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Brighthouse Financial Inc Valuation – February 2019 $BHF

Company Profile (excerpt from Reuters): Brighthouse Financial, Inc., incorporated on August 01, 2016, is a provider of life insurance and annuity products in the United States. The Company offers a range of products and services, which include variable, fixed, index-linked and income annuities, as well as variable, universal, term and whole life products. These products and services are marketed through various third party retail distribution channels in the United States. The Company’s products include variable annuities, fixed annuities, index-linked annuities and whole life; income annuities, and variable, universal and term life. Fixed income annuities provide a guaranteed monthly income for a specified period of years and/or for the life of the annuitant. The Company operating segments include Annuities, Life and Run-off.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BHF – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,008,038,591 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 4033233.33% Pass
5. Moderate PEmg Ratio PEmg < 20 62.52 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.35 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 Fail
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.68
MG Growth Estimate 15.00%
MG Value $26.23
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $9.88
MG Value based on 0% Growth $5.79
Market Implied Growth Rate 27.01%
Current Price $42.60
% of Intrinsic Value 162.40%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0 in 2015 to an estimated $0.68 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 27.01% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Brighthouse Financial Inc revealed the company was trading below its Graham Number of $147.67. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 62.52, which was above the industry average of 32.96.

Brighthouse Financial Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Graham Number $147.67
PEmg 62.52
PB Ratio 0.35
Dividend Yield 0.00%
TTM Dividend $0.00
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $3,963,000,000
Total Assets $206,294,000,000
Intangible Assets $0
Total Liabilities $191,811,000,000
Shares Outstanding (Diluted Average) 118,685,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.90
Dec2018 $7.36
Dec2017 -$3.16
Dec2016 -$24.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.68
Dec2018 -$3.31
Dec2017 -$7.62
Dec2016 -$8.21

Recommended Reading:

Other ModernGraham posts about the company

Brighthouse Financial Inc Valuation – Initial Coverage $BHF

Other ModernGraham posts about related companies

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Hartford Financial Services Group Inc Valuation – February 2019 $HIG
Unum Group Valuation – February 2019 $UNM
Everest Re Group Ltd Valuation – February 2019 $RE
Cigna Corp Valuation – January 2019 $CI
MetLife Inc Valuation – January 2019 $MET
Aflac Inc Valuation – January 2019 $AFL
Principal Financial Group Inc Valuation – January 2019 $PFG
Progressive Corp Valuation – January 2019 $PGR
Lincoln National Corp Valuation – January 2019 $LNC

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.

Perrigo Company Valuation – February 2019 $PRGO

Company Profile (excerpt from Reuters): Perrigo Company PLC (Perrigo), formerly Perrigo Company Limited, incorporated on June 28, 2013, is an over-the-counter (OTC) consumer goods and specialty pharmaceutical company. The Company’s segments include Consumer Healthcare (CHC), Branded Consumer Healthcare (BCH), Prescription Pharmaceuticals (Rx) and Specialty Sciences. The Company manufactures OTC healthcare products and supplies infant formulas for the store brand market. It is also a provider of generic extended topical prescription products. It provides healthcare products across a range of product categories and geographies, primarily in North America, Europe and Australia, as well as in other markets, including Israel and China.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PRGO – 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 $6,345,880,345 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.85 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 -442.48% Fail
6. Moderate PEmg Ratio PEmg < 20 -9.91 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.13 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.85 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$4.71
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$68.31
MG Value based on 0% Growth -$40.05
Market Implied Growth Rate -9.21%
Current Price $46.71
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.42 in 2014 to an estimated $-4.71 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Perrigo Company PLC revealed the company was trading above its Graham Number of $34.54. The company pays a dividend of $0.64 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was -9.91, which was below the industry average of 39.51, 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 $-18.3.

