ModernGraham Valuation of RF – 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 $15,962,952,366 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -252.47% Fail
5. Moderate PEmg Ratio PEmg < 20 13.99 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.14 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 $1.10
MG Growth Estimate 15.00%
MG Value $42.48
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $16.00
MG Value based on 0% Growth $9.38
Market Implied Growth Rate 2.75%
Current Price $15.44
% of Intrinsic Value 36.35%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.52 in 2014 to an estimated $1.1 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.75% 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 Regions Financial Corp revealed the company was trading below its Graham Number of $21.6. The company pays a dividend of $0.32 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 13.99, 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.

Regions Financial Corp fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $21.60
PEmg 13.99
PB Ratio 1.14
Dividend Yield 2.04%
TTM Dividend $0.32
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $11,178,000,000
Total Assets $124,578,000,000
Intangible Assets $5,357,000,000
Total Liabilities $109,808,000,000
Shares Outstanding (Diluted Average) 1,095,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.53
Dec2017 $1.00
Dec2016 $0.87
Dec2015 $0.75
Dec2014 $0.79
Dec2013 $0.75
Dec2012 $0.71
Dec2011 -$0.34
Dec2010 -$0.62
Dec2009 -$1.27
Dec2008 -$8.09
Dec2007 $1.76
Dec2006 $2.67
Dec2005 $2.15
Dec2004 $2.19
Dec2003 $2.90
Dec2002 $2.72
Dec2001 $1.82
Dec2000 $1.92
Dec1999 $1.90
Dec1998 $1.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.10
Dec2017 $0.87
Dec2016 $0.80
Dec2015 $0.68
Dec2014 $0.52
Dec2013 $0.20
Dec2012 -$0.69
Dec2011 -$1.49
Dec2010 -$1.75
Dec2009 -$1.73
Dec2008 -$1.26
Dec2007 $2.21
Dec2006 $2.47
Dec2005 $2.36
Dec2004 $2.42
Dec2003 $2.44
Dec2002 $2.15

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – April 2018
Regions Financial Corp Valuation – March 2018 $RF
Best Stocks Below Their Graham Number – August 2016
Best Stocks to Invest In: the Bank Industry – August 2016
Stocks Trading Below Their Graham Number – July 2016

Other ModernGraham posts about related companies

PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY
Citigroup Inc Valuation – January 2019 $C
People’s United Financial Inc Valuation – January 2019 $PBCT
JPMorgan Chase & Co Valuation – November 2018 $JPM
CVB Financial Corp Valuation – September 2018 $CVBF
Customers Bancorp Inc Valuation – September 2018 $CUBI
Sterling Bancorp Valuation – August 2018 $STL
S&T Bancorp Inc Valuation – August 2018 $STBA
Central Pacific Financial Corp Valuation – August 2018 $CPF

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.

Inter Parfums Inc Valuation – July 2018 $IPAR

Company Profile (excerpt from Reuters): Inter Parfums, Inc., incorporated on May 6, 1985, operates in the fragrance business. The Company manufactures, markets and distributes an array of fragrance and fragrance related products. The Company operates through two segments: European based operations and United States based operations. Its prestige fragrance products are produced and marketed by both its United States operations and its European operations. The Company sells its products to department stores, perfumeries, specialty stores, and domestic and international wholesalers and distributors. The Company operates in North America, the Europe, Central and South America, the Middle East, Asia and Other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPAR – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,887,816,013 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.36 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 50.00% Pass
6. Moderate PEmg Ratio PEmg < 20 46.14 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.12 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 3.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.08 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.29
MG Growth Estimate -3.63%
MG Value $11.66
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $18.74
MG Value based on 0% Growth $10.99
Market Implied Growth Rate 18.82%
Current Price $59.65
% of Intrinsic Value 511.70%

