Raytheon Co Valuation – March 2019 #RTN

Company Profile (excerpt from Reuters): Raytheon Company, incorporated on December 17, 1953, is a technology company, which specializes in defense and other government markets. The Company develops integrated products, services and solutions in various markets, including sensing; effects; command, control, communications, computers, cyber and intelligence; mission support, and cybersecurity. The Company operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS), and Forcepoint. The Company serves both domestic and international customers, primarily as a prime contractor or subcontractor on a range of defense and related programs for government customers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RTN – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $50,836,887,301 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 80.90% Pass
6. Moderate PEmg Ratio PEmg < 20 19.17 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.47 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.24 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 $9.40
MG Growth Estimate 6.50%
MG Value $202.10
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $136.26
MG Value based on 0% Growth $79.88
Market Implied Growth Rate 5.33%
Current Price $180.12
% of Intrinsic Value 89.12%

Raytheon Company 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 Fairly Valued after growing its EPSmg (normalized earnings) from $6.56 in 2015 to an estimated $9.4 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 5.33% 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 Raytheon Company revealed the company was trading above its Graham Number of $102.6. The company pays a dividend of $3.47 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 19.17, which was below the industry average of 51.79, 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 $-29.

Raytheon Company 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) -$29.00
Graham Number $102.60
PEmg 19.17
Current Ratio 1.46
PB Ratio 4.47
Current Dividend $3.47
Dividend Yield 1.93%
Number of Consecutive Years of Dividend Growth 14

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $12,136,000,000
Total Current Liabilities $8,288,000,000
Long-Term Debt $4,755,000,000
Total Assets $31,864,000,000
Intangible Assets $15,486,000,000
Total Liabilities $20,392,000,000
Shares Outstanding (Diluted Average) 284,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.50
Dec2018 $10.15
Dec2017 $6.95
Dec2016 $7.55
Dec2015 $6.91
Dec2014 $7.18
Dec2013 $6.16
Dec2012 $5.65
Dec2011 $5.28
Dec2010 $4.88
Dec2009 $4.89
Dec2008 $3.92
Dec2007 $5.79
Dec2006 $2.85
Dec2005 $1.92
Dec2004 $0.94
Dec2003 $0.88
Dec2002 -$1.59
Dec2001 -$2.12
Dec2000 $0.41
Dec1999 $1.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.40
Dec2018 $8.15
Dec2017 $7.08
Dec2016 $6.99
Dec2015 $6.56
Dec2014 $6.20
Dec2013 $5.59
Dec2012 $5.18
Dec2011 $4.95
Dec2010 $4.68
Dec2009 $4.34
Dec2008 $3.74
Dec2007 $3.26
Dec2006 $1.66
Dec2005 $0.71
Dec2004 -$0.03
Dec2003 -$0.42

Recommended Reading:

Other ModernGraham posts about the company

Raytheon Co Valuation – June 2018 $RTN
Raytheon Company Valuation – April 2017 $RTN
Raytheon Company Valuation – August 2016 $RTN
Raytheon Co Valuation – February 2016 $RTN
10 Best Stocks For Value Investors This Week – 10/31/15

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Disclaimer:

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

Gartner Inc Valuation – January 2019 $IT

Company Profile (excerpt from Reuters): Gartner, Inc., incorporated on June 1, 1990, is an information technology research and advisory company. The Company works with clients to research, analyze and interpret the business of information technology (IT), supply chain and marketing within the context of their individual roles. The Company operates through three segments: Research, Consulting and Events. Research segment consists of subscription-based research products, access to research inquiry, peer networking services and membership programs. Consulting segment consists of consulting, measurement engagements and strategic advisory services. Events segment consists of various symposia, conferences and exhibitions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IT – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,868,808,106 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.66 Fail
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 23.44% Fail
6. Moderate PEmg Ratio PEmg < 20 92.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.78 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 0.66 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.57 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.42
MG Growth Estimate -3.11%
MG Value $3.22
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $20.53
MG Value based on 0% Growth $12.04
Market Implied Growth Rate 41.86%
Current Price $130.58
% of Intrinsic Value 4051.52%

Gartner Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings 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 $1.79 in 2014 to an estimated $1.42 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 41.86% 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 Gartner Inc revealed the company was trading above its Graham Number of $19.74. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 92.22, which was above the industry average of 44.74. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.63.

