Starwood Property Trust Inc Valuation – March 2018 $STWD

Company Profile (obtained from Marketwatch): Starwood Property Trust, Inc. engages in originating, acquiring, financing, and managing commercial mortgage loans and other commercial real estate debt and equity investments. It operates through the following segments: Real Estate Lending; Real Estate Investing and Servicing, and Real Estate Property. The Real Estate Lending segment involves in providing a one-stop solution for borrowers and able to lend for balance sheet across the capital stack, including providing first mortgages, subordinate debt, mezzanine loans, and B-notes. The Real Estate Investing and Servicing segment offers commercial mortgage-backed securities and commercial real estate debt investing business. The Real Estate Property segment consists of real estate assets to complement its real estate lending and real estate investing and services segments. The company was founded on August 17, 2009 and is headquartered in Greenwich, CT.

STWD Chart

STWD data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of STWD – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,533,172,894 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 110.16% Pass
5. Moderate PEmg Ratio PEmg < 20 11.61 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.24 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.83
MG Growth Estimate -0.15%
MG Value $14.99
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $26.48
MG Value based on 0% Growth $15.52
Market Implied Growth Rate 1.56%
Current Price $21.20
% of Intrinsic Value 141.46%

Starwood Property Trust, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding 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 $1.84 in 2014 to an estimated $1.83 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.56% 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 Starwood Property Trust, Inc. revealed the company was trading below its Graham Number of $28.75. The company pays a dividend of $1.92 per share, for a yield of 9.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.61, which was below the industry average of 42.02, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Starwood Property Trust, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $28.75
PEmg 11.61
PB Ratio 1.24
Dividend Yield 9.06%
TTM Dividend $1.92
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $2,125,235,000
Total Assets $62,941,289,000
Intangible Assets $323,529,000
Total Liabilities $58,462,875,000
Shares Outstanding (Diluted Average) 262,151,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.15
Dec2017 $1.52
Dec2016 $1.50
Dec2015 $1.91
Dec2014 $2.24
Dec2013 $1.82
Dec2012 $1.76
Dec2011 $1.38
Dec2010 $1.14
Dec2009 -$0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.83
Dec2017 $1.71
Dec2016 $1.82
Dec2015 $1.92
Dec2014 $1.84
Dec2013 $1.50
Dec2012 $1.17
Dec2011 $0.75
Dec2010 $0.36
Dec2009 -$0.02

Recommended Reading:

Other ModernGraham posts about the company

Best Stocks Below Their Graham Number – August 2017
Starwood Property Trust Inc Valuation – April 2017 $STWD
10 Low PE Stock Picks for the Enterprising Investor – April 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017

Other ModernGraham posts about related companies

Simon Property Group Inc Valuation – March 2018 $SPG
Welltower Inc Valuation – March 2018 $WELL
Boston Properties Inc Valuation – March 2018 $BXP
AvalonBay Communities Inc Valuation – February 2018 $AVB
Weyerhauser Co Valuation – February 2018 $WY
Alexandria Real Estate Equities Inc Valuation – February 2018 $ARE
Education Realty Trust Inc Valuation – Initial Coverage $EDR
American Campus Communities Inc Valuation – September 2017 $ACC
First Industrial Realty Trust Inc Valuation – Initial Coverage $FR
Saul Centers Inc Valuation – Initial Coverage $BFS

Disclaimer:

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

Starwood Property Trust Inc Valuation – April 2017 $STWD

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

Company Profile (obtained from Google Finance): Starwood Property Trust, Inc. is a real estate investment trust. The Company operates through three business segments: Real estate lending (the Lending Segment), which engages primarily in originating, acquiring, financing and managing commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), residential mortgage-backed securities, and other real estate and real estate-related debt investments; Real estate investing and servicing (the Investing and Servicing Segment), which includes a servicing business in the United States that manages and works out problem assets; an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, and a mortgage loan business, and Real estate property (the Property Segment), which engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties.