Inter Parfums, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.71 in 2014 to an estimated $1.29 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.82% 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 Inter Parfums, Inc. revealed the company was trading above its Graham Number of $22.28. The company pays a dividend of $0.72 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 46.14, which was below the industry average of 72.01, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $11.66.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $11.66
Graham Number $22.28
PEmg 46.14
Current Ratio 3.36
PB Ratio 3.12
Current Dividend $0.72
Dividend Yield 1.21%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $571,205,000
Total Current Liabilities $169,938,000
Long-Term Debt $31,011,000
Total Assets $805,106,000
Intangible Assets $205,489,000
Total Liabilities $204,830,000
Shares Outstanding (Diluted Average) 31,429,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2017 $1.33
Dec2016 $1.07
Dec2015 $0.98
Dec2014 $0.95
Dec2013 $1.27
Dec2012 $4.26
Dec2011 $1.05
Dec2010 $0.87
Dec2009 $0.74
Dec2008 $0.77
Dec2007 $0.76
Dec2006 $0.57
Dec2005 $0.50
Dec2004 $0.51
Dec2003 $0.46
Dec2002 $0.31
Dec2001 $0.27
Dec2000 $0.23
Dec1999 $0.18
Dec1998 $0.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.29
Dec2017 $1.14
Dec2016 $1.26
Dec2015 $1.47
Dec2014 $1.71
Dec2013 $1.93
Dec2012 $2.02
Dec2011 $0.88
Dec2010 $0.78
Dec2009 $0.71
Dec2008 $0.67
Dec2007 $0.61
Dec2006 $0.51
Dec2005 $0.46
Dec2004 $0.41
Dec2003 $0.33
Dec2002 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Inter Parfums Inc Valuation – Initial Coverage $IPAR

Other ModernGraham posts about related companies

Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG

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.

Norfolk Southern Corp Valuation – April 2018-corrected

Company Profile (excerpt from Reuters): Norfolk Southern Corporation, incorporated on August 24, 2009, is a holding company engaged principally in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest, and through interchange with rail carriers, to and from the rest of the United States. It also transports overseas freight through several Atlantic and Gulf Coast ports. It offers an intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area.

NSC Chart

NSC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – April 2018-corrected

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $43,931,478,476 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 166.42% Pass
6. Moderate PEmg Ratio PEmg < 20 14.72 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.53 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 105.90 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.96
MG Growth Estimate 10.72%
MG Value $298.21
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $144.41
MG Value based on 0% Growth $84.65
Market Implied Growth Rate 3.11%
Current Price $146.62
% of Intrinsic Value 49.17%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.81 in 2014 to an estimated $9.96 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.11% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $103.69. The company pays a dividend of $2.44 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 14.72, which was below the industry average of 25.23, 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 $-60.9.

Norfolk Southern Corp. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$60.90
Graham Number $103.69
PEmg 14.72
Current Ratio 1.04
PB Ratio 2.53
Current Dividend $2.44
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $2,479,000,000
Total Current Liabilities $2,388,000,000
Long-Term Debt $9,637,000,000
Total Assets $36,162,000,000
Intangible Assets $0
Total Liabilities $19,744,000,000
Shares Outstanding (Diluted Average) 283,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.30
Dec2017 $18.61
Dec2016 $5.62
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.96
Dec2017 $9.98
Dec2016 $5.67
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – April 2018 $NSC
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC

Other ModernGraham posts about related companies

Norfolk Southern Corp Valuation – April 2018 $NSC
CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP
Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR
Kansas City Southern Valuation – December 2016 $KSU
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP

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.

Norfolk Southern Corp Valuation – April 2018 $NSC

Company Profile (excerpt from Reuters): Norfolk Southern Corporation, incorporated on August 24, 2009, is a holding company engaged principally in the rail transportation business. As of December 31, 2016, the Company operated approximately 19,500 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest, and through interchange with rail carriers, to and from the rest of the United States. It also transports overseas freight through several Atlantic and Gulf Coast ports. It offers an intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area.