Perrigo Company PLC 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) -$18.30
Graham Number $34.54
PEmg -9.91
Current Ratio 1.85
PB Ratio 1.13
Current Dividend $0.64
Dividend Yield 1.37%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,768,800,000
Total Current Liabilities $1,493,500,000
Long-Term Debt $3,071,000,000
Total Assets $10,942,900,000
Intangible Assets $7,001,300,000
Total Liabilities $5,282,900,000
Shares Outstanding (Diluted Average) 137,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.21
Dec2017 $0.84
Dec2016 -$28.01
Jun2015 $0.97
Jun2014 $2.01
Jun2013 $4.68
Jun2012 $4.27
Jun2011 $3.63
Jun2010 $2.41
Jun2009 $1.54
Jun2008 $1.43
Jun2007 $0.79
Jun2006 $0.76
Jun2005 -$4.57
Jun2004 $1.11
Jun2003 $0.76
Jun2002 $0.60
Jun2001 $0.33
Jun2000 $0.23
Jun1999 $0.02
Jun1998 -$0.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$4.71
Dec2017 -$6.42
Dec2016 -$7.77
Jun2015 $2.61
Jun2014 $3.42
Jun2013 $3.85
Jun2012 $3.17
Jun2011 $2.40
Jun2010 $1.66
Jun2009 $0.85
Jun2008 $0.30
Jun2007 -$0.25
Jun2006 -$0.60
Jun2005 -$0.97
Jun2004 $0.75
Jun2003 $0.51
Jun2002 $0.29

Recommended Reading:

Other ModernGraham posts about the company

Perrigo Company PLC Valuation – April 2018 $PRGO
5 of the Worst Stocks to Invest In – August 2016
Perrigo Co PLC Valuation – July 2016 $PRGO
Perrigo Co PLC Valuation – January 2016 Update $PRGO
Perrigo Company PLC Analysis – October 2015 Update $PRGO

Other ModernGraham posts about related companies

Eli Lilly and Co Valuation – January 2019 $LLY
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Pfizer Inc Valuation – November 2018 $PFE
Nektar Therapeutics Valuation – November 2018 $NKTR
Merck & Co Inc Valuation – November 2018 $MRK
Ligand Pharmaceuticals Inc Valuation – September 2018 $LGND
Supernus Pharmaceuticals Inc Valuation – August 2018 $SUPN
Lannett Co Inc Valuation – August 2018 $LCI
Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI

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.

Transocean Ltd Valuation – June 2018 $RIG

Company Profile (excerpt from Reuters): Transocean Ltd., incorporated on August 18, 2008, is an international provider of offshore contract drilling services for oil and gas wells. The Company’s primary business is to contract its drilling rigs, related equipment and work crews on a dayrate basis to drill oil and gas wells. As of February 9, 2017, the Company owned or had partial ownership interests in and operated 56 mobile offshore drilling units. As of February 9, 2017, its fleet consisted of 30 floaters, seven harsh environment floaters, three deepwater floaters, six midwater floaters and 10 high-specification jackups. As February 9, 2017, it also had four ultra-deepwater drillships and five high-specification jackups under construction or under contract to be constructed. Its contract drilling services operations are spread across oil and gas exploration and development areas throughout the world. Its fleet operates in a single, global market for the provision of contract drilling services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RIG – June 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,157,982,137 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 41.86% Pass
6. Moderate PEmg Ratio PEmg < 20 -6.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.44 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.50 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.24 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.21
MG Growth Estimate 3.88%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$32.02
MG Value based on 0% Growth -$18.77
Market Implied Growth Rate -7.29%
Current Price $13.44
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-2.98 in 2014 to an estimated $-2.21 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Transocean LTD revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -6.09, which was below the industry average of 87.76, 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 $-17.64.

Transocean LTD 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) -$17.64
Graham Number $0.00
PEmg -6.09
Current Ratio 1.50
PB Ratio 0.44
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $4,543,000,000
Total Current Liabilities $3,022,000,000
Long-Term Debt $7,976,000,000
Total Assets $25,695,000,000
Intangible Assets $1,073,000,000
Total Liabilities $12,268,000,000
Shares Outstanding (Diluted Average) 438,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.40
Dec2017 -$8.00
Dec2016 $2.08
Dec2015 $2.36
Dec2014 -$5.08
Dec2013 $3.87
Dec2012 -$0.62
Dec2011 -$17.88
Dec2010 $2.88
Dec2009 $9.84
Dec2008 $12.53
Dec2007 $14.14
Dec2006 $6.10
Dec2005 $3.03
Dec2004 $0.67
Dec2003 $0.06
Dec2002 -$11.69
Dec2001 $0.80
Dec2000 $0.51
Dec1999 $0.53
Dec1998 $3.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.21
Dec2017 -$2.06
Dec2016 $0.78
Dec2015 -$1.07
Dec2014 -$2.98
Dec2013 -$1.41
Dec2012 -$2.25
Dec2011 -$0.61
Dec2010 $8.38
Dec2009 $10.46
Dec2008 $9.62
Dec2007 $7.04
Dec2006 $2.20
Dec2005 -$0.30
Dec2004 -$1.96
Dec2003 -$2.83
Dec2002 -$3.30