STWD Chart

STWD data by YCharts

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Downloadable PDF version of this valuation:

ModernGraham Valuation of STWD – April 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 $5,936,504,324 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 401.85% Pass
5. Moderate PEmg Ratio PEmg < 20 12.17 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.22 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 $1.87
MG Growth Estimate 3.72%
MG Value $29.84
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $27.14
MG Value based on 0% Growth $15.91
Market Implied Growth Rate 1.84%
Current Price $22.79
% of Intrinsic Value 76.37%

Starwood Property Trust, 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. 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 $1.5 in 2013 to an estimated $1.87 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 1.84% 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 Starwood Property Trust, Inc. revealed the company was trading below its Graham Number of $29.28. The company pays a dividend of $1.92 per share, for a yield of 8.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.17, which was below the industry average of 51.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Starwood Property Trust, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $29.28
PEmg 12.17
PB Ratio 1.22
Dividend Yield 8.42%
TTM Dividend $1.92
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 12/1/2016
Long-Term Debt & Capital Lease Obligation $2,011,544,000
Total Assets $77,256,266,000
Intangible Assets $359,685,000
Total Liabilities $72,733,992,000
Shares Outstanding (Diluted Average) 241,794,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.01
Dec2016 $1.50
Dec2015 $1.91
Dec2014 $2.24
Dec2013 $1.82
Dec2012 $1.76
Dec2011 $1.38
Dec2010 $1.14
Dec2009 -$0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.87
Dec2016 $1.82
Dec2015 $1.92
Dec2014 $1.84
Dec2013 $1.50
Dec2012 $1.17
Dec2011 $0.75
Dec2010 $0.36
Dec2009 -$0.02

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stock Picks for the Enterprising Investor – April 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017
10 Low PE Stock Picks for the Enterprising Investor – February 2017
5 Undervalued Companies for Value Investors with a Low Beta – January 2017

Other ModernGraham posts about related companies

Corecivic Inc Valuation – Initial Coverage $CXW
Kimco Realty Corp Valuation – March 2017 $KIM
LaSalle Hotel Properties Valuation – Initial Coverage $LHO
Cousins Properties Inc Valuation – Initial Coverage $CUZ
Cominar Real Estate Investment Trust – Initial Coverage $TSE:CUF.UN
Essex Property Trust Inc Valuation – March 2017 $ESS
Caretrust REIT Inc Valuation – Initial Coverage $CTRE
Federal Realty Investment Trust Valuation – Initial Coverage $FRT
Extra Space Storage Inc Valuation – Initial Coverage $EXR
UDR Inc Valuation – Initial Coverage $UDR

Disclaimer:

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

Starwood Property Trust Inc Valuation – August 2016 $STWD

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 – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Starwood Property Trust Inc (STWD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Starwood Property Trust, Inc. is a real estate investment trust. The Company operates through three business segments: Real estate lending (the Lending Segment), which engages primarily in originating, acquiring, financing and managing commercial first mortgages, subordinated mortgages, mezzanine loans, preferred equity, commercial mortgage-backed securities (CMBS), residential mortgage-backed securities, and other real estate and real estate-related debt investments; Real estate investing and servicing (the Investing and Servicing Segment), which includes servicing businesses in the United States and Europe that manage and work out problem assets; an investment business that selectively acquires and manages unrated, investment grade and non-investment grade rated CMBS, and a mortgage loan business, and Real estate property (the Property Segment), which engages primarily in acquiring and managing equity interests in stabilized commercial real estate properties.

STWD Chart

STWD data by YCharts

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

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of STWD – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,284,835,014 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 -10333.33% Fail
5. Moderate PEmg Ratio PEmg < 20 11.30 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.31 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

STWD value chart August 2016

EPSmg $1.98
MG Growth Estimate 10.29%
MG Value $57.61
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $28.72
MG Value based on 0% Growth $16.84
Market Implied Growth Rate 1.40%
Current Price $22.39
% of Intrinsic Value 38.87%

Starwood Property Trust, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history. 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 $1.17 in 2012 to an estimated $1.98 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.4% 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 Starwood Property Trust, Inc. revealed the company was trading below its Graham Number of $27.64. The company pays a dividend of $1.92 per share, for a yield of 8.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.3, which was below the industry average of 34.03, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Starwood Property Trust, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

STWD charts August 2016

Graham Number $27.64
PEmg 11.30
PB Ratio 1.31
Dividend Yield 8.58%
TTM Dividend $1.92
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Long-Term Debt & Capital Lease Obligation $1,334,424,000
Total Assets $89,386,361,000
Intangible Assets $317,490,000
Total Liabilities $85,325,897,000
Shares Outstanding (Diluted Average) 237,597,000

Earnings Per Share History

Next Fiscal Year Estimate $1.99
Dec2015 $1.91
Dec2014 $2.24
Dec2013 $1.82
Dec2012 $1.76
Dec2011 $1.38
Dec2010 $1.14
Dec2009 -$0.06

