SVB Financial Group Valuation – March 2019 #SIVB

Company Profile (excerpt from Reuters): SVB Financial Group (SVB Financial), incorporated on March 22, 1999, is a diversified financial services company, as well as a bank holding and a financial holding company. The Company operates through three segments: Global Commercial Bank, SVB Private Bank and SVB Capital. The Company, through its subsidiaries and divisions, offers a range of banking and financial products and services to clients across the United States. The Company offers services in the technology, life science/healthcare, private equity/venture capital and wine industries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SIVB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,930,426,391 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
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 361.84% Pass
5. Moderate PEmg Ratio PEmg < 20 16.91 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.50 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $14.52
MG Growth Estimate 15.00%
MG Value $558.84
Opinion Undervalued
MG Grade D+
MG Value based on 3% Growth $210.47
MG Value based on 0% Growth $123.38
Market Implied Growth Rate 4.21%
Current Price $245.49
% of Intrinsic Value 43.93%

SVB Financial Group does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history. The Enterprising Investor has concerns regarding 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 Undervalued after growing its EPSmg (normalized earnings) from $5.34 in 2015 to an estimated $14.52 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into SVB Financial Group revealed the company was trading above its Graham Number of $205.49. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 16.91, which was above the industry average of 16.75.

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

Stage 3: Information for Further Research

Graham Number $205.49
PEmg 16.91
PB Ratio 2.50
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 $696,465,000
Total Assets $56,927,979,000
Intangible Assets $0
Total Liabilities $51,663,136,000
Shares Outstanding (Diluted Average) 53,688,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $19.29
Dec2018 $18.11
Dec2017 $9.20
Dec2016 $7.31
Dec2015 $6.62
Dec2014 $5.31
Dec2013 $4.67
Dec2012 $3.91
Dec2011 $3.94
Dec2010 $2.24
Dec2009 $0.66
Dec2008 $2.16
Dec2007 $3.37
Dec2006 $2.38
Dec2005 $2.40
Dec2004 $1.70
Dec2003 $0.35
Dec2002 $1.21
Dec2001 $1.79
Dec2000 $3.23
Dec1999 $1.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $14.52
Dec2018 $11.19
Dec2017 $7.36
Dec2016 $6.15
Dec2015 $5.34
Dec2014 $4.47
Dec2013 $3.73
Dec2012 $3.03
Dec2011 $2.56
Dec2010 $1.96
Dec2009 $1.95
Dec2008 $2.53
Dec2007 $2.49
Dec2006 $1.90
Dec2005 $1.60
Dec2004 $1.36
Dec2003 $1.31

Recommended Reading:

Other ModernGraham posts about the company

SVB Financial Group Valuation – June 2018 $SIVB
SVB Financial Group Valuation – Initial Coverage $SIVB

Other ModernGraham posts about related companies

US Bancorp Valuation – March 2019 #USB
Citizens Financial Group Inc Valuation – February 2019 $CFG
BB&T Corp Valuation – February 2019 $BBT
M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC

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.

SVB Financial Group Valuation – June 2018 $SIVB

Company Profile (excerpt from Reuters): SVB Financial Group (SVB Financial), incorporated on March 22, 1999, is a diversified financial services company, as well as a bank holding and a financial holding company. The Company operates through three segments: Global Commercial Bank, SVB Private Bank and SVB Capital. The Company, through its subsidiaries and divisions, offers a range of banking and financial products and services to clients across the United States. The Company offers services in the technology, life science/healthcare, private equity/venture capital and wine industries.

SIVB Chart

SIVB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SIVB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $16,831,404,501 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
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 342.11% Pass
5. Moderate PEmg Ratio PEmg < 20 32.66 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.74 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.73
MG Growth Estimate 15.00%
MG Value $374.55
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $141.07
MG Value based on 0% Growth $82.69
Market Implied Growth Rate 12.08%
Current Price $317.73
% of Intrinsic Value 84.83%

SVB Financial Group does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding 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 Fairly Valued after growing its EPSmg (normalized earnings) from $4.47 in 2014 to an estimated $9.73 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 12.08% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into SVB Financial Group revealed the company was trading above its Graham Number of $156.32. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 32.66, which was above the industry average of 21.57.