Recommended Reading:

Other ModernGraham posts about the company

Transocean Ltd Valuation – July 2016 $RIG
47 Companies in the Spotlight This Week – 5/16/15
Transocean Limited Annual Valuation – 2015 $RIG
16 Companies in the Spotlight This Week – 5/24/14
Transocean Ltd. (RIG) Annual Valuation – 2014

Other ModernGraham posts about related companies

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Andeavor Valuation – May 2018 $ANDV
Halliburton Co Valuation – May 2018 $HAL
National Oilwell Varco Inc Valuation – May 2018 $NOV
Newfield Exploration Co Valuation – May 2018 $NFX
Kinder Morgan Inc Valuation – May 2018 $KMI
Range Resources Corp Valuation – May 2018 $RRC

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Brighthouse Financial Inc Valuation – Initial Coverage $BHF

Company Profile (excerpt from Reuters): Brighthouse Financial, Inc., incorporated on August 01, 2016, is a provider of life insurance and annuity products in the United States. The Company offers a range of products and services, which include variable, fixed, index-linked and income annuities, as well as variable, universal, term and whole life products. These products and services are marketed through various third party retail distribution channels in the United States. The Company’s products include variable annuities, fixed annuities, index-linked annuities and whole life; income annuities, and variable, universal and term life. Fixed income annuities provide a guaranteed monthly income for a specified period of years and/or for the life of the annuitant. The Company operating segments include Annuities, Life and Run-off.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BHF – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,979,073,831 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -681000100.00% Fail
5. Moderate PEmg Ratio PEmg < 20 -15.05 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.41 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 Fail
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$3.32
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$48.09
MG Value based on 0% Growth -$28.19
Market Implied Growth Rate -11.78%
Current Price $49.92
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0 in 2014 to an estimated $-3.32 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Brighthouse Financial Inc revealed the company was trading below its Graham Number of $141.57. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -15.05, which was below the industry average of 22.6, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $141.57
PEmg -15.05
PB Ratio 0.41
Dividend Yield 0.00%
TTM Dividend $0.00
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $3,612,000,000
Total Assets $224,192,000,000
Intangible Assets $0
Total Liabilities $209,677,000,000
Shares Outstanding (Diluted Average) 119,773,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.35
Dec2017 -$3.16
Dec2016 -$24.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$3.32
Dec2017 -$7.62
Dec2016 -$8.21

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

Aetna Inc Valuation – April 2018 $AET
Everest Re Group Ltd Valuation – Initial Coverage $RE
Cigna Corp Valuation – March 2018 $CI
Aspen Insurance Holdings Ltd Valuation – March 2018 $AHL
AFLAC Inc Valuation – March 2018 $AFL
MetLife Inc Valuation – March 2018 $MET
Principal Financial Group Inc Valuation – March 2018 $PFG
Progressive Corp Valuation – February 2018 $PGR
Cincinnati Financial Corp Valuation – February 2018 $CINF
Lincoln National Corp Valuation – February 2018 $LNC

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.

Perrigo Company PLC Valuation – April 2018 $PRGO

Company Profile (excerpt from Reuters): Perrigo Company PLC (Perrigo), formerly Perrigo Company Limited, incorporated on June 28, 2013, is an over-the-counter (OTC) consumer goods and specialty pharmaceutical company. The Company’s segments include Consumer Healthcare (CHC), Branded Consumer Healthcare (BCH), Prescription Pharmaceuticals (Rx) and Specialty Sciences. The Company manufactures OTC healthcare products and supplies infant formulas for the store brand market. It is also a provider of generic extended topical prescription products. It provides healthcare products across a range of product categories and geographies, primarily in North America, Europe and Australia, as well as in other markets, including Israel and China.

PRGO Chart

PRGO data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PRGO – 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 $11,747,554,100 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.96 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 -391.56% Fail
6. Moderate PEmg Ratio PEmg < 20 -24.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.93 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 1.96 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.36 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$3.42
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$49.66
MG Value based on 0% Growth -$29.11
Market Implied Growth Rate -16.47%
Current Price $83.72
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.42 in 2014 to an estimated $-3.42 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Perrigo Company plc Ordinary Shares revealed the company was trading above its Graham Number of $70.71. The company pays a dividend of $0.64 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was -24.45, which was below the industry average of 29.14, 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 $-18.58.