Gartner Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.63
Graham Number $19.74
PEmg 92.22
Current Ratio 0.66
PB Ratio 12.78
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,535,340,000
Total Current Liabilities $2,343,596,000
Long-Term Debt $2,077,466,000
Total Assets $5,944,817,000
Intangible Assets $3,996,585,000
Total Liabilities $5,003,269,000
Shares Outstanding (Diluted Average) 92,148,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.60
Dec2017 $0.04
Dec2016 $2.31
Dec2015 $2.06
Dec2014 $2.03
Dec2013 $1.93
Dec2012 $1.73
Dec2011 $1.39
Dec2010 $0.96
Dec2009 $0.85
Dec2008 $1.05
Dec2007 $0.68
Dec2006 $0.50
Dec2005 -$0.02
Dec2004 $0.13
Dec2003 $0.25
Sep2002 $0.46
Sep2001 -$0.78
Sep2000 $0.30
Sep1999 $0.84
Sep1998 $0.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.42
Dec2017 $1.44
Dec2016 $2.10
Dec2015 $1.94
Dec2014 $1.79
Dec2013 $1.57
Dec2012 $1.32
Dec2011 $1.07
Dec2010 $0.88
Dec2009 $0.76
Dec2008 $0.64
Dec2007 $0.39
Dec2006 $0.25
Dec2005 $0.09
Dec2004 $0.12
Dec2003 $0.15
Sep2002 $0.17

Recommended Reading:

Other ModernGraham posts about the company

Gartner Inc Valuation – March 2018 $IT

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Disclaimer:

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

Natural Resource Partners LP Valuation – August 2018 $NRP

Company Profile (excerpt from Reuters): Natural Resource Partners L.P., incorporated on April 9, 2002, owns, operates, manages and leases a portfolio of mineral properties in the United States, including interests in coal, trona and soda ash, construction aggregates and other natural resources. The Company’s segments include Coal Royalty and Other, Soda Ash and VantaCore. The Company’s operations are conducted through NRP (Operating) LLC (Opco), and its operating assets are owned by its subsidiaries. NRP (GP) LP, its general partner, has responsibility for conducting the Company’s business and for managing its operations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NRP – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $385,145,764 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.84 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 -48.35% Fail
6. Moderate PEmg Ratio PEmg < 20 -25.31 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.94 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 0.84 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -41.77 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.25
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth -$18.08
MG Value based on 0% Growth -$10.60
Market Implied Growth Rate -16.90%
Current Price $31.55
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $12.88 in 2014 to an estimated $-1.25 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 Natural Resource Partners LP revealed the company was trading below its Graham Number of $48.6. The company pays a dividend of $1.8 per share, for a yield of 5.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -25.31, which was below the industry average of 53.66, 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 $-47.97.

Natural Resource Partners LP receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.97
Graham Number $48.60
PEmg -25.31
Current Ratio 0.84
PB Ratio 0.94
Current Dividend $1.80
Dividend Yield 5.71%
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 $89,047,000
Total Current Liabilities $106,399,000
Long-Term Debt $724,854,000
Total Assets $1,377,206,000
Intangible Assets $927,614,000
Total Liabilities $848,367,000
Shares Outstanding (Diluted Average) 15,829,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.84
Dec2017 $3.96
Dec2016 $7.78
Dec2015 -$45.75
Dec2014 $9.42
Dec2013 $15.39
Dec2012 $19.70
Dec2011 $5.00
Dec2010 $15.40
Dec2009 $11.70
Dec2008 $19.50
Dec2007 $12.60
Dec2006 $17.40
Dec2005 $16.95
Dec2004 $11.45
Dec2003 $7.95
Dec2002 $1.40

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.25
Dec2017 -$3.47
Dec2016 -$4.36
Dec2015 -$6.70
Dec2014 $12.88
Dec2013 $14.22
Dec2012 $13.84
Dec2011 $11.55
Dec2010 $14.99
Dec2009 $15.07
Dec2008 $16.36
Dec2007 $14.29
Dec2006 $13.76
Dec2005 $10.48
Dec2004 $6.22
Dec2003 $3.02
Dec2002 $0.47