SVB Financial Group scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Graham Number $156.32
PEmg 32.66
PB Ratio 3.74
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 3/1/2018
Long-Term Debt & Capital Lease Obligation $695,731,000
Total Assets $53,500,787,000
Intangible Assets $0
Total Liabilities $48,941,063,000
Shares Outstanding (Diluted Average) 53,685,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.73
Dec2017 $9.20
Dec2016 $7.31
Dec2015 $6.62
Dec2014 $5.31
Dec2013 $4.67
Dec2012 $3.91
Dec2011 $3.94
Dec2010 $2.24
Dec2009 $0.66
Dec2008 $2.16
Dec2007 $3.37
Dec2006 $2.38
Dec2005 $2.40
Dec2004 $1.70
Dec2003 $0.35
Dec2002 $1.21
Dec2001 $1.79
Dec2000 $3.23
Dec1999 $1.23
Dec1998 $0.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.73
Dec2017 $7.36
Dec2016 $6.15
Dec2015 $5.34
Dec2014 $4.47
Dec2013 $3.73
Dec2012 $3.03
Dec2011 $2.56
Dec2010 $1.96
Dec2009 $1.95
Dec2008 $2.53
Dec2007 $2.49
Dec2006 $1.90
Dec2005 $1.60
Dec2004 $1.36
Dec2003 $1.31
Dec2002 $1.74

Recommended Reading:

Other ModernGraham posts about the company

SVB Financial Group Valuation – Initial Coverage $SIVB

Other ModernGraham posts about related companies

US Bancorp Valuation – May 2018 $USB
Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC
Fifth Third Bancorp Valuation – March 2018 $FITB
Regions Financial Corp Valuation – March 2018 $RF
Huntington Bancshares Inc Valuation – March 2018 $HBAN
Zions Bancorp Valuation – March 2018 $ZION

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.

SVB Financial Group Valuation – Initial Coverage $SIVB

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 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 SVB Financial Group (SIVB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): SVB Financial Group (SVB Financial) is a diversified financial services, bank holding and financial holding company. The Company operates through three segments: Global Commercial Bank, SVB Private Bank and SVB Capital. The Global Commercial Bank segment consists of the operations of its Commercial Bank, and of SVB Wine, SVB Analytics and its Debt Fund Investments. SVB Private Bank is the private banking division of the Bank, which provides a range of personal financial solutions for consumers. SVB Capital is the venture capital investment arm of SVB Financial Group, which focuses primarily on funds management. The Company, through its subsidiaries and divisions, offers a range of banking and financial products and services to clients across the United States, as well as in international entrepreneurial markets. The Company offers services in the technology, life science/healthcare, private equity/venture capital and wine industries.

SIVB Chart

SIVB 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. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of SIVB – January 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,250,132,270 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
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 206.79% Pass
5. Moderate PEmg Ratio PEmg < 20 29.02 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.57 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $6.06
MG Growth Estimate 14.98%
MG Value $233.22
Opinion Fairly Valued
MG Grade F
MG Value based on 3% Growth $87.93
MG Value based on 0% Growth $51.54
Market Implied Growth Rate 10.26%
Current Price $175.95
% of Intrinsic Value 75.44%

SVB Financial Group does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.03 in 2012 to an estimated $6.06 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 10.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into SVB Financial Group revealed the company was trading above its Graham Number of $104.71. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 29.02, which was above the industry average of 21.43.

SVB Financial Group scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Graham Number $104.71
PEmg 29.02
PB Ratio 2.57
Dividend Yield 0.00%
TTM Dividend $0.00
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 9/1/2016
Long-Term Debt & Capital Lease Obligation $795,971,000
Total Assets $43,274,037,000
Intangible Assets $0
Total Liabilities $39,680,986,000
Shares Outstanding (Diluted Average) 52,413,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.06
Dec2015 $6.62
Dec2014 $5.31
Dec2013 $4.67
Dec2012 $3.91
Dec2011 $3.94
Dec2010 $2.24
Dec2009 $0.66
Dec2008 $2.16
Dec2007 $3.37
Dec2006 $2.38
Dec2005 $2.40
Dec2004 $1.70
Dec2003 $0.35
Dec2002 $1.21
Dec2001 $1.79
Dec2000 $3.23
Dec1999 $1.23
Dec1998 $0.69
Dec1997 $0.68
Dec1996 $0.55

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.06
Dec2015 $5.34
Dec2014 $4.47
Dec2013 $3.73
Dec2012 $3.03
Dec2011 $2.56
Dec2010 $1.96
Dec2009 $1.95
Dec2008 $2.53
Dec2007 $2.49
Dec2006 $1.90
Dec2005 $1.60
Dec2004 $1.36
Dec2003 $1.31
Dec2002 $1.74
Dec2001 $1.84
Dec2000 $1.67

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

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Citizens Financial Group Inc Valuation – Initial Coverage $CFG

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.