NSC Chart

NSC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – April 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $41,438,714,409 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.84 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 362.33% Pass
6. Moderate PEmg Ratio PEmg < 20 8.21 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.40 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.84 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -23.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $16.62
MG Growth Estimate 15.00%
MG Value $639.97
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $241.03
MG Value based on 0% Growth $141.29
Market Implied Growth Rate -0.14%
Current Price $136.48
% of Intrinsic Value 21.33%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.81 in 2014 to an estimated $16.62 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.14% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $101.73. The company pays a dividend of $2.44 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 8.21, which was below the industry average of 25.23, 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 $-59.82.

Norfolk Southern Corp. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$59.82
Graham Number $101.73
PEmg 8.21
Current Ratio 0.84
PB Ratio 2.40
Current Dividend $2.44
Dividend Yield 1.79%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,149,000,000
Total Current Liabilities $2,545,000,000
Long-Term Debt $9,136,000,000
Total Assets $35,711,000,000
Intangible Assets $0
Total Liabilities $19,352,000,000
Shares Outstanding (Diluted Average) 287,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.99
Dec2017 $37.22
Dec2016 $11.24
Dec2015 $10.20
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $16.62
Dec2017 $18.70
Dec2016 $8.91
Dec2015 $7.39
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016

Other ModernGraham posts about related companies

CSX Corporation Valuation – April 2018 $CSX
Union Pacific Corp Valuation – April 2018 $UNP
Canadian Pacific Railway Ltd Valuation – Initial Coverage $TSE:CP
Canadian National Railway Co Valuation – Initial Valuation $TSE:CNR
Kansas City Southern Valuation – December 2016 $KSU
Norfolk Southern Corp Valuation – December 2016 $NSC
Norfolk Southern Corp Valuation – August 2016 $NSC
CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC

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.

Regions Financial Corp Valuation – March 2018 $RF

Company Profile (excerpt from Reuters): Regions Financial Corporation, incorporated on February 13, 2004, is a financial holding company. The Company conducts its banking operations through Regions Bank, an Alabama state-chartered commercial bank, which is a member of the Federal Reserve System. The Company operates in three segments: Corporate Bank, Consumer Bank and Wealth Management. The Company provides traditional commercial, retail and mortgage banking services, as well as other financial services in the fields of asset management, wealth management, securities brokerage, insurance brokerage, trust services, merger and acquisition advisory services, and other specialty financing. As of December 31, 2016, the Company operated 1,906 automatic teller machines (ATMs) and over 1,527 banking offices in Alabama, Arkansas, Florida, Georgia, Illinois, Indiana, Iowa, Kentucky, Louisiana, Mississippi, Missouri, North Carolina, South Carolina, Tennessee, and Texas.

RF Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of RF – 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 $22,770,239,022 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -241.26% Fail
5. Moderate PEmg Ratio PEmg < 20 19.25 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.41 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 14.50%
MG Value $38.25
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $14.79
MG Value based on 0% Growth $8.67
Market Implied Growth Rate 5.37%
Current Price $19.63
% of Intrinsic Value 51.32%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.52 in 2014 to an estimated $1.02 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.37% 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 Regions Financial Corp revealed the company was trading below its Graham Number of $19.76. The company pays a dividend of $0.32 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 19.25, which was below the industry average of 24.17, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Regions Financial Corp performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Graham Number $19.76
PEmg 19.25
PB Ratio 1.41
Dividend Yield 1.60%
TTM Dividend $0.32
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $8,132,000,000
Total Assets $124,294,000,000
Intangible Assets $5,417,000,000
Total Liabilities $108,102,000,000
Shares Outstanding (Diluted Average) 1,165,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.28
Dec2017 $1.00
Dec2016 $0.87
Dec2015 $0.75
Dec2014 $0.79
Dec2013 $0.75
Dec2012 $0.71
Dec2011 -$0.34
Dec2010 -$0.62
Dec2009 -$1.27
Dec2008 -$8.09
Dec2007 $1.76
Dec2006 $2.67
Dec2005 $2.15
Dec2004 $2.19
Dec2003 $2.90
Dec2002 $2.72
Dec2001 $1.82
Dec2000 $1.92
Dec1999 $1.90
Dec1998 $1.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.02
Dec2017 $0.87
Dec2016 $0.80
Dec2015 $0.68
Dec2014 $0.52
Dec2013 $0.20
Dec2012 -$0.69
Dec2011 -$1.49
Dec2010 -$1.75
Dec2009 -$1.73
Dec2008 -$1.26
Dec2007 $2.21
Dec2006 $2.47
Dec2005 $2.36
Dec2004 $2.42
Dec2003 $2.44
Dec2002 $2.15