Recommended Reading:

Other ModernGraham posts about the company

Natural Resource Partners LP Valuation – February 2017 $NRP
Natural Resource Partners LP Analysis – October 2015 Update $NRP
10 Companies in the Spotlight This Week – 12/28/13
ModernGraham Valuation: Natural Resource Partners L.P. (NRP)

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Disclaimer:

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

Coca-Cola European Partners PLC Valuation – July 2018 $CCE

Company Profile (excerpt from Reuters): Coca-Cola European Partners plc (Orange) is an independent Coca-Cola bottler. The Company is formed to act as the holding company for the group to be formed by the combination of White, a company that owns the Coca-Cola bottling operations in Great Britain, continental France, Monaco, Belgium, Luxembourg, the Netherlands, Sweden and Norway; Olive, a company that owns the Coca-Cola bottling operations in Spain, Portugal and Andorra, and Black, a company that owns the Coca-Cola bottling operations in Germany (the Combination). The Company’s segments are Europe and Corporate. White is The Coca-Cola Company (TCCC)’s bottling partner in Western Europe and is an independent Coca-Cola bottler. Olive is TCCC’s bottling partner for Spain, Portugal and Andorra, and operates in these territories under product bottling and distribution agreements with TCCC. Black is an indirect subsidiary of TCCC, and is TCCC’s bottling partner in Germany.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CCE – 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 $20,154,999,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.03 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 -8.65% Fail
6. Moderate PEmg Ratio PEmg < 20 21.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.49 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 1.03 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 58.58 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.95
MG Growth Estimate -2.32%
MG Value $7.52
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $28.33
MG Value based on 0% Growth $16.61
Market Implied Growth Rate 6.34%
Current Price $41.39
% of Intrinsic Value 550.18%

Coca-Cola European Partners 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 growth 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 growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.31 in 2014 to an estimated $1.95 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.34% 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 Coca-Cola European Partners PLC revealed the company was trading above its Graham Number of $28.43. The company pays a dividend of $0.99 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.18, which was below the industry average of 25.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.27.

Coca-Cola European Partners 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) -$20.27
Graham Number $28.43
PEmg 21.18
Current Ratio 1.03
PB Ratio 2.49
Current Dividend $0.99
Dividend Yield 2.40%
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 $4,130,703,000
Total Current Liabilities $4,016,030,000
Long-Term Debt $6,717,633,000
Total Assets $22,419,236,000
Intangible Assets $13,452,528,000
Total Liabilities $14,184,957,000
Shares Outstanding (Diluted Average) 496,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.20
Dec2017 $1.67
Dec2016 $1.50
Dec2015 $2.39
Dec2014 $2.37
Dec2013 $2.42
Dec2012 $2.23
Dec2011 $2.33
Dec2010 $1.82
Dec2009 $1.73
Dec2008 -$8.79
Dec2007 $1.46
Dec2006 -$2.41
Dec2005 $1.08
Dec2004 $1.25
Dec2003 $1.43
Dec2002 $1.04
Dec2001 -$0.75
Dec2000 $0.52
Dec1999 $0.13
Dec1998 $0.32

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.95
Dec2017 $1.91
Dec2016 $2.08
Dec2015 $2.36
Dec2014 $2.31
Dec2013 $2.23
Dec2012 $1.37
Dec2011 $0.53
Dec2010 -$0.66
Dec2009 -$1.72
Dec2008 -$2.79
Dec2007 $0.32
Dec2006 -$0.01
Dec2005 $1.07
Dec2004 $0.94
Dec2003 $0.68
Dec2002 $0.29

Recommended Reading:

Other ModernGraham posts about the company

Coca-Cola European Partners PLC Valuation – January 2017 $CCE
Coca-Cola Enterprises Inc. Analysis – September 2015 Update $CCE
14 Companies in the Spotlight This Week – 4/5/14
Coca-Cola Enterprises Inc. (CCE) Annual Valuation – 2014

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Disclaimer:

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

Alliance Resource Partners LP Valuation – July 2018 $ARLP

Company Profile (excerpt from Reuters): Alliance Resource Partners, L.P., incorporated on May 17, 1999, is a producer and marketer of coal primarily to the United States utilities and industrial users. The Company operates through segments, including Illinois Basin, Appalachia, and Other and Corporate. As of December 31, 2016, the Company operated eight underground mining complexes in Illinois, Indiana, Kentucky, Maryland and West Virginia. The Company also operates a coal loading terminal on the Ohio River at Mt. Vernon, Indiana. The Company’s mining activities are conducted in two geographic regions: the Illinois Basin and Appalachian region.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ARLP – 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 $2,428,544,196 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.15 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 -4.63% Fail
6. Moderate PEmg Ratio PEmg < 20 6.37 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.93 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 1.15 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 10.28 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.88
MG Growth Estimate -4.02%
MG Value $1.34
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $41.77
MG Value based on 0% Growth $24.49
Market Implied Growth Rate -1.06%
Current Price $18.35
% of Intrinsic Value 1373.62%

Alliance Resource Partners, L.P. 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 growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.93 in 2014 to an estimated $2.88 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.06% 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 below the price.

At the time of valuation, further research into Alliance Resource Partners, L.P. revealed the company was trading below its Graham Number of $22.52. The company pays a dividend of $1.88 per share, for a yield of 10.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 6.37, which was below the industry average of 46.07, 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 $-5.41.

Alliance Resource Partners, L.P. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.41
Graham Number $22.52
PEmg 6.37
Current Ratio 1.15
PB Ratio 1.93
Current Dividend $1.88
Dividend Yield 10.25%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $294,106,000
Total Current Liabilities $256,493,000
Long-Term Debt $386,703,000
Total Assets $2,243,414,000
Intangible Assets $136,399,000
Total Liabilities $1,002,448,000
Shares Outstanding (Diluted Average) 130,819,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.57
Dec2017 $2.80
Dec2016 $3.39
Dec2015 $2.11
Dec2014 $4.77
Dec2013 $3.63
Dec2012 $3.06
Dec2011 $4.07
Dec2010 $3.34
Dec2009 $1.78
Dec2008 $1.20
Dec2007 $1.53
Dec2006 $1.52
Dec2005 $1.42
Dec2004 $0.86
Dec2003 $0.63
Dec2002 $0.56
Dec2001 $0.27
Dec2000 $0.25
Dec1999 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.88
Dec2017 $3.14
Dec2016 $3.33
Dec2015 $3.38
Dec2014 $3.93
Dec2013 $3.40
Dec2012 $3.09
Dec2011 $2.86
Dec2010 $2.13
Dec2009 $1.51
Dec2008 $1.35
Dec2007 $1.35
Dec2006 $1.18
Dec2005 $0.92
Dec2004 $0.62
Dec2003 $0.45
Dec2002 $0.32

Recommended Reading:

Other ModernGraham posts about the company

Alliance Resource Partners LP Valuation – September 2016 $ARLP
Alliance Resource Partners LP Analysis – Initial Coverage $ARLP

Other ModernGraham posts about related companies

Freeport-McMoRan Inc Valuation – May 2018 $FCX
Newmont Mining Corp Valuation – March 2018 $NEM
Lucara Diamond Corp Valuation – March 2018 $TSE-LUC
MAG Silver Corp Valuation – Initial Coverage $TSE:MAG
Osisko Gold Royalties Ltd Valuation – Initial Coverage $TSE:OR
Alcoa Corp Valuation – Initial Coverage $AA
New Gold Inc (USA) Valuation – Initial Coverage $NGD
Dominion Diamond Corp Valuation – Initial Coverage $TSE:DDC
Lundin Mining Co Valuation – Initial Coverage $TSE:LUN
Lucara Diamond Corp Valuation – Initial Coverage $TSE:LUC

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.