Comerica Inc Valuation – March 2019 #CMA

Company Profile (excerpt from Reuters): Comerica Incorporated, incorporated on November 13, 1972, is a financial services company. The Company’s principal activity is lending to and accepting deposits from businesses and individuals. The Company’s segments include the Business Bank, the Retail Bank, Wealth Management, Finance and Other. The Business Bank serves middle market businesses, multinational corporations and governmental entities by offering various products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services. The Retail Bank includes small business banking and personal financial services, consisting of consumer lending, consumer deposit gathering and mortgage loan origination. In addition to a range of financial services provided to small business customers, this business segment offers a range of consumer products, including deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMA – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,991,666,519 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 238.83% Pass
5. Moderate PEmg Ratio PEmg < 20 13.98 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.81 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.88
MG Growth Estimate 15.00%
MG Value $226.56
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $85.33
MG Value based on 0% Growth $50.02
Market Implied Growth Rate 2.74%
Current Price $82.27
% of Intrinsic Value 36.31%

Comerica Incorporated qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.85 in 2015 to an estimated $5.88 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.74% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Comerica Incorporated revealed the company was trading below its Graham Number of $90.55. The company pays a dividend of $1.84 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.98, which was below the industry average of 16.75, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Comerica Incorporated fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $90.55
PEmg 13.98
PB Ratio 1.81
Dividend Yield 2.24%
TTM Dividend $1.84
Number of Consecutive Years of Dividend Growth 9

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 $6,463,000,000
Total Assets $70,818,000,000
Intangible Assets $0
Total Liabilities $63,311,000,000
Shares Outstanding (Diluted Average) 165,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.77
Dec2018 $7.20
Dec2017 $4.14
Dec2016 $2.68
Dec2015 $2.84
Dec2014 $3.16
Dec2013 $2.85
Dec2012 $2.67
Dec2011 $2.09
Dec2010 $0.88
Dec2009 -$0.79
Dec2008 $1.28
Dec2007 $4.43
Dec2006 $5.49
Dec2005 $5.11
Dec2004 $4.36
Dec2003 $3.75
Dec2002 $3.40
Dec2001 $3.88
Dec2000 $4.31
Dec1999 $4.14

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.88
Dec2018 $4.63
Dec2017 $3.27
Dec2016 $2.84
Dec2015 $2.85
Dec2014 $2.68
Dec2013 $2.14
Dec2012 $1.60
Dec2011 $1.24
Dec2010 $1.30
Dec2009 $2.04
Dec2008 $3.68
Dec2007 $4.79
Dec2006 $4.79
Dec2005 $4.33
Dec2004 $3.94
Dec2003 $3.78

Recommended Reading:

Other ModernGraham posts about the company

Comerica Inc Valuation – June 2018 $CMA
11 Best Stocks for Value Investors This Week – 3/4/17
Comerica Inc Valuation – March 2017 $CMA
21 Best Undervalued Stocks of the Week – 8/27/16
Comerica Inc Valuation – August 2016 $CMA

Other ModernGraham posts about related companies

SVB Financial Group Valuation – March 2019 #SIVB
US Bancorp Valuation – March 2019 #USB
Citizens Financial Group Inc Valuation – February 2019 $CFG
BB&T Corp Valuation – February 2019 $BBT
M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN

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.