Recommended Reading:

Other ModernGraham posts about the company

Regions Financial Corp – June 2016 $RF
58 Companies in the Spotlight This Week – 1/31/15
Regions Financial Corporation Annual Valuation – 2015 $RF
14 Companies in the Spotlight This Week – 1/25/14
Regions Financial Corp (RF) Annual Valuation

Other ModernGraham posts about related companies

PNC Financial Services Group Inc Valuation – March 2018 $PNC
KeyCorp Valuation – March 2018 $KEY
Canadian Western Bank Valuation – March 2018 $TSE-CWB
Simmons First National Corp Valuation – March 2018 $SFNC
Citigroup Inc Valuation – March 2018 $C
People’s United Financial Inc Valuation – March 2018 $PBCT
JPMorgan Chase & Co Valuation – February 2018 $JPM
Opus Bank Valuation – Initial Coverage $OPB
Wells Fargo & Co Valuation – August 2017 $WFC
Old National Bancorp Valuation – Initial Coverage $ONB

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.

Diebold Nixdorf Inc Valuation – Initial Coverage $DBD

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

Company Profile (obtained from Google Finance): Diebold Nixdorf, Incorporated provides connected commerce services, software and technology. The Company’s geographic segments include North America (NA), Asia Pacific (AP), Europe, Middle East and Africa (EMEA), and Latin America (LA). These segments sell and service financial self-service (FSS), retail solutions and security systems. The Company is engaged in providing connected commerce solutions to financial institutions. These solutions are supported by a field service organization. The Company provides security solutions, which combine a services portfolio and products to help address its customers’ needs. The Company provides services for a portfolio of physical security offerings, in addition to serving as a national locksmith. The Company provides voting machines for official elections and the terminals for the governmental lottery and correspondent bank.

DBD Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of DBD – July 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 $1,607,666,752 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 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 58.87% Pass
6. Moderate PEmg Ratio PEmg < 20 31.53 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.00 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 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.24 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 Pass

Stage 2: Determination of Intrinsic Value

EPSmg $0.67
MG Growth Estimate 15.00%
MG Value $25.95
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $9.77
MG Value based on 0% Growth $5.73
Market Implied Growth Rate 11.51%
Current Price $21.25
% of Intrinsic Value 81.89%

Diebold Nixdorf Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the  small size, low current ratio, insufficient earnings stability 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $-0.21 in 2013 to an estimated $0.67 for 2017.  This level of demonstrated earnings growth supports the market’s implied estimate of 11.51% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Diebold Nixdorf Inc revealed the company was trading above its Graham Number of $16.83.  The company pays a dividend of $0.96 per share, for a yield of 4.5%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 31.53, which was below the industry average of 41.95, 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 $-28.02.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.02
Graham Number $16.83
PEmg 31.53
Current Ratio 1.41
PB Ratio 3.00
Current Dividend $0.96
Dividend Yield 4.53%
Number of Consecutive Years of Dividend Growth 0