Magellan Midstream Partners LP Valuation – July 2018 $MMP

Company Profile (excerpt from Reuters): Magellan Midstream Partners, L.P., incorporated on August 30, 2000, is principally engaged in the transportation, storage and distribution of refined petroleum products and crude oil. The Company operates through three segments: refined products, crude oil and marine storage. As of December 31, 2016, its asset portfolio, including the assets of its joint ventures, consisted of its refined products segment, consisting 9,700-mile refined products pipeline system with 53 terminals, as well as 26 independent terminals not connected to its pipeline system and its 1,100-mile ammonia pipeline system; its crude oil segment, consisted of approximately 2,200 miles of crude oil pipelines and storage facilities with an aggregate storage capacity of approximately 26 million barrels, of which 16 million are used for contract storage, and its marine storage segment, consisted of five marine terminals located along coastal waterways with an aggregate storage capacity of approximately 26 million barrels.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MMP – 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 $15,772,946,945 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.63 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 157.11% Pass
6. Moderate PEmg Ratio PEmg < 20 18.48 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.37 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 0.63 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.47 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.74
MG Growth Estimate 6.28%
MG Value $78.69
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $54.20
MG Value based on 0% Growth $31.77
Market Implied Growth Rate 4.99%
Current Price $69.08
% of Intrinsic Value 87.78%

Magellan Midstream Partners, L.P. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.64 in 2014 to an estimated $3.74 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.99% 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 Magellan Midstream Partners, L.P. revealed the company was trading above its Graham Number of $28.55. The company pays a dividend of $3.52 per share, for a yield of 5.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.48, which was below the industry average of 49.12, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.77.

Magellan Midstream Partners, L.P. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.77
Graham Number $28.55
PEmg 18.48
Current Ratio 0.63
PB Ratio 7.37
Current Dividend $3.52
Dividend Yield 5.10%
Number of Consecutive Years of Dividend Growth 18

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 $493,192,000
Total Current Liabilities $788,540,000
Long-Term Debt $4,272,747,000
Total Assets $7,376,049,000
Intangible Assets $105,823,000
Total Liabilities $5,236,862,000
Shares Outstanding (Diluted Average) 228,360,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.88
Dec2017 $3.81
Dec2016 $3.52
Dec2015 $3.59
Dec2014 $3.69
Dec2013 $2.56
Dec2012 $1.92
Dec2011 $1.83
Dec2010 $1.42
Dec2009 $1.11
Dec2008 $0.70
Dec2007 $0.49
Dec2006 $1.12
Dec2005 $1.02
Dec2004 $0.86
Dec2003 $1.02
Dec2002 $0.92
Dec2001 $0.47

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.74
Dec2017 $3.59
Dec2016 $3.34
Dec2015 $3.07
Dec2014 $2.64
Dec2013 $1.99
Dec2012 $1.61
Dec2011 $1.34
Dec2010 $1.05
Dec2009 $0.87
Dec2008 $0.78
Dec2007 $0.85
Dec2006 $1.01
Dec2005 $0.92
Dec2004 $0.80
Dec2003 $0.68
Dec2002 $0.43

Recommended Reading:

Other ModernGraham posts about the company

Magellan Midstream Partners LP Valuation – August 2016 $MMP
Magellan Midstream Partners LP Analysis – Initial Coverage $MMP

Other ModernGraham posts about related companies

Noble Corp PLC Valuation – June 2018 $NE
Rowan Companies PLC Valuation – June 2018 $RDC
Diamond Offshore Drilling Inc Valuation – June 2018 $DO
Transocean Ltd Valuation – June 2018 $RIG
Nabors Industries Ltd Valuation – June 2018 $NBR
QEP Resources Inc Valuation – June 2018 $QEP
Pioneer Natural Resources Co Valuation – June 2018 $PXD
Schlumberger Ltd Valuation – June 2018 $SLB
Anadarko Petroleum Corp Valuation – June 2018 $APC
Apache Corp Valuation – June 2018 $APA

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.

Enterprise Products Partners LP Valuation – July 2018 $EPD

Company Profile (excerpt from Reuters): Enterprise Products Partners L.P. (Enterprise), incorporated on April 9, 1998, is a provider of midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals and refined products in North America. The Company’s segments include NGL Pipelines & Services; Crude Oil Pipelines & Services; Natural Gas Pipelines & Services, and Petrochemical & Refined Products Services. The Company owns and operates certain NGLs related businesses of Enterprise Products Company (EPCO). The Company’s midstream energy operations include natural gas gathering, treating, processing, transportation and storage; NGL transportation, fractionation, storage, and import and export terminals, including liquefied petroleum gas (LPG); crude oil gathering, transportation, storage and terminals; petrochemical and refined products transportation, storage, export and import terminals, and related services, and a marine transportation business that operates primarily on the United States inland and Intracoastal Waterway systems.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EPD – 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 $60,574,911,153 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.77 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 75.66% Pass
6. Moderate PEmg Ratio PEmg < 20 20.61 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.62 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 0.77 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.24 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 $1.34
MG Growth Estimate 0.11%
MG Value $11.70
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $19.47
MG Value based on 0% Growth $11.41
Market Implied Growth Rate 6.05%
Current Price $27.67
% of Intrinsic Value 236.40%