Canadian Imperial Bank of Commerce Valuation – July 2018 $TSE:CM

Company Profile (excerpt from Reuters): Canadian Imperial Bank of Commerce (CIBC), incorporated on May 17, 1995, is a global financial institution. The Company provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets. The Company’s Retail and Business Banking segment provides personal and business clients across Canada with financial advice, products and services in its banking centers or through remote channels, such as mobile advisors, telephone, online or mobile banking. The Company’s Wealth Management segment provides advice and investment solutions. The Company’s Capital Markets segment provides integrated credit and global markets products, investment banking advisory services and research to corporate, government and institutional clients around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CM – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $51,959,440,000 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 122.52% Pass
5. Moderate PEmg Ratio PEmg < 20 10.95 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.58 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $10.83
MG Growth Estimate 6.31%
MG Value $228.71
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $157.00
MG Value based on 0% Growth $92.03
Market Implied Growth Rate 1.23%
Current Price $118.58
% of Intrinsic Value 51.85%

Canadian Imperial Bank of Commerce (USA) qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $7.62 in 2014 to an estimated $10.83 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canadian Imperial Bank of Commerce (USA) revealed the company was trading below its Graham Number of $133.77. The company pays a dividend of $5.08 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.95, which was below the industry average of 20.05, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Canadian Imperial Bank of Commerce (USA) fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $133.77
PEmg 10.95
PB Ratio 1.58
Dividend Yield 4.28%
TTM Dividend $5.08
Number of Consecutive Years of Dividend Growth 7

 

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2018
Long-Term Debt & Capital Lease Obligation $4,633,000,000
Total Assets $590,537,000,000
Intangible Assets $7,375,000,000
Total Liabilities $556,991,000,000
Shares Outstanding (Diluted Average) 445,658,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.95
Oct2017 $11.24
Oct2016 $10.70
Oct2015 $8.87
Oct2014 $7.86
Oct2013 $8.11
Oct2012 $7.76
Oct2011 $6.71
Oct2010 $5.87
Oct2009 $2.65
Oct2008 -$5.89
Oct2007 $9.21
Oct2006 $7.43
Oct2005 -$0.46
Oct2004 $5.53
Oct2003 $5.18
Oct2002 $1.35
Oct2001 $4.13
Oct2000 $4.86
Oct1999 $2.22
Oct1998 $2.26

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.83
Oct2017 $9.96
Oct2016 $9.10
Oct2015 $8.16
Oct2014 $7.62
Oct2013 $7.07
Oct2012 $5.51
Oct2011 $4.16
Oct2010 $3.21
Oct2009 $2.11
Oct2008 $2.29
Oct2007 $6.04
Oct2006 $4.24
Oct2005 $2.81
Oct2004 $4.37
Oct2003 $3.71
Oct2002 $2.97

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Canadian Stocks for Intelligent Investors – February 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017
15 Best Stocks for Value Investors This Week – 1/14/17
Canadian Imperial Bank of Commerce Valuation – Initial Coverage $TSE:CM

Other ModernGraham posts about related companies

ServisFirst Bancshares Inc Valuation – July 2018 $SFBS
Cullen/Frost Bankers Inc Valuation – July 2018 $CFR
Signature Bank Valuation – July 2018 $SBNY
City Holding Co Valuation – July 2018 $CHCO
Southside Bancshares Inc Valuation – July 2018 $SBSI
Independent Bank Corp Valuation – July 2018 $INDB
Wells Fargo & Co Valuation – June 2018 $WFC
SunTrust Banks Inc Valuation – June 2018 $STI
Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB

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.

ServisFirst Bancshares Inc Valuation – July 2018 $SFBS

Company Profile (excerpt from Reuters): ServisFirst Bancshares, Inc., incorporated on August 16, 2007, is a bank holding company whose business is conducted by its subsidiary, ServisFirst Bank (the Bank). The Company’s principal business is to accept deposits from the public and to make loans and other investments. The Company, through its bank, originates commercial, consumer and other loans; accept deposits; provides electronic banking services, such as online and mobile banking, including remote deposit capture, deliver treasury and cash management services, and provides correspondent banking services to other financial institutions. The Company offers a range of products and services, including round the clock telephone banking, direct deposit, Internet banking, mobile banking, traveler’s checks, safe deposit boxes, attorney trust accounts and automatic account transfers. It also participates in a shared network of automated teller machines and a debit card system. Additionally, it offers Visa credit cards.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SFBS – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,190,725,210 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 872.79% Pass
5. Moderate PEmg Ratio PEmg < 20 23.09 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.48 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.82
MG Growth Estimate 15.00%
MG Value $70.04
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $26.38
MG Value based on 0% Growth $15.46
Market Implied Growth Rate 7.30%
Current Price $42.01
% of Intrinsic Value 59.98%

ServisFirst Bancshares, Inc. is suitable for the Enterprising Investor but not 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 and PB ratios. 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 $0.85 in 2014 to an estimated $1.82 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.3% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into ServisFirst Bancshares, Inc. revealed the company was trading above its Graham Number of $25.28. The company pays a dividend of $0.2 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 23.09, which was above the industry average of 20.05.