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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 3/1/2017
Total Current Assets $2,601,500,000
Total Current Liabilities $1,846,200,000
Long-Term Debt $1,689,700,000
Total Assets $5,244,600,000
Intangible Assets $1,765,200,000
Total Liabilities $4,711,500,000
Shares Outstanding (Diluted Average) 75,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.60
Dec2016 -$0.48
Dec2015 $1.12
Dec2014 $1.76
Dec2013 -$2.85
Dec2012 $1.15
Dec2011 $2.22
Dec2010 -$0.31
Dec2009 $0.39
Dec2008 $1.33
Dec2007 $0.59
Dec2006 $1.55
Dec2005 $1.43
Dec2004 $2.53
Dec2003 $2.37
Dec2002 $1.37
Dec2001 $0.93
Dec2000 $1.92
Dec1999 $1.85
Dec1998 $1.10
Dec1997 $1.76

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.67
Dec2016 $0.19
Dec2015 $0.57
Dec2014 $0.33
Dec2013 -$0.21
Dec2012 $1.05
Dec2011 $0.95
Dec2010 $0.45
Dec2009 $0.90
Dec2008 $1.27
Dec2007 $1.39
Dec2006 $1.81
Dec2005 $1.87
Dec2004 $2.00
Dec2003 $1.72
Dec2002 $1.41
Dec2001 $1.46

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Tech Data Corp Valuation – Initial Coverage $TECD
Teledyne Technologies Inc Valuation – Initial Coverage $TDY
Skyworks Solutions Inc Valuation – April 2017 $SWKS
Daktronics Inc Valuation – Initial Coverage $DAKT
Cypress Semiconductor Corp Valuation – Initial Coverage $CY
Littelfuse Inc Valuation – Initial Coverage $LFUS
CTS Corporation Valuation – Initial Coverage $CTS
IT Hardware Industry Review – March 2017
Garmin Ltd Valuation – March 2017 $GRMN
Hewlett Packard Enterprise Co Valuation – Initial Valuation $HPE

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.

Inter Parfums Inc Valuation – Initial Coverage $IPAR

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 – December 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 Inter Parfums Inc (IPAR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Inter Parfums, Inc. operates in the fragrance business. The Company manufactures, markets and distributes fragrances and fragrance-related products. It operates in two segments: European based operations and United States based operations. Under its European Operations, the Company produces and distributes fragrance products primarily under license agreements with brand owners and its prestige brands include Balmain, Boucheron, Coach, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Paul Smith, S.T. Dupont, Repetto, Rochas and Van Cleef & Arpels. Prestige brand fragrance products are also marketed under its United States operations. These fragrance products are sold under trademarks owned by the Company or pursuant to license or other agreements with the owners of brands, which include Abercrombie & Fitch, Agent Provocateur, Anna Sui, Banana Republic, bebe, Dunhill, Hollister, French Connection, Oscar de la Renta, and Shanghai Tang brands.

IPAR Chart

IPAR data by YCharts

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

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of IPAR – December 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,054,498,566 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.65 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 31.28% Fail
6. Moderate PEmg Ratio PEmg < 20 27.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.74 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 3.65 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.18 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $1.25
MG Growth Estimate -4.25%
MG Value $5.34
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $18.19
MG Value based on 0% Growth $10.66
Market Implied Growth Rate 9.34%
Current Price $34.10
% of Intrinsic Value 638.91%

Inter Parfums, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.02 in 2012 to an estimated $1.25 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.34% 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 Inter Parfums, Inc. revealed the company was trading above its Graham Number of $17.18. The company pays a dividend of $0.58 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 27.18, which was above the industry average of 26.36. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.34.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.34
Graham Number $17.18
PEmg 27.18
Current Ratio 3.65
PB Ratio 2.74
Current Dividend $0.58
Dividend Yield 1.70%
Number of Consecutive Years of Dividend Growth 2

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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 9/1/2016
Total Current Assets $483,551,000
Total Current Liabilities $132,460,000
Long-Term Debt $61,858,000
Total Assets $705,599,000
Intangible Assets $202,308,000
Total Liabilities $317,184,000
Shares Outstanding (Diluted Average) 31,171,000