Perrigo Company plc Ordinary Shares 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) -$18.58
Graham Number $70.71
PEmg -24.45
Current Ratio 1.96
PB Ratio 1.93
Current Dividend $0.64
Dividend Yield 0.76%
Number of Consecutive Years of Dividend Growth 15

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 $2,819,600,000
Total Current Liabilities $1,436,000,000
Long-Term Debt $3,270,800,000
Total Assets $11,628,800,000
Intangible Assets $7,556,200,000
Total Liabilities $5,458,300,000
Shares Outstanding (Diluted Average) 142,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.07
Dec2017 $0.84
Dec2016 -$28.01
Jun2015 $0.97
Jun2014 $2.01
Jun2013 $4.68
Jun2012 $4.27
Jun2011 $3.63
Jun2010 $2.41
Jun2009 $1.54
Jun2008 $1.43
Jun2007 $0.79
Jun2006 $0.76
Jun2005 -$4.57
Jun2004 $1.11
Jun2003 $0.76
Jun2002 $0.60
Jun2001 $0.33
Jun2000 $0.23
Jun1999 $0.02
Jun1998 -$0.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$3.42
Dec2017 -$6.42
Dec2016 -$7.77
Jun2015 $2.61
Jun2014 $3.42
Jun2013 $3.85
Jun2012 $3.17
Jun2011 $2.40
Jun2010 $1.66
Jun2009 $0.85
Jun2008 $0.30
Jun2007 -$0.25
Jun2006 -$0.60
Jun2005 -$0.97
Jun2004 $0.75
Jun2003 $0.51
Jun2002 $0.29

Recommended Reading:

Other ModernGraham posts about the company

Perrigo Co PLC Valuation – January 2016 Update $PRGO
Perrigo Company PLC Analysis – October 2015 Update $PRGO
Perrigo Company Analysis – July 2015 Update $PRGO
24 Companies in the Spotlight This Week – 3/28/15
Perrigo Company plc Quarterly Valuation – March 2015 $PRGO

Other ModernGraham posts about related companies

AbbVie Inc Valuation – April 2018 $ABBV
Eli Lilly and Co. Valuation – March 2018 $LLY
Zoetis Inc Valuation – March 2018 $ZTS
Gilead Sciences Inc Valuation – March 2018 $GILD
Pfizer Inc Valuation – February 2018 $PFE
Merck & Co Inc Valuation – February 2018 $MRK
Johnson & Johnson Valuation – February 2018 $JNJ
Bristol-Myers Squibb Co Valuation – September 2017 $BMY
Momenta Pharmaceuticals Inc Valuation – Initial Coverage $MNTA
Depomed Inc Valuation – Initial Coverage $DEPO

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.

Briggs & Stratton Corp Valuation – Initial Coverage $BGG

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 Undervalued Stocks for the Enterprising Investor – August 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 Briggs & Stratton Corp (BGG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Briggs & Stratton Corporation is a producer of gasoline engines for outdoor power equipment. The Company designs, manufactures, markets, sells and services the various products for original equipment manufacturers (OEMs) around the world. It also markets and sells related service parts and accessories for its engines. Its subsidiary is a marketer of pressure washers, and it is a designer, manufacturer and marketer of power generation, lawn and garden, turf care and job site products through its Simplicity, Snapper, Snapper Pro, Ferris, PowerBoss, Allmand, Billy Goat, Murray, Branco and Victa brands. It operates in over 100 countries on six continents. It operates through two segments: Engines and Products. Its Engines segment sells engines around the world, primarily to OEMs of lawn and garden equipment and other gasoline engine-powered equipment. Its Products segment designs, manufactures and markets a range of outdoor power equipment, job site products and related accessories.

BGG Chart

BGG data by YCharts

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ModernGraham Valuation of BGG – September 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 $901,386,001 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.09 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 79.46% Pass
6. Moderate PEmg Ratio PEmg < 20 18.71 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.57 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.09 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.62 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.11
MG Growth Estimate 15.00%
MG Value $42.81
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $16.12
MG Value based on 0% Growth $9.45
Market Implied Growth Rate 5.10%
Current Price $20.80
% of Intrinsic Value 48.58%

Briggs & Stratton Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the  small size, insufficient earnings stability 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 $0.23 in 2014 to an estimated $1.11 for 2018.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.1% 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 Briggs & Stratton Corporation revealed the company was trading above its Graham Number of $20.39.  The company pays a dividend of $0.56 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 18.71, 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.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.79.