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.98
Dec2015 $1.92
Dec2014 $1.84
Dec2013 $1.50
Dec2012 $1.17
Dec2011 $0.75
Dec2010 $0.36
Dec2009 -$0.02

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – August 2016
10 Best Dividend Paying Stocks for the Enterprising Investor – August 2016
5 Undervalued Companies with a Low Beta – August 2016
Dividend Investors Should Research These 10 Stocks – July 2016
5 Undervalued Companies with a Low Beta – July 2016

Other ModernGraham posts about related companies

Equity Residential Valuation – August 2016 $EQR
Host Hotels and Resorts Inc Valuation – July 2016 $HST
Iron Mountain Inc Valuation – July 2016 $IRM
Vornado Realty Trust Valuation – July 2016 $VNO
Public Storage Valuation – July 2016 $PSA
Macerich Co Valuation – July 2016 $MAC
HCP Inc Valuation – July 2016 $HCP
Apartment Investment & Management Co Valuation – July 2016 $AIV
Crown Castle International Corp Valuation – June 2016 $CCI
General Growth Properties Inc Valuation – June 2016 $GGP

Disclaimer:

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

Starwood Property Trust Inc Stock Valuation – February 2016 $STWD

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Starwood Property Trust Inc (STWD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Starwood Property Trust, Inc. is a holding company that operates as a real estate investment trust (REIT). The Company, through its subsidiaries, focuses on originating, acquiring, financing and managing commercial mortgage loans, commercial mortgage-backed securities (CMBS), and other commercial real estate-related debt investments in the United States and Europe. The Company operates through two segments: Lending Segment, and Investing and Servicing Segment. The Company’s Lending Segment represents investments in real estate-related loans and securities that are held-for-investment. The Investing and Servicing Segment includes servicing businesses in the United States and Europe, an investment business that acquires and manages real estate finance investments, and a mortgage loan business. The Company is externally managed and advised by SPT Management, LLC, an affiliate of Starwood Capital Group.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of STWD

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,309,192,222 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 20733233.33% Pass
5. Moderate PEmg Ratio PEmg < 20 8.89 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.02 Pass
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

STWD value chart February 2016

EPSmg $2.01
MG Growth Estimate 15.00%
MG Value $77.31
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $29.12
MG Value based on 0% Growth $17.07
Market Implied Growth Rate 0.20%
Current Price $17.86
% of Intrinsic Value 23.10%

Starwood Property Trust, 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. 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 $0.76 in 2011 to an estimated $2.01 for 2015. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.2% 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.

Starwood Property Trust, Inc. performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

STWD charts February 2016

Graham Number $29.20
PEmg 8.89
PB Ratio 1.02
Dividend Yield 10.75%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Long-Term Debt $1,320,207,000
Total Assets $91,819,407,000
Intangible Assets $331,517,000
Total Liabilities $87,648,634,000
Shares Outstanding (Diluted Average) 237,925,000

Earnings Per Share History

Next Fiscal Year Estimate $2.16
Dec2014 $2.24
Dec2013 $1.82
Dec2012 $1.76
Dec2011 $1.38
Dec2010 $1.14

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.01
Dec2014 $1.84
Dec2013 $1.50
Dec2012 $1.18
Dec2011 $0.76
Dec2010 $0.38

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – February 2016
Starwood Property Trust Inc. Valuation – October 2015 Update $STWD
10 Most Undervalued Companies for the Enterprising Investor – October 2015
The Best Companies of the Banking Industry – October 2015
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – October 2015

Other ModernGraham posts about related companies

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HCP Inc Valuation – January 2016 Update $HCP
Macerich Co Valuation – January 2016 Update $MAC
American Tower Corp Valuation – November 2015 Update $AMT
Weyerhaeuser Co Valuation – November 2015 Update $WY
Boston Properties Inc. Valuation – November 2015 Update $BXP
Welltower Inc. Valuation – November 2015 Update $HCN
Kimco Realty Corporation Valuation – November 2015 Update $KIM
Prologis Inc. Valuation – October 2015 Update $PLD
HCP Inc. Valuation – October 2015 Update $HCP

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.