Earnings Per Share History

Next Fiscal Year Estimate $1.05
Dec2015 $0.98
Dec2014 $0.95
Dec2013 $1.27
Dec2012 $4.26
Dec2011 $1.05
Dec2010 $0.87
Dec2009 $0.74
Dec2008 $0.77
Dec2007 $0.76
Dec2006 $0.57
Dec2005 $0.50
Dec2004 $0.51
Dec2003 $0.46
Dec2002 $0.31
Dec2001 $0.27
Dec2000 $0.23
Dec1999 $0.18
Dec1998 $0.15
Dec1997 $0.14
Dec1996 $0.17

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.25
Dec2015 $1.47
Dec2014 $1.71
Dec2013 $1.93
Dec2012 $2.02
Dec2011 $0.88
Dec2010 $0.78
Dec2009 $0.71
Dec2008 $0.67
Dec2007 $0.61
Dec2006 $0.51
Dec2005 $0.46
Dec2004 $0.41
Dec2003 $0.33
Dec2002 $0.26
Dec2001 $0.22
Dec2000 $0.18

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Avon Products Inc Valuation – July 2016 $AVP
Proctor & Gamble Co Valuation – July 2016 $PG
International Flavors & Fragrances Inc Valuation – June 2016 $IFF
Kimberly-Clark Corporation Valuation – June 2016 $KMB
Estee Lauder Companies Inc Valuation – May 2016 $EL
Colgate-Palmolive Co Valuation – January 2016 Update $CL
International Flavors & Fragrances Valuation – December 2015 Update $IFF
The Estee Lauder Company Valuation – October 2015 Update $EL
International Flavors & Fragrances Inc. Analysis – August 2015 Update $IFF
Estee Lauder Companies Analysis – August 2015 Update $EL

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.

Norfolk Southern Corp Valuation – December 2016 $NSC

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 – December 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 Norfolk Southern Corp (NSC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Norfolk Southern Corporation is a holding company engaged in the rail transportation business. The Company operates approximately 20,000 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company’s intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.

NSC Chart

NSC data by YCharts

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

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

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

ModernGraham Valuation of NSC – December 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $32,090,112,033 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 54.38% Pass
6. Moderate PEmg Ratio PEmg < 20 19.57 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.61 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 < 1.1 112.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $5.61
MG Growth Estimate 2.86%
MG Value $79.80
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $81.36
MG Value based on 0% Growth $47.70
Market Implied Growth Rate 5.54%
Current Price $109.83
% of Intrinsic Value 137.64%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.71 in 2012 to an estimated $5.61 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.54% 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 Norfolk Southern Corp. revealed the company was trading above its Graham Number of $72.03. The company pays a dividend of $2.36 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.57, which was above the industry average of 18.13. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-67.59.

Norfolk Southern 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) -$67.59
Graham Number $72.03
PEmg 19.57
Current Ratio 1.04
PB Ratio 2.61
Current Dividend $2.36
Dividend Yield 2.15%
Number of Consecutive Years of Dividend Growth 15

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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 9/1/2016
Total Current Assets $2,317,000,000
Total Current Liabilities $2,232,000,000
Long-Term Debt $9,555,000,000
Total Assets $34,632,000,000
Intangible Assets $0
Total Liabilities $22,236,000,000
Shares Outstanding (Diluted Average) 294,700,000

Earnings Per Share History

Next Fiscal Year Estimate $5.43
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93
Dec1997 $1.90
Dec1996 $2.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.61
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95
Dec2001 $0.95
Dec2000 $1.09

Recommended Reading:

Other ModernGraham posts about the company

Norfolk Southern Corp Valuation – August 2016 $NSC
26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015

Other ModernGraham posts about related companies

Norfolk Southern Corp Valuation – August 2016 $NSC
CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
Kansas City Southern Analysis – August 2015 Update $KSU
CSX Corporation Annual Valuation – 2014 $CSX
Union Pacific Corporation Annual Valuation – 2014 $UNP

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.