Briggs & Stratton Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.79
Graham Number $20.39
PEmg 18.71
Current Ratio 2.09
PB Ratio 1.57
Current Dividend $0.56
Dividend Yield 2.67%
Number of Consecutive Years of Dividend Growth 3

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2017
Total Current Assets $689,441,000
Total Current Liabilities $330,378,000
Long-Term Debt $221,793,000
Total Assets $1,450,979,000
Intangible Assets $271,317,000
Total Liabilities $891,645,000
Shares Outstanding (Diluted Average) 42,239,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.41
Jun2017 $1.31
Jun2016 $0.60
Jun2015 $1.00
Jun2014 $0.59
Jun2013 -$0.73
Jun2012 $0.57
Jun2011 $0.48
Jun2010 $0.73
Jun2009 $0.64
Jun2008 $0.46
Jun2007 $0.13
Jun2006 $1.98
Jun2005 $2.32
Jun2004 $2.72
Jun2003 $1.74
Jun2002 $1.18
Jun2001 $1.11
Jun2000 $2.99
Jun1999 $2.26
Jun1998 $1.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.11
Jun2017 $0.83
Jun2016 $0.53
Jun2015 $0.45
Jun2014 $0.23
Jun2013 $0.14
Jun2012 $0.58
Jun2011 $0.55
Jun2010 $0.66
Jun2009 $0.78
Jun2008 $1.07
Jun2007 $1.51
Jun2006 $2.13
Jun2005 $2.08
Jun2004 $1.95
Jun2003 $1.66
Jun2002 $1.68

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

Albany International Corp Valuation – Initial Coverage $AIN
Terex Corporation Valuation – Initial Coverage $TEX
Donaldson Co Inc Valuation – Initial Coverage $DCI
Stanley Black & Decker Inc Valuation – April 2017 $SWK
Lindsay Corp Valuation – Initial Coverage $LNN
Lennox International Inc Valuation – Initial Coverage $LII
Standex Int’l Corp Valuation – Initial Coverage $SXI
Pentair PLC Valuation – March 2017 $PNR
Lincoln Electric Holdings Inc Valuation – Initial Coverage $LECO
Lydall Inc Valuation – Initial Coverage $LDL

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.

Perrigo Co PLC Valuation – July 2016 $PRGO

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 Perrigo Co PLC (PRGO) fares in the ModernGraham valuation model.

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PRGO Chart

PRGO data by YCharts

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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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ModernGraham Valuation of PRGO – July 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 $13,044,717,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.42 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 98.66% Pass
6. Moderate PEmg Ratio PEmg < 20 44.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.33 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 1.42 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 6.67 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

PRGO value chart July 2016

EPSmg $2.04
MG Growth Estimate -2.24%
MG Value $8.21
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $29.62
MG Value based on 0% Growth $17.36
Market Implied Growth Rate 18.12%
Current Price $91.39
% of Intrinsic Value 1113.18%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.4 in 2011 to an estimated $2.04 for 2015. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Perrigo Company plc Ordinary Shares scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

PRGO charts July 2016

Net Current Asset Value (NCAV) -$48.22
Graham Number $0.00
PEmg 44.74
Current Ratio 1.42
PB Ratio 1.33
Current Dividend $0.52
Dividend Yield 0.57%
Number of Consecutive Years of Dividend Growth 13

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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
Total Current Assets $2,974,500,000
Total Current Liabilities $2,089,200,000
Long-Term Debt $5,902,700,000
Total Assets $19,726,200,000
Intangible Assets $15,552,100,000
Total Liabilities $9,878,900,000
Shares Outstanding (Diluted Average) 143,200,000

Earnings Per Share History

Next Fiscal Year Estimate -$0.53
Jun2014 $1.77
Jun2013 $4.68
Jun2012 $4.27
Jun2011 $3.63
Jun2010 $2.40
Jun2009 $1.54
Jun2008 $1.43
Jun2007 $0.79
Jun2006 $0.76
Jun2005 -$4.57
Jun2004 $1.11
Jun2003 $0.76
Jun2002 $0.67
Jun2001 $0.37
Jun2000 $0.26
Jun1999 $0.02
Jun1998 -$0.69
Jun1997 $0.58
Jun1996 $0.52
Jun1995 $0.58