ServisFirst Bancshares, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Graham Number $25.28
PEmg 23.09
PB Ratio 3.48
Dividend Yield 0.48%
TTM Dividend $0.20
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Long-Term Debt & Capital Lease Obligation $64,648,000
Total Assets $7,084,562,000
Intangible Assets $14,584,000
Total Liabilities $6,429,448,000
Shares Outstanding (Diluted Average) 54,196,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.48
Dec2017 $1.72
Dec2016 $1.52
Dec2015 $1.20
Dec2014 $1.05
Dec2013 $0.95
Dec2012 $0.83
Dec2011 $0.59

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.82
Dec2017 $1.42
Dec2016 $1.22
Dec2015 $1.02
Dec2014 $0.85
Dec2013 $0.65
Dec2012 $0.43
Dec2011 $0.20

Recommended Reading:

Other ModernGraham posts about the company

ServisFirst Bancshares Inc Valuation – Initial Coverage $SFBS

Other ModernGraham posts about related companies

Cullen/Frost Bankers Inc Valuation – July 2018 $CFR
Signature Bank Valuation – July 2018 $SBNY
City Holding Co Valuation – July 2018 $CHCO
Southside Bancshares Inc Valuation – July 2018 $SBSI
Independent Bank Corp Valuation – July 2018 $INDB
Wells Fargo & Co Valuation – June 2018 $WFC
SunTrust Banks Inc Valuation – June 2018 $STI
Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB
US Bancorp Valuation – May 2018 $USB

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.

Cullen/Frost Bankers Inc Valuation – July 2018 $CFR

Company Profile (excerpt from Reuters): Cullen/Frost Bankers, Inc., incorporated on January 25, 1966, is a financial holding company and a bank holding company. The Company, through its subsidiaries, provides a range of products and services throughout Texas markets. The Company’s segments include Banking, Frost Wealth Advisors and Non-Banks. The Banking segment includes both commercial and consumer banking services, and Frost Insurance Agency. Commercial banking services are provided to corporations and other business clients and include a range of lending and cash management products. Consumer banking services include direct lending and depository services. Frost Insurance Agency provides insurance brokerage services to individuals and businesses covering corporate and personal property and casualty products, as well as group health and life insurance products and human resources consulting services. The Frost Wealth Advisors segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and securities brokerage services. The Non-Banks segment includes the direct and indirect ownership of its banking and non-banking subsidiaries and the issuance of debt and equity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CFR – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,231,845,441 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 66.93% Pass
5. Moderate PEmg Ratio PEmg < 20 21.01 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.42
MG Growth Estimate 5.74%
MG Value $108.23
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $78.53
MG Value based on 0% Growth $46.04
Market Implied Growth Rate 6.25%
Current Price $113.78
% of Intrinsic Value 105.12%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.92 in 2014 to an estimated $5.42 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.25% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $84.91. The company pays a dividend of $2.25 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 21.01, which was above the industry average of 20.05.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $84.91
PEmg 21.01
PB Ratio 2.27
Dividend Yield 1.98%
TTM Dividend $2.25
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
Long-Term Debt & Capital Lease Obligation $234,789,000
Total Assets $31,459,232,000
Intangible Assets $659,637,000
Total Liabilities $28,215,802,000
Shares Outstanding (Diluted Average) 64,662,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.45
Dec2017 $5.51
Dec2016 $4.70
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.42
Dec2017 $4.77
Dec2016 $4.33
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92

Recommended Reading:

Other ModernGraham posts about the company

Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

Other ModernGraham posts about related companies

Wells Fargo & Co Valuation – June 2018 $WFC
SunTrust Banks Inc Valuation – June 2018 $STI
Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB
US Bancorp Valuation – May 2018 $USB
Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC

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.