Enterprise Products Partners L.P. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. 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 $1.33 in 2014 to an estimated $1.34 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.05% 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 Enterprise Products Partners L.P. revealed the company was trading above its Graham Number of $18.58. The company pays a dividend of $1.67 per share, for a yield of 6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.61, which was below the industry average of 49.12, 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 $-11.82.

Enterprise Products Partners L.P. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.82
Graham Number $18.58
PEmg 20.61
Current Ratio 0.77
PB Ratio 2.62
Current Dividend $1.67
Dividend Yield 6.03%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $6,791,000,000
Total Current Liabilities $8,839,600,000
Long-Term Debt $23,016,400,000
Total Assets $55,482,300,000
Intangible Assets $9,481,600,000
Total Liabilities $32,517,400,000
Shares Outstanding (Diluted Average) 2,177,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.47
Dec2017 $1.30
Dec2016 $1.20
Dec2015 $1.26
Dec2014 $1.47
Dec2013 $1.41
Dec2012 $1.35
Dec2011 $1.19
Dec2010 $0.58
Dec2009 $0.50
Dec2008 $0.92
Dec2007 $0.48
Dec2006 $0.61
Dec2005 $0.46
Dec2004 $0.44
Dec2003 $0.21
Dec2002 $0.24
Dec2001 $0.70
Dec2000 $0.66
Dec1999 $0.41
Dec1998 $0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.34
Dec2017 $1.30
Dec2016 $1.31
Dec2015 $1.35
Dec2014 $1.33
Dec2013 $1.18
Dec2012 $1.01
Dec2011 $0.80
Dec2010 $0.61
Dec2009 $0.62
Dec2008 $0.65
Dec2007 $0.49
Dec2006 $0.46
Dec2005 $0.39
Dec2004 $0.38
Dec2003 $0.39
Dec2002 $0.46

Recommended Reading:

Other ModernGraham posts about the company

Enterprise Products Partners LP Valuation – August 2016 $EPD
Enterprise Products Partners LP Analysis – Initial Coverage $EPD

Other ModernGraham posts about related companies

Noble Corp PLC Valuation – June 2018 $NE
Rowan Companies PLC Valuation – June 2018 $RDC
Diamond Offshore Drilling Inc Valuation – June 2018 $DO
Transocean Ltd Valuation – June 2018 $RIG
Nabors Industries Ltd Valuation – June 2018 $NBR
QEP Resources Inc Valuation – June 2018 $QEP
Pioneer Natural Resources Co Valuation – June 2018 $PXD
Schlumberger Ltd Valuation – June 2018 $SLB
Anadarko Petroleum Corp Valuation – June 2018 $APC
Apache Corp Valuation – June 2018 $APA

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.

Suburban Propane Partners LP Valuation – June 2018 $SPH

Company Profile (excerpt from Reuters): Suburban Propane Partners, L.P., incorporated on December 18, 1995, is s a marketer and distributor of a range of products. The Company specializes in the distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. The Company’s segments include Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. In support of its marketing and distribution operations, the Company installs and services a range of home comfort equipment, particularly in the areas of heating and ventilation. The Company conducts its business through Suburban Propane, L.P., which operates its propane business and assets (the Operating Partnership), and its direct and indirect subsidiaries. As of September 24, 2016, it had sold approximately 414.8 million gallons of propane and 30.9 million gallons of fuel oil and refined fuels to retail customers.

SPH Chart

SPH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPH – 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 $1,440,571,709 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 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 -85.03% Fail
6. Moderate PEmg Ratio PEmg < 20 29.94 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 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 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 17.94 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.78
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $11.38
MG Value based on 0% Growth $6.67
Market Implied Growth Rate 10.72%
Current Price $23.49
% of Intrinsic Value N/A

Suburban Propane Partners LP 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 growth 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 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 $1.53 in 2014 to an estimated $0.78 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.72% 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 Suburban Propane Partners LP revealed the company was trading above its Graham Number of $13.16. The company pays a dividend of $3.55 per share, for a yield of 15.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 29.94, which was above the industry average of 22.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.88.