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.04
Jun2014 $3.34
Jun2013 $3.85
Jun2012 $3.17
Jun2011 $2.40
Jun2010 $1.65
Jun2009 $0.85
Jun2008 $0.30
Jun2007 -$0.25
Jun2006 -$0.60
Jun2005 -$0.96
Jun2004 $0.77
Jun2003 $0.54
Jun2002 $0.33
Jun2001 $0.14
Jun2000 $0.07
Jun1999 $0.05

Recommended Reading:

Other ModernGraham posts about the company

Perrigo Co PLC Valuation – January 2016 Update $PRGO
Perrigo Company PLC Analysis – October 2015 Update $PRGO
Perrigo Company Analysis – July 2015 Update $PRGO
24 Companies in the Spotlight This Week – 3/28/15
Perrigo Company plc Quarterly Valuation – March 2015 $PRGO

Other ModernGraham posts about related companies

AbbVie Inc Valuation – July 2016 $ABBV
Gilead Sciences Inc Valuation – July 2016 $GILD
Eli Lilly and Company Valuation – July 2016 $LLY
Zoetis Inc Valuation – June 2016 $ZTS
Merck & Co Inc Valuation – March 2016 $MRK
Bristol-Myers Squibb Company Valuation – February 2016 $BMY
Amgen Inc Valuation – February 2016 $AMGN
Merck & Co Inc Valuation – March 2016 $MRK
Bristol-Myers Squibb Company Valuation – February 2016 $BMY
Amgen Inc Valuation – February 2016 $AMGN

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.

Transocean Ltd Valuation – July 2016 $RIG

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 – June 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 Transocean Ltd (RIG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Transocean Ltd. is an international provider of offshore contract drilling services for oil and gas wells. The Company’s primary business is to contract its drilling rigs, related equipment and work crews primarily on a day rate basis to drill oil and gas wells. The Company operates through the contract drilling services segment. The Company specializes in technically demanding regions of the global offshore drilling business with a particular focus on deepwater and harsh environment drilling services. Its mobile offshore drilling fleet consists of floaters and high-specification jackups used in support of offshore drilling activities and offshore support services across the world. The Company owns or has partial ownership interests in and operates over 60 mobile offshore drilling , including approximately 30 ultra‑deepwater floaters, over seven harsh environment floaters, over five deepwater floaters, over 10 midwater floaters and approximately 10 high-specification jackups.

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ModernGraham Valuation of RIG – July 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 $4,759,763,365 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -108.98% Fail
6. Moderate PEmg Ratio PEmg < 20 -173.51 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.32 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.43 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

RIG value chart July 2016

EPSmg -$0.07
MG Growth Estimate 14.49%
MG Value -$2.77
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth -$1.07
MG Value based on 0% Growth -$0.63
Market Implied Growth Rate -91.01%
Current Price $12.84
% of Intrinsic Value -463.00%

Transocean LTD does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability 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 Undervalued after growing its EPSmg (normalized earnings) from $-2.17 in 2012 to an estimated $-0.07 for 2016. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Transocean LTD receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

RIG charts July 2016

Net Current Asset Value (NCAV) -$18.65
Graham Number $0.00
PEmg -173.51
Current Ratio 1.82
PB Ratio 0.32
Current Dividend $1.05
Dividend Yield 8.18%
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 3/1/2016
Total Current Assets $4,700,000,000
Total Current Liabilities $2,588,000,000
Long-Term Debt $7,253,000,000
Total Assets $26,245,000,000
Intangible Assets $0
Total Liabilities $11,487,000,000
Shares Outstanding (Diluted Average) 364,000,000

Earnings Per Share History

Next Fiscal Year Estimate -$0.20
Dec2015 $2.16
Dec2014 -$5.29
Dec2013 $3.87
Dec2012 -$0.62
Dec2011 -$17.79
Dec2010 $2.99
Dec2009 $9.84
Dec2008 $13.09
Dec2007 $14.14
Dec2006 $4.28
Dec2005 $2.13
Dec2004 $0.47
Dec2003 $0.06
Dec2002 -$11.69
Dec2001 $0.80
Dec2000 $0.51
Dec1999 $0.53
Dec1998 $3.41
Dec1997 $1.38
Dec1996 $1.09

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate -$0.07
Dec2015 -$1.19
Dec2014 -$3.03
Dec2013 -$1.38
Dec2012 -$2.17
Dec2011 -$0.48
Dec2010 $8.41
Dec2009 $10.31
Dec2008 $9.31
Dec2007 $6.35
Dec2006 $1.32
Dec2005 -$0.66
Dec2004 -$2.03
Dec2003 -$2.83
Dec2002 -$3.28
Dec2001 $1.06
Dec2000 $1.25