Signature Bank Valuation – July 2018 $SBNY

Company Profile (excerpt from Reuters): Signature Bank, incorporated in September 2000, is a full-service commercial bank. The Bank operates over 30 private client offices throughout the New York metropolitan area. Its segments include Commercial Banking and Specialty Finance. The Bank offers a range of business and personal banking products and services. Its specialty finance subsidiary, Signature Financial LLC (Signature Financial), provides equipment finance and leasing services. Signature Securities Group Corporation (Signature Securities), a subsidiary of Bank, is a licensed broker-dealer, investment advisor offering investment, brokerage, asset management and insurance products and services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBNY – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,501,390,093 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
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 222.02% Pass
5. Moderate PEmg Ratio PEmg < 20 15.28 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.57 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $7.56
MG Growth Estimate 9.40%
MG Value $206.50
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $109.65
MG Value based on 0% Growth $64.28
Market Implied Growth Rate 3.39%
Current Price $115.56
% of Intrinsic Value 55.96%

Signature Bank does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history. The Enterprising Investor has concerns regarding 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 Undervalued after growing its EPSmg (normalized earnings) from $4.65 in 2014 to an estimated $7.56 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.39% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Signature Bank revealed the company was trading below its Graham Number of $118.23. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 15.28, which was below the industry average of 20.05, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Signature Bank receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Graham Number $118.23
PEmg 15.28
PB Ratio 1.57
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 3/1/2018
Long-Term Debt & Capital Lease Obligation $4,542,577,000
Total Assets $44,435,634,000
Intangible Assets $0
Total Liabilities $40,434,462,000
Shares Outstanding (Diluted Average) 54,395,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.47
Dec2017 $7.12
Dec2016 $7.37
Dec2015 $7.27
Dec2014 $5.95
Dec2013 $4.76
Dec2012 $3.91
Dec2011 $3.37
Dec2010 $2.46
Dec2009 $1.30
Dec2008 $1.35
Dec2007 $0.91
Dec2006 $1.12
Dec2005 $0.53
Dec2004 $1.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.56
Dec2017 $6.90
Dec2016 $6.48
Dec2015 $5.71
Dec2014 $4.65
Dec2013 $3.72
Dec2012 $2.96
Dec2011 $2.28
Dec2010 $1.63
Dec2009 $1.16
Dec2008 $1.06
Dec2007 $0.86
Dec2006 $0.74
Dec2005 $0.48
Dec2004 $0.38

Recommended Reading:

Other ModernGraham posts about the company

Signature Bank Valuation – Initial Coverage $SBNY

Other ModernGraham posts about related companies

Wells Fargo & Co Valuation – June 2018 $WFC
SunTrust Banks Inc Valuation – June 2018 $STI
Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB
US Bancorp Valuation – May 2018 $USB
Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC

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.

City Holding Co Valuation – July 2018 $CHCO

Company Profile (excerpt from Reuters): City Holding Company, incorporated on March 12, 1981, is a financial holding company. The Company conducts its principal activities through its subsidiary, City National Bank of West Virginia (City National). As of December 31, 2016, the City National provided banking, trust and investment management and other financial solutions through its network of 85 banking offices located in the states of West Virginia, Virginia, eastern Kentucky and southeastern Ohio. City National offers various products and services, including commercial banking, consumer banking, mortgage banking, and wealth management and trust services. City National provides credit, deposit and investment advisory products and services to rural and small community markets in addition to cities, including Charleston, Huntington, Martinsburg, Winchester, Staunton, Virginia Beach, Ashland and Lexington.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CHCO – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,223,181,659 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 48.59% Pass
5. Moderate PEmg Ratio PEmg < 20 20.84 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.46 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.88
MG Growth Estimate 4.52%
MG Value $67.98
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $56.22
MG Value based on 0% Growth $32.96
Market Implied Growth Rate 6.17%
Current Price $80.81
% of Intrinsic Value 118.87%

City Holding Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg ratio. 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 Overvalued after growing its EPSmg (normalized earnings) from $2.98 in 2014 to an estimated $3.88 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.17% 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 City Holding Company revealed the company was trading above its Graham Number of $58.27. The company pays a dividend of $1.75 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.84, which was above the industry average of 20.05.