Suburban Propane Partners LP receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.88
Graham Number $13.16
PEmg 29.94
Current Ratio 1.41
PB Ratio 2.31
Current Dividend $3.55
Dividend Yield 15.11%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $246,854,000
Total Current Liabilities $175,266,000
Long-Term Debt $1,284,574,000
Total Assets $2,227,981,000
Intangible Assets $1,287,339,000
Total Liabilities $1,598,728,000
Shares Outstanding (Diluted Average) 61,793,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.85
Sep2017 $0.62
Sep2016 $0.24
Sep2015 $1.38
Sep2014 $1.56
Sep2013 $1.34
Sep2012 $0.02
Sep2011 $3.22
Sep2010 $3.24
Sep2009 $4.96
Sep2008 $4.70
Sep2007 $3.89
Sep2006 $2.83
Sep2005 -$0.38
Sep2004 $0.84
Sep2003 $1.86
Sep2002 $2.12
Sep2001 $2.14
Sep2000 $1.70
Sep1999 $0.83
Sep1998 $1.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.78
Sep2017 $0.84
Sep2016 $0.94
Sep2015 $1.36
Sep2014 $1.53
Sep2013 $1.86
Sep2012 $2.49
Sep2011 $3.82
Sep2010 $4.05
Sep2009 $4.04
Sep2008 $3.18
Sep2007 $2.21
Sep2006 $1.40
Sep2005 $0.89
Sep2004 $1.60
Sep2003 $1.90
Sep2002 $1.81

Recommended Reading:

Other ModernGraham posts about the company

Suburban Propane Partners Valuation – June 2016 $SPH
Suburban Propane Partners LP Annual Valuation – 2015 $SPH
14 Companies in the Spotlight This Week – 1/4/14
ModernGraham Valuation: Suburban Propane Partners LP (SPH)

Other ModernGraham posts about related companies

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Eversource Energy Valuation – June 2018 $ES
PPL Corp Valuation – June 2018 $PPL
Entergy Corp Valuation – June 2018 $ETR
Pinnacle West Capital Corp Valuation – June 2018 $PNW
NiSource Inc Valuation – June 2018 $NI
American Electric Power Co Valuation – June 2018 $AEP
American Water Works Co Inc Valuation – June 2018 $AWK
Alliant Energy Corp Valuation – June 2018 $LNT
Consolidated Edison Inc Valuation – June 2018 $ED

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.

Raytheon Co Valuation – June 2018 $RTN

Company Profile (excerpt from Reuters): Raytheon Company, incorporated on December 17, 1953, is a technology company, which specializes in defense and other government markets. The Company develops integrated products, services and solutions in various markets, including sensing; effects; command, control, communications, computers, cyber and intelligence; mission support, and cybersecurity. The Company operates through five segments: Integrated Defense Systems (IDS); Intelligence, Information and Services (IIS); Missile Systems (MS); Space and Airborne Systems (SAS), and Forcepoint. The Company serves both domestic and international customers, primarily as a prime contractor or subcontractor on a range of defense and related programs for government customers.

RTN Chart

RTN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RTN – 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 $55,548,401,568 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.62 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 61.46% Pass
6. Moderate PEmg Ratio PEmg < 20 24.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.46 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 1.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.14 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 $8.03
MG Growth Estimate 4.44%
MG Value $139.59
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $116.44
MG Value based on 0% Growth $68.26
Market Implied Growth Rate 7.79%
Current Price $193.38
% of Intrinsic Value 138.53%

Raytheon Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $6.2 in 2014 to an estimated $8.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.79% 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 Raytheon Company revealed the company was trading above its Graham Number of $87.34. The company pays a dividend of $3.19 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 24.08, which was below the industry average of 51.81, 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 $-32.2.