Recommended Reading:

Other ModernGraham posts about the company

47 Companies in the Spotlight This Week – 5/16/15
Transocean Limited Annual Valuation – 2015 $RIG
16 Companies in the Spotlight This Week – 5/24/14
Transocean Ltd. (RIG) Annual Valuation – 2014

Other ModernGraham posts about related companies

Hess Corp Valuation – July 2016 $HES
EQT Corporation Valuation – July 2016 $EQT
QEP Resources Inc Valuation – July 2016 $QEP
Suburban Propane Partners Valuation – June 2016 $SPH
Spectra Energy Corp Valuation – June 2016 $SE
Helmerich & Payne Inc Valuation – June 2016 $HP
Chesapeake Energy Corp Valuation – June 2016 $CHK
AGL Resources Inc Valuation – June 2016 $GAS
Pioneer Natural Resources Valuation – June 2016 $PXD
Williams Companies Inc Valuation – June 2016 $WMB

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.

Keurig Green Mountain Inc Valuation – January 2016 Update $GMCR

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 Keurig Green Mountain Inc (GMCR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Keurig Green Mountain, Inc. is a personal beverage system company. The Company is engaged in producing specialty coffee, coffeemakers, teas and other beverages in the United States and Canada. It operates through two segments: Domestic and Canada. Its Domestic segment includes all operations and immaterial operations related to international expansion in the United States, and the Canada segment includes all Canadian operations. Its products include pods, brewers and accessories, and other products and royalties. Its Domestic segment sells brewers, accessories, and sources, produces and sells coffee, hot cocoa, teas and other beverages in its pods (portion packs), and coffee in other packaging. Its Canada segment sells brewers, accessories, and sources, produces and sells coffee and teas and other beverages in pods. It sells coffee in traditional packaging under various brands to retailers, including supermarkets, restaurants and other markets through its Website.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of GMCR

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,317,180,014 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.52 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 1234.65% Pass
6. Moderate PEmg Ratio PEmg < 20 27.53 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.11 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.52 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.49 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

GMCR value chart January 2016

EPSmg $3.24
MG Growth Estimate 15.00%
MG Value $124.82
Opinion Undervalued
MG Value based on 3% Growth $47.01
MG Value based on 0% Growth $27.56
Market Implied Growth Rate 9.51%
Current Price $89.25
% of Intrinsic Value 71.50%

Keurig Green Mountain Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the short dividend history along with the high PEmg and PB ratios.  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 $1.30 in 2012 to an estimated $3.24 for 2016.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.51% annual earnings loss 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 Keurig Green Mountain Inc (GMCR)?  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

GMCR charts January 2016

Net Current Asset Value (NCAV) $1.45
Graham Number $35.96
PEmg 27.53
Current Ratio 2.52
PB Ratio 5.11
Dividend Yield 1.29%
Number of Consecutive Years of Dividend Growth 3

 

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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 Sep2015
Total Current Assets $1,517,203,000
Total Current Liabilities $602,124,000
Long-Term Debt $447,953,000
Total Assets $4,001,577,000
Intangible Assets $1,171,293,000
Total Liabilities $1,292,219,000
Shares Outstanding (Diluted Average) 155,275,000

Earnings Per Share History

Next Fiscal Year Estimate $3.25
Sep2015 $3.14
Sep2014 $3.74
Sep2013 $3.16
Sep2012 $2.28
Sep2011 $1.31
Sep2010 $0.58
Sep2009 $0.45
Sep2008 $0.19
Sep2007 $0.12
Sep2006 $0.08
Sep2005 $0.09
Sep2004 $0.08
Sep2003 $0.06
Sep2002 $0.06
Sep2001 $0.06
Sep2000 $0.04
Sep1999 $0.03
Sep1998 -$0.01
Sep1997 $0.01
Sep1996 $0.01

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.24
Sep2015 $3.07
Sep2014 $2.76
Sep2013 $2.03
Sep2012 $1.30
Sep2011 $0.71
Sep2010 $0.37
Sep2009 $0.24
Sep2008 $0.13
Sep2007 $0.09
Sep2006 $0.08
Sep2005 $0.07
Sep2004 $0.07
Sep2003 $0.06
Sep2002 $0.05
Sep2001 $0.04
Sep2000 $0.02