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

Stage 3: Information for Further Research

Graham Number $58.27
PEmg 20.84
PB Ratio 2.46
Dividend Yield 2.17%
TTM Dividend $1.75
Number of Consecutive Years of Dividend Growth 6

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Long-Term Debt & Capital Lease Obligation $16,495,000
Total Assets $4,374,383,000
Intangible Assets $78,342,000
Total Liabilities $3,870,629,000
Shares Outstanding (Diluted Average) 15,345,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.69
Dec2017 $3.48
Dec2016 $3.45
Dec2015 $3.53
Dec2014 $3.38
Dec2013 $3.04
Dec2012 $2.61
Dec2011 $2.67
Dec2010 $2.47
Dec2009 $2.68
Dec2008 $1.74
Dec2007 $3.01
Dec2006 $2.99
Dec2005 $2.84
Dec2004 $2.75
Dec2003 $2.58
Dec2002 $1.90
Dec2001 -$1.54
Dec2000 -$2.27
Dec1999 $0.37
Dec1998 $0.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.88
Dec2017 $3.44
Dec2016 $3.35
Dec2015 $3.21
Dec2014 $2.98
Dec2013 $2.75
Dec2012 $2.55
Dec2011 $2.52
Dec2010 $2.49
Dec2009 $2.55
Dec2008 $2.54
Dec2007 $2.91
Dec2006 $2.77
Dec2005 $2.35
Dec2004 $1.63
Dec2003 $0.78
Dec2002 -$0.16

Recommended Reading:

Other ModernGraham posts about the company

City Holding Company Valuation – Initial Coverage $CHCO

Other ModernGraham posts about related companies

Wells Fargo & Co Valuation – June 2018 $WFC
SunTrust Banks Inc Valuation – June 2018 $STI
Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB
US Bancorp Valuation – May 2018 $USB
Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC

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.

Southside Bancshares Inc Valuation – July 2018 $SBSI

Company Profile (excerpt from Reuters): Southside Bancshares, Inc., incorporated on August 11, 1982, is a bank holding company for Southside Bank (the Bank). The Company is a community-focused financial institution that offers a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations in the communities. These services include consumer and commercial loans, deposit accounts, trust services, safe deposit services and brokerage services. As of December 31, 2016, the Company operated through 60 banking centers, 17 of which are located in grocery stores.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBSI – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,241,781,007 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 4.24% Fail
5. Moderate PEmg Ratio PEmg < 20 18.86 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.68 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.89
MG Growth Estimate 3.59%
MG Value $29.65
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $27.41
MG Value based on 0% Growth $16.07
Market Implied Growth Rate 5.18%
Current Price $35.66
% of Intrinsic Value 120.27%

Southside Bancshares, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings growth over the last ten years. 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 Overvalued after growing its EPSmg (normalized earnings) from $1.53 in 2014 to an estimated $1.89 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.18% 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 Southside Bancshares, Inc. revealed the company was trading above its Graham Number of $33.39. The company pays a dividend of $1.08 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.86, which was below the industry average of 20.05, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Southside Bancshares, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Graham Number $33.39
PEmg 18.86
PB Ratio 1.68
Dividend Yield 3.02%
TTM Dividend $1.08
Number of Consecutive Years of Dividend Growth 13

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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Long-Term Debt & Capital Lease Obligation $870,451,000
Total Assets $6,373,197,000
Intangible Assets $222,861,000
Total Liabilities $5,626,801,000
Shares Outstanding (Diluted Average) 35,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.30
Dec2017 $1.81
Dec2016 $1.81
Dec2015 $1.61
Dec2014 $0.97
Dec2013 $1.94
Dec2012 $1.61
Dec2011 $1.82
Dec2010 $1.81
Dec2009 $2.05
Dec2008 $1.43
Dec2007 $0.78
Dec2006 $0.70
Dec2005 $0.69
Dec2004 $0.75
Dec2003 $0.66
Dec2002 $0.66
Dec2001 $0.59
Dec2000 $0.55
Dec1999 $0.45
Dec1998 $0.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.89
Dec2017 $1.67
Dec2016 $1.59
Dec2015 $1.52
Dec2014 $1.53
Dec2013 $1.82
Dec2012 $1.75
Dec2011 $1.74
Dec2010 $1.59
Dec2009 $1.36
Dec2008 $0.97
Dec2007 $0.73
Dec2006 $0.70
Dec2005 $0.69
Dec2004 $0.68
Dec2003 $0.62
Dec2002 $0.57

Recommended Reading:

Other ModernGraham posts about the company

Southside Bancshares Inc Valuation – Initial Coverage $SBSI

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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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