Starwood Property Trust Inc. Valuation – October 2015 Update $STWD

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

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

In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

What follows is a specific look at how Starwood Property Trust Inc. (STWD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Starwood Property Trust, Inc. is a holding company that operates as a real estate investment trust (REIT). The Company, through its subsidiaries, focuses on originating, acquiring, financing and managing commercial mortgage loans, commercial mortgage-backed securities (CMBS), and other commercial real estate-related debt investments in the United States and Europe. The Company operates through two segments: Lending Segment, and Investing and Servicing Segment. The Company’s Lending Segment represents investments in real estate-related loans and securities that are held-for-investment. The Investing and Servicing Segment includes servicing businesses in the United States and Europe, an investment business that acquires and manages real estate finance investments, and a mortgage loan business. The Company is externally managed and advised by SPT Management, LLC, an affiliate of Starwood Capital Group.
[level-free]

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

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

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

ModernGraham Valuation of STWD – October 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,902,897,918 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 2039900.00% Pass
5. Moderate PEmg Ratio PEmg < 20 10.32 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.15 Pass
Score
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

STWD value Chart October 2015

EPSmg $1.97
MG Growth Estimate 15.00%
MG Value $76.02
Opinion Undervalued
MG Value based on 3% Growth $28.63
MG Value based on 0% Growth $16.78
Market Implied Growth Rate 0.91%
Current Price $20.38
% of Intrinsic Value 26.81%

Starwood Property Trust Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor has concerns regarding the company’s short history as a publicly traded entity while the Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the next stage of the analysis.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $0.75 in 2011 to an estimated $1.97 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.91% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

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

Stage 3: Information for Further Research

STWD Charts October 2015

Graham Number $28.55
PEmg 10.32
PB Ratio 1.15
Dividend Yield 9.42%
Number of Consecutive Years of Dividend Growth 7

 

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Most Recent Balance Sheet Figures

Long-Term Debt $1,315,245,000
Total Assets $101,585,200,000
Intangible Assets $316,044,000
Total Liabilities $97,391,410,000
Shares Outstanding (Diluted Average) 235,831,000

Earnings Per Share History

Next Fiscal Year Estimate $2.06
Dec14 $2.24
Dec13 $1.82
Dec12 $1.76
Dec11 $1.38
Dec10 $1.14
Dec09 -$0.06

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.97
Dec14 $1.84
Dec13 $1.50
Dec12 $1.17
Dec11 $0.75
Dec10 $0.36
Dec09 -$0.02

Recommended Reading:

Other ModernGraham posts about the company

10 Most Undervalued Companies for the Enterprising Investor – October 2015
The Best Companies of the Banking Industry – October 2015
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – October 2015
10 Companies Benjamin Graham Would Invest In Today – October 2015
10 Most Undervalued Companies for the Enterprising Investor – August 2015

Other ModernGraham posts about related companies

The Best Companies of the Banking Industry – October 2015
Comerica Inc. Valuation – October 2015 Update $CMA
Bank of New York Mellon Corporation Analysis – October 2015 Update $BK
Fifth Third Bancorp Analysis – October 2015 Update $FITB
Huntington Bancshares Inc. Analysis – October 2015 Update $HBAN
JPMorgan Chase & Co. Analysis – September 2015 Update $JPM
Citigroup Inc. Analysis – September 2015 Update $C
Wells Fargo & Co. Analysis – September 2015 Update $WFC
People’s United Financial Inc. Analysis – August 2015 Update $PBCT
M&T Bank Corporation Analysis – August 2015 Update $MTB

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 review our detailed disclaimer.

Starwood Property Trust Inc. Analysis – Initial Coverage $STWD

starwood-property-trustIn the wake of the great financial crisis it can sometimes be difficult for Intelligent Investors to find a solid financial company in which to invest, because they require specific achievements over the historical period.  Many investors may simply decide to throw out the worst years with the rationale that they are outliers that shouldn’t be considered when evaluating the company’s prospects, but doing so would involve speculation.  We don’t know whether the financial crisis will happen again, but we do know that if it does, we can expect to see similar results as we did before.  By continuing to require the same standards for the historical period, Intelligent Investors are able to whittle down banks to only those with the best financial position, and then they are able to determine an intrinsic value to get a sense of whether the company is a good investment.  In addition, a company must have strong financial statements to prove that it is stable enough for Intelligent Investors.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Starwood Property Trust Inc. (STWD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Starwood Property Trust, Inc. is a holding company that operates as a real estate investment trust (REIT). The Company, through its subsidiaries, focuses on originating, acquiring, financing and managing commercial mortgage loans, commercial mortgage-backed securities (CMBS), and other commercial real estate-related debt investments in the United States and Europe. The Company operates through two segments: Lending Segment, and Investing and Servicing Segment. The Company’s Lending Segment represents investments in real estate-related loans and securities that are held-for-investment. The Investing and Servicing Segment includes servicing businesses in the United States and Europe, an investment business that acquires and manages real estate finance investments, and a mortgage loan business. The Company is externally managed and advised by SPT Management, LLC, an affiliate of Starwood Capital Group.