Raytheon Company receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$32.20
Graham Number $87.34
PEmg 24.08
Current Ratio 1.62
PB Ratio 5.46
Current Dividend $3.19
Dividend Yield 1.65%
Number of Consecutive Years of Dividend Growth 13

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ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $10,960,000,000
Total Current Liabilities $6,779,000,000
Long-Term Debt $4,751,000,000
Total Assets $30,497,000,000
Intangible Assets $14,871,000,000
Total Liabilities $20,260,000,000
Shares Outstanding (Diluted Average) 288,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.80
Dec2017 $6.95
Dec2016 $7.55
Dec2015 $6.91
Dec2014 $7.18
Dec2013 $6.16
Dec2012 $5.65
Dec2011 $5.28
Dec2010 $4.88
Dec2009 $4.89
Dec2008 $3.92
Dec2007 $5.79
Dec2006 $2.85
Dec2005 $1.92
Dec2004 $0.94
Dec2003 $0.88
Dec2002 -$1.59
Dec2001 -$2.12
Dec2000 $0.41
Dec1999 $1.17
Dec1998 $2.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.03
Dec2017 $7.08
Dec2016 $6.99
Dec2015 $6.56
Dec2014 $6.20
Dec2013 $5.59
Dec2012 $5.18
Dec2011 $4.95
Dec2010 $4.68
Dec2009 $4.34
Dec2008 $3.74
Dec2007 $3.26
Dec2006 $1.66
Dec2005 $0.71
Dec2004 -$0.03
Dec2003 -$0.42
Dec2002 -$0.69

Recommended Reading:

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Raytheon Company Valuation – April 2017 $RTN
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Disclaimer:

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

Gartner Inc Valuation – March 2018 $IT

Company Profile (excerpt from Reuters): Gartner, Inc., incorporated on June 1, 1990, is an information technology research and advisory company. The Company works with clients to research, analyze and interpret the business of information technology (IT), supply chain and marketing within the context of their individual roles. The Company operates through three segments: Research, Consulting and Events. Research segment consists of subscription-based research products, access to research inquiry, peer networking services and membership programs. Consulting segment consists of consulting, measurement engagements and strategic advisory services. Events segment consists of various symposia, conferences and exhibitions.

IT Chart

IT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IT – 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 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,690,230,261 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.92 Fail
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 90.63% Pass
6. Moderate PEmg Ratio PEmg < 20 55.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.54 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 0.92 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -12.39 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.13
MG Growth Estimate 2.90%
MG Value $30.52
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $30.92
MG Value based on 0% Growth $18.13
Market Implied Growth Rate 23.34%
Current Price $117.69
% of Intrinsic Value 385.64%

Gartner Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of 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 $1.79 in 2014 to an estimated $2.13 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 23.34% 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 Gartner Inc revealed the company was trading above its Graham Number of $30.23. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 55.18, which was above the industry average of 43.34. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-38.49.

Gartner Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$38.49
Graham Number $30.23
PEmg 55.18
Current Ratio 0.92
PB Ratio 11.54
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $2,588,608,000
Total Current Liabilities $2,822,585,000
Long-Term Debt $2,899,124,000
Total Assets $7,283,173,000
Intangible Assets $4,279,316,000
Total Liabilities $6,299,708,000
Shares Outstanding (Diluted Average) 96,405,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.75
Dec2017 $0.04
Dec2016 $2.31
Dec2015 $2.06
Dec2014 $2.03
Dec2013 $1.93
Dec2012 $1.73
Dec2011 $1.39
Dec2010 $0.96
Dec2009 $0.85
Dec2008 $1.05
Dec2007 $0.68
Dec2006 $0.50
Dec2005 -$0.02
Dec2004 $0.13
Dec2003 $0.25
Sep2002 $0.46
Sep2001 -$0.78
Sep2000 $0.30
Sep1999 $0.84
Sep1998 $0.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.13
Dec2017 $1.44
Dec2016 $2.10
Dec2015 $1.94
Dec2014 $1.79
Dec2013 $1.57
Dec2012 $1.32
Dec2011 $1.07
Dec2010 $0.88
Dec2009 $0.76
Dec2008 $0.64
Dec2007 $0.39
Dec2006 $0.25
Dec2005 $0.09
Dec2004 $0.12
Dec2003 $0.15
Sep2002 $0.17

Recommended Reading:

Other ModernGraham posts about the company

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

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Disclaimer:

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

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