Norfolk Southern Corp Valuation – August 2016 $NSC

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 – July 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 Norfolk Southern Corp (NSC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Norfolk Southern Corporation is a holding company engaged in the rail transportation business. The Company operates approximately 20,000 miles of road primarily in the East and Midwest. The Company is engaged in the rail transportation of raw materials, intermediate products and finished goods primarily in the Southeast, East and Midwest. The Company, through interchange with rail carriers, to and from the rest of the United States. The Company also transports overseas freight through various Atlantic and Gulf Coast ports. It provides logistics services and offers the intermodal network in the eastern half of the United States. The Company’s system reaches various manufacturing plants, electric generating facilities, mines, distribution centers and other businesses located in its service area. The Company’s intermodal market group consists of shipments moving in trailers, domestic and international containers, and RoadRailer equipment.

NSC Chart

NSC data by YCharts

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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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of NSC – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $25,878,025,539 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.06 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 52.65% Pass
6. Moderate PEmg Ratio PEmg < 20 16.02 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.15 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.06 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 72.34 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

NSC value chart August 2016

EPSmg $5.55
MG Growth Estimate 2.66%
MG Value $76.66
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $80.45
MG Value based on 0% Growth $47.16
Market Implied Growth Rate 3.76%
Current Price $88.88
% of Intrinsic Value 115.94%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.71 in 2012 to an estimated $5.55 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.76% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Norfolk Southern Corp. revealed the company was trading above its Graham Number of $70.21. The company pays a dividend of $2.36 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.02, which was below the industry average of 18.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-66.83.

Norfolk Southern Corp. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

NSC charts August 2016

Net Current Asset Value (NCAV) -$66.83
Graham Number $70.21
PEmg 16.02
Current Ratio 1.06
PB Ratio 2.15
Current Dividend $2.36
Dividend Yield 2.66%
Number of Consecutive Years of Dividend Growth 15

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $2,239,000,000
Total Current Liabilities $2,107,000,000
Long-Term Debt $9,549,000,000
Total Assets $34,334,000,000
Intangible Assets $0
Total Liabilities $22,061,000,000
Shares Outstanding (Diluted Average) 296,600,000

Earnings Per Share History

Next Fiscal Year Estimate $5.24
Dec2015 $5.10
Dec2014 $6.39
Dec2013 $6.04
Dec2012 $5.37
Dec2011 $5.45
Dec2010 $4.00
Dec2009 $2.76
Dec2008 $4.52
Dec2007 $3.68
Dec2006 $3.57
Dec2005 $3.11
Dec2004 $2.31
Dec2003 $1.37
Dec2002 $1.18
Dec2001 $0.97
Dec2000 $0.45
Dec1999 $0.63
Dec1998 $1.93
Dec1997 $1.90
Dec1996 $2.03

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.55
Dec2015 $5.69
Dec2014 $5.81
Dec2013 $5.25
Dec2012 $4.71
Dec2011 $4.28
Dec2010 $3.70
Dec2009 $3.54
Dec2008 $3.77
Dec2007 $3.20
Dec2006 $2.74
Dec2005 $2.15
Dec2004 $1.53
Dec2003 $1.07
Dec2002 $0.95
Dec2001 $0.95
Dec2000 $1.09

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
Norfolk Southern Corp Valuation – February 2016 Update $NSC
10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015
15 Best Stocks For Value Investors This Week – 9/12/15

Other ModernGraham posts about related companies

CSX Corporation Valuation – August 2016 $CSX
Union Pacific Corp Valuation – August 2016 $UNP
Norfolk Southern Corp Valuation – February 2016 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
CSX Corporation Valuation – February 2016 Update $CSX
Union Pacific Corporation Valuation – February 2016 Update $UNP
Norfolk Southern Corporation Analysis – September 2015 Update $NSC
Kansas City Southern Analysis – August 2015 Update $KSU

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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