Defensive Investor – must pass all 6 of the following tests: Score = 3/6

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Earnings Stability – positive earnings per share for at least 10 straight years – FAIL
  3. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  4. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  5. Moderate PEmg ratio – PEmg is less than 20 – PASS
  6. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

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

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

Valuation Summary

Key Data:

Recent Price $21.47
MG Value $76.15
MG Opinion Undervalued
Value Based on 3% Growth $28.68
Value Based on 0% Growth $16.81
Market Implied Growth Rate 1.18%
PEmg 10.85
PB Ratio 1.27

Balance Sheet – March 2015

Total Debt $1,324,100,000
Total Assets $111,980,000,000
Intangible Assets $279,200,000
Total Liabilities $108,123,000,000
Outstanding Shares 229,000,000

Earnings Per Share

2015 (estimate) $2.07
2014 $2.24
2013 $1.82
2012 $1.76
2011 $1.38
2010 $1.14

Earnings Per Share – ModernGraham 

2015 (estimate) $1.98
2014 $1.84
2013 $1.50
2012 $1.18
2011 $0.76
2010 $0.38

Dividend History

Conclusion

Starwood Property Trust Inc. qualifies for the Enterprising Investor but not the Defensive Investor.  The Defensive Investor is concerned by the short history as a publicly traded company, while the company passes all of the Enterprising Investor’s requirements.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities.  As for a valuation, the company appears undervalued after growing its EPSmg (normalized earnings) from $0.76 in 2011 to an estimated $1.98 for 2015.  This level of demonstrated growth is greater than the market’s implied estimate of 1.18% earnings growth and leads the ModernGraham valuation model, which is based on Benjamin Graham’s formula, to return an estimate of intrinsic value above the market price.

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

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

10 Low PE Stock Picks for the Enterprising Investor – March 2019

There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I’ve selected 10 low PE stocks for the Enterprising Investor.  These companies have the lowest PEmg (price / normalized earnings) ratio out of all companies reviewed by ModernGraham. Each company has been determined to be suitable for the Enterprising Investor and undervalued according to the ModernGraham approach.

Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to select companies that present a moderate (though still low) amount of risk.

LyondellBasell Industries NV (LYB)

LyondellBasell Industries NV is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. 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 Undervalued after growing its EPSmg (normalized earnings) from $6.13 in 2014 to an estimated $10.84 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.41% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into LyondellBasell Industries NV revealed the company was trading above its Graham Number of $77.64. The company pays a dividend of $3.55 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 7.68, which was below the industry average of 20.47, 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 $-16.01.

LyondellBasell Industries NV performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

Lincoln National Corporation (LNC)

Lincoln National Corporation 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. 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 $4.25 in 2014 to an estimated $7.01 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.58% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Lincoln National Corporation revealed the company was trading below its Graham Number of $117.31. The company pays a dividend of $0.87 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 7.33, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Lincoln National Corporation performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)

Synchrony Financial (SYF)

Synchrony Financial 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. 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 $2.22 in 2015 to an estimated $3.36 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.7% 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 Synchrony Financial revealed the company was trading below its Graham Number of $43.03. The company pays a dividend of $0.72 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 9.91, which was below the industry average of 21.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Synchrony Financial fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

BorgWarner Inc. (BWA)

BorgWarner Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. 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 Undervalued after growing its EPSmg (normalized earnings) from $2.58 in 2015 to an estimated $3.51 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.72% 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 above the price.

At the time of valuation, further research into BorgWarner Inc. revealed the company was trading below its Graham Number of $43.32. The company pays a dividend of $0.68 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 11.93, which was below the industry average of 21.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.33.