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Food Processing Industry – October 2015
5 Undervalued Companies with a Low Beta – August 2015
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – July 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15
5 Undervalued Companies with a Low Beta – July 2015

Other ModernGraham posts about related companies

Monster Beverage Corp Valuation – January 2016 Update $MNST
Mead Johnson Nutrition Co Valuation – November 2015 Update $MJN
Archer Daniels Midland Valuation – November 2015 Update $ADM
The Best Companies of the Food Processing Industry – October 2015
J.M. Smucker Company Valuation – October 2015 Update $SJM
Keurig Green Mountain Inc. Valuation – October 2015 Update $GMCR
Monster Beverage Corporation Analysis – October 2015 Update $MNST
B&G Foods Inc. Analysis – September 2015 Update $BGS
Hormel Foods Corporation Analysis – September 2015 Update $HRL

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.

Perrigo Co PLC Valuation – January 2016 Update $PRGO

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 Perrigo Co PLC (PRGO) fares in the ModernGraham valuation model.

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of PRGO – January 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 $21,822,692,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.73 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 173.94% Pass
6. Moderate PEmg Ratio PEmg < 20 36.82 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.04 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.73 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.29 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

PRGO value Chart January 2016

EPSmg $4.04
MG Growth Estimate 4.11%
MG Value $67.66
Opinion Overvalued
MG Value based on 3% Growth $58.65
MG Value based on 0% Growth $34.38
Market Implied Growth Rate 14.16%
Current Price $148.94
% of Intrinsic Value 220.11%

Perrigo Co PLC qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio along with the high PEmg ratio.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  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 overvalued after growing its EPSmg (normalized earnings) from $3.17 in 2012 to an estimated $4.04 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 14.16% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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 Perrigo Co PLC (PRGO)?  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

PRGO Charts January 2016

Net Current Asset Value (NCAV) -$41.46
Graham Number $112.08
PEmg 36.82
Current Ratio 1.73
PB Ratio 2.04
Dividend Yield 0.32%
Number of Consecutive Years of Dividend Growth 14

 

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $2,880,800,000
Total Current Liabilities $1,661,200,000
Long-Term Debt $5,229,900,000
Total Assets $19,703,100,000
Intangible Assets $15,645,400,000
Total Liabilities $8,971,100,000
Shares Outstanding (Diluted Average) 146,900,000

Earnings Per Share History

Next Fiscal Year Estimate $7.61
Jun15 $0.92
Jun14 $1.77
Jun13 $4.68
Jun12 $4.27
Jun11 $3.63
Jun10 $2.41
Jun09 $1.54
Jun08 $1.43
Jun07 $0.79
Jun06 $0.76
Jun05 -$4.57
Jun04 $1.11
Jun03 $0.76
Jun02 $0.60
Jun01 $0.33
Jun00 $0.23
Jun99 $0.02
Jun98 -$0.69
Jun97 $0.58
Jun96 $0.52

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.04
Jun15 $2.53
Jun14 $3.34
Jun13 $3.85
Jun12 $3.17
Jun11 $2.40
Jun10 $1.66
Jun09 $0.85
Jun08 $0.30
Jun07 -$0.25
Jun06 -$0.60
Jun05 -$0.97
Jun04 $0.75
Jun03 $0.51
Jun02 $0.29
Jun01 $0.12
Jun00 $0.06

Recommended Reading:

Other ModernGraham posts about the company

Perrigo Company PLC Analysis – October 2015 Update $PRGO
Perrigo Company Analysis – July 2015 Update $PRGO
24 Companies in the Spotlight This Week – 3/28/15
Perrigo Company plc Quarterly Valuation – March 2015 $PRGO
27 Companies in the Spotlight This Week – 12/20/14

Other ModernGraham posts about related companies

Johnson & Johnson Valuation – January 2016 Update $JNJ
Mylan NV Valuation – January 2016 Update $MYL
Celgene Corp Valuation – December 2015 Update $CELG
Merck & Co Valuation – November 2015 Update $MRK
Zoetis Inc. Valuation – October 2015 Update $ZTS
Biogen Inc. Valuation – October 2015 Update $BIIB
Perrigo Company PLC Analysis – October 2015 Update $PRGO
Amgen Inc. Analysis – September 2015 Update $AMGN
Pfizer Inc Analysis – September 2015 Update $PFE
Johnson & Johnson Analysis – September 2015 Update $JNJ

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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