BorgWarner Inc. performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)

Citizens Financial Group Inc (CFG)

Citizens Financial Group 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. 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 $-0.08 in 2015 to an estimated $3.21 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.47% 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 Citizens Financial Group Inc revealed the company was trading below its Graham Number of $60.22. The company pays a dividend of $0.98 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.44, which was below the industry average of 16.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Citizens Financial Group Inc fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

Morgan Stanley (MS)

Morgan Stanley 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. 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 $1.23 in 2014 to an estimated $3.46 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.9% 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 Morgan Stanley revealed the company was trading below its Graham Number of $63.69. The company pays a dividend of $0.9 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.29, which was below the industry average of 18, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Morgan Stanley fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

Bank of America Corp (BAC)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.76 in 2015 to an estimated $2.2 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.46% 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 Bank of America Corp revealed the company was trading below its Graham Number of $39.29. The company pays a dividend of $0.54 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 13.42, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Bank of America Corp performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)

KeyCorp (KEY)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.91 in 2014 to an estimated $1.24 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.16% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into KeyCorp revealed the company was trading below its Graham Number of $22.58. The company pays a dividend of $0.38 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 12.83, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

KeyCorp fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

Huntington Bancshares Incorporated (HBAN)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.66 in 2014 to an estimated $0.96 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.68% 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 Huntington Bancshares Incorporated revealed the company was trading below its Graham Number of $15.53. The company pays a dividend of $0.35 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.86, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Huntington Bancshares Incorporated fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

Regions Financial Corp (RF)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.52 in 2014 to an estimated $1.1 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.75% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Regions Financial Corp revealed the company was trading below its Graham Number of $21.6. The company pays a dividend of $0.32 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 13.99, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Regions Financial Corp fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

What do you think?  Are these companies a good value for Enterprising Investors?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:

The author held a long position in Starwood Property Trust Inc (STWD) but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing those holdings within the next 72 hours.  This article is not investment advice and all readers are encouraged to speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not related to the companies mentioned in any capacity.  Please take a moment to read our detailed disclaimer.

10 Low PE Stock Picks for the Enterprising Investor – May 2018

enterprising low PE

There are a number of great companies in the market today. By using the ModernGraham Valuation Model, I’ve selected 10 low PE stocks for the Enterprising Investor.  Each company has been determined to be suitable for the Enterprising Investor and undervalued according to the ModernGraham approach.

Defensive Investors are defined as investors who are seeking to minimize risk to the fullest extent. Enterprising Investors, on the other hand, are able to do substantial research and can select companies that present a moderate (though still low) amount of risk.  Learn more about the difference between Defensive Investors and Enterprising Investors.

Bed Bath & Beyond Inc. (BBBY)

Bed Bath & Beyond Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history. 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 $4.19 in 2014 to an estimated $4.19 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.57% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Bed Bath & Beyond Inc. revealed the company was trading below its Graham Number of $34.59. The company pays a dividend of $0.38 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 5.36, which was below the industry average of 35.42, 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 $-3.6.  (See the full valuation)

Signet Jewelers Ltd. (SIG)

Signet Jewelers Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history. 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 $3.86 in 2014 to an estimated $6.07 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.22% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Signet Jewelers Ltd. revealed the company was trading below its Graham Number of $61.99. The company pays a dividend of $1.04 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 8.06, which was below the industry average of 30.22, 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 $-3.32.  (See the full valuation)

Lucara Diamond Corp (TSE:LUC)

Lucara Diamond Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history. 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 $0.08 in 2014 to an estimated $0.22 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.98% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Lucara Diamond Corp revealed the company was trading above its Graham Number of $1.96. The company pays a dividend of $0.1 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 10.45, which was below the industry average of 42.77, 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 $-0.03.  (See the full valuation)

Newell Brands Inc (NWL)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.28 in 2014 to an estimated $2.89 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.48% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Newell Brands Inc revealed the company was trading below its Graham Number of $41.25. The company pays a dividend of $0.88 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 9.46, which was below the industry average of 20.37, 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 $-26.44.  (See the full valuation)

Lincoln National Corporation (LNC)

Lincoln National Corporation 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. 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 $4.25 in 2014 to an estimated $7.21 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.03% 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 Lincoln National Corporation revealed the company was trading below its Graham Number of $121.79. The company pays a dividend of $0.87 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 10.56, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

Gilead Sciences, Inc. (GILD)

Gilead Sciences, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. 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 Undervalued after growing its EPSmg (normalized earnings) from $3.61 in 2014 to an estimated $7.05 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.33% 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 above the price.

At the time of valuation, further research into Gilead Sciences, Inc. revealed the company was trading above its Graham Number of $46.47. The company pays a dividend of $2.08 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.16, which was below the industry average of 28.67, 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 $-13.66.  (See the full valuation)

AT&T Inc. (T)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $3.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into AT&T Inc. revealed the company was trading below its Graham Number of $41.02. The company pays a dividend of $1.97 per share, for a yield of 5.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.23, which was below the industry average of 41.47, 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 $-36.26.  (See the full valuation)

Principal Financial Group Inc (PFG)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.62 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% 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 Principal Financial Group Inc revealed the company was trading below its Graham Number of $74.18. The company pays a dividend of $1.87 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 10.92, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

Verizon Communications Inc. (VZ)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.11 in 2014 to an estimated $4.58 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.11% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Verizon Communications Inc. revealed the company was trading above its Graham Number of $29.66. The company pays a dividend of $2.34 per share, for a yield of 4.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.71, which was below the industry average of 37.96, 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 $-45.  (See the full valuation)

LyondellBasell Industries NV (LYB)

LyondellBasell Industries NV is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PB ratio. 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 Undervalued after growing its EPSmg (normalized earnings) from $6.13 in 2014 to an estimated $9.75 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.3% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into LyondellBasell Industries NV revealed the company was trading above its Graham Number of $66.06. The company pays a dividend of $3.55 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.1, which was below the industry average of 30.04, 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 $-13.94.  (See the full valuation)

Disclaimer:

The author held a long position in Starwood Property Trust Inc (STWD) but did not hold a position in any other company mentioned in this article at the time of publication and had no intention of changing those holdings within the next 72 hours.  This article is not investment advice and all readers are encouraged to speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not related to the companies mentioned in any capacity.  Please take a moment to read our detailed disclaimer.

SL Green Realty Corp Valuation – April 2018 $SLG

Company Profile (excerpt from Reuters): SL Green Realty Corp., incorporated on June 10, 1997, is a self-managed real estate investment trust (REIT), with in-house capabilities in property management, acquisitions and dispositions, financing, development and redevelopment, construction and leasing. The Company operates through two segments: real estate, and debt and preferred equity investments. It acquires, owns, repositions, manages and leases commercial office, retail and multifamily properties in the New York Metropolitan area. Its subsidiaries include Reckson Associates Realty Corp. (Reckson) and Reckson Operating Partnership, L.P. (ROP).

SLG Chart

SLG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SLG – April 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,581,074,975 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.08 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -57.60% Fail
6. Moderate PEmg Ratio PEmg < 20 49.00 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.54 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 4.08 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 7.30 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 $1.94
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $28.11
MG Value based on 0% Growth $16.48
Market Implied Growth Rate 20.25%
Current Price $95.00
% of Intrinsic Value N/A

SL Green Realty Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net 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 $3.59 in 2014 to an estimated $1.94 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.25% 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 SL Green Realty Corp revealed the company was trading above its Graham Number of $48.11. The company pays a dividend of $3.14 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 49, which was above the industry average of 44.79. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-66.44.

SL Green Realty Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$66.44
Graham Number $48.11
PEmg 49.00
Current Ratio 4.08
PB Ratio 1.54
Current Dividend $3.14
Dividend Yield 3.30%
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 12/1/2017
Total Current Assets $1,062,979,000
Total Current Liabilities $260,422,000
Long-Term Debt $5,855,132,000
Total Assets $13,982,904,000
Intangible Assets $0
Total Liabilities $7,757,811,000
Shares Outstanding (Diluted Average) 100,772,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2017 $0.87
Dec2016 $2.34
Dec2015 $2.70
Dec2014 $5.23
Dec2013 $1.10
Dec2012 $1.74
Dec2011 $7.33
Dec2010 $3.45
Dec2009 $0.54
Dec2008 $6.20
Dec2007 $10.78
Dec2006 $4.38
Dec2005 $3.20
Dec2004 $4.75
Dec2003 $2.66
Dec2002 $2.09
Dec2001 $1.94
Dec2000 $2.93
Dec1999 $1.37
Dec1998 $1.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.94
Dec2017 $2.22
Dec2016 $2.81
Dec2015 $3.24
Dec2014 $3.59
Dec2013 $2.79
Dec2012 $3.71
Dec2011 $5.02
Dec2010 $4.26
Dec2009 $4.79
Dec2008 $6.56
Dec2007 $6.21
Dec2006 $3.76
Dec2005 $3.27
Dec2004 $3.16
Dec2003 $2.31
Dec2002 $2.06

Recommended Reading:

Other ModernGraham posts about the company

SL Green Realty Corp Analysis – Initial Coverage $SLG

Other ModernGraham posts about related companies

Regency Centers Corp Valuation – Initial Coverage $REG
Host Hotels & Resorts Inc Valuation – April 2018 $HST
Vornado Realty Trust Valuation – April 2018 $VNO
Public Storage Valuation – March 2018 $PSA
Macerich Co Valuation – March 2018 $MAC
HCP Inc Valuation – March 2018 $HCP
Apartment Investment & Management Co Valuation – March 2018 $AIV
Crown Castle International Corp Valuation – March 2018 $CCI
GGP Inc Valuation – March 2018 $GGP
Starwood Property Trust Inc Valuation – March 2018 $STWD

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.

Regency Centers Corp Valuation – Initial Coverage $REG

Company Profile (excerpt from Reuters): Regency Centers Corporation, incorporated on July 8, 1993, is a real estate investment trust (REIT). The Company is the general partner of Regency Centers, L.P. (the Operating Partnership). The Company is engaged in the ownership, management, leasing, acquisition and development of retail shopping centers through the Operating Partnership. The Company’s properties include Palm Valley Marketplace, Shops at Arizona, Amerige Heights Town Center, Clayton Valley Shopping Center, Five Points Shopping Center, French Valley Village Center, Hasley Canyon Village, Pleasant Hill Shopping Center, Snell & Branham Plaza, Applewood Shopping Center, Kent Place, Black Rock, Spring Valley Shopping Center and Pebblebrook Plaza.

REG Chart

REG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of REG – April 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,909,273,268 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.94 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 -811.32% Fail
6. Moderate PEmg Ratio PEmg < 20 45.62 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.52 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.94 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -258.52 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 $1.30
MG Growth Estimate 4.63%
MG Value $23.14
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.88
MG Value based on 0% Growth $11.07
Market Implied Growth Rate 18.56%
Current Price $59.40
% of Intrinsic Value 256.74%

Regency Centers Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or 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. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.99 in 2014 to an estimated $1.3 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.56% 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 Regency Centers Corp revealed the company was trading above its Graham Number of $34.44. The company pays a dividend of $2.09 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 45.62, which was above the industry average of 44.79. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.72.

Regency Centers Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.72
Graham Number $34.44
PEmg 45.62
Current Ratio 0.94
PB Ratio 1.52
Current Dividend $2.09
Dividend Yield 3.52%
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 12/1/2017
Total Current Assets $220,366,000
Total Current Liabilities $234,272,000
Long-Term Debt $3,594,977,000
Total Assets $11,145,717,000
Intangible Assets $478,826,000
Total Liabilities $4,453,665,000
Shares Outstanding (Diluted Average) 171,270,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.35
Dec2017 $1.00
Dec2016 $1.42
Dec2015 $1.36
Dec2014 $1.80
Dec2013 $1.40
Dec2012 -$0.08
Dec2011 $0.35
Dec2010 -$0.14
Dec2009 -$0.74
Dec2008 $1.66
Dec2007 $2.65
Dec2006 $2.89
Dec2005 $2.23
Dec2004 $2.03
Dec2003 $2.11
Dec2002 $1.81
Dec2001 $1.69
Dec2000 $1.08
Dec1999 $1.61
Dec1998 $1.75

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.30
Dec2017 $1.32
Dec2016 $1.38
Dec2015 $1.23
Dec2014 $0.99
Dec2013 $0.45
Dec2012 $0.05
Dec2011 $0.33
Dec2010 $0.63
Dec2009 $1.26
Dec2008 $2.27
Dec2007 $2.51
Dec2006 $2.37
Dec2005 $2.06
Dec2004 $1.90
Dec2003 $1.78
Dec2002 $1.60

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

Host Hotels & Resorts Inc Valuation – April 2018 $HST
Vornado Realty Trust Valuation – April 2018 $VNO
Public Storage Valuation – March 2018 $PSA
Macerich Co Valuation – March 2018 $MAC
HCP Inc Valuation – March 2018 $HCP
Apartment Investment & Management Co Valuation – March 2018 $AIV
Crown Castle International Corp Valuation – March 2018 $CCI
GGP Inc Valuation – March 2018 $GGP
Starwood Property Trust Inc Valuation – March 2018 $STWD
Simon Property Group Inc Valuation – March 2018 $SPG

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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