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TrueBlue Inc Valuation – October 2018 $TBI

Company Profile (excerpt from Reuters): TrueBlue, Inc., incorporated on March 18, 1985, is a provider of specialized workforce solutions. The Company is engaged in providing staffing, on-site workforce management and recruitment process outsourcing services. The Company operates through three segments: PeopleReady, PeopleManagement and PeopleScout. Its PeopleReady segment provides blue-collar contingent staffing through the PeopleReady service line. Its PeopleManagement segment provides primarily on-premise contingent staffing and on-premise management of those contingent staffing services through four segments: Staff Management a SMX (Staff Management), SIMOS Insourcing Solutions Corporation (SIMOS), Centerline and PlaneTechs. Its PeopleScout segment provides permanent employee recruitment process outsourcing (RPO) and management of outsourced labor service providers through two segments: PeopleScout and PeopleScout MSP. Through its subsidiary, TMP Holdings LTD, the Company provides employer branding and recruitment marketing solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TBI – October 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,029,902,476 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.98 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.23% Pass
6. Moderate PEmg Ratio PEmg < 20 19.85 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.82 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.98 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.55 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.28
MG Growth Estimate 2.08%
MG Value $16.16
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.52
MG Value based on 0% Growth $10.86
Market Implied Growth Rate 5.67%
Current Price $25.35
% of Intrinsic Value 156.84%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.12 in 2014 to an estimated $1.28 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.67% 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 Trueblue Inc revealed the company was trading above its Graham Number of $24.52. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 19.85, which was below the industry average of 27.67, 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 $-3.16.

Trueblue Inc 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) -$3.16
Graham Number $24.52
PEmg 19.85
Current Ratio 1.98
PB Ratio 1.82
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $432,966,000
Total Current Liabilities $219,129,000
Long-Term Debt $117,199,000
Total Assets $1,124,220,000
Intangible Assets $341,455,000
Total Liabilities $560,919,000
Shares Outstanding (Diluted Average) 40,469,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.98
Dec2017 $1.34
Dec2016 -$0.37
Dec2015 $1.71
Dec2014 $1.59
Dec2013 $1.11
Dec2012 $0.84
Dec2011 $0.73
Dec2010 $0.46
Dec2009 $0.20
Dec2008 -$0.10
Dec2007 $1.44
Dec2006 $1.45
Dec2005 $1.18
Dec2004 $0.75
Dec2003 $0.41
Dec2002 $0.28
Dec2001 $0.23
Dec2000 $0.24
Dec1999 $0.53
Dec1998 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.28
Dec2017 $0.98
Dec2016 $0.85
Dec2015 $1.38
Dec2014 $1.12
Dec2013 $0.81
Dec2012 $0.59
Dec2011 $0.49
Dec2010 $0.48
Dec2009 $0.60
Dec2008 $0.85
Dec2007 $1.23
Dec2006 $1.02
Dec2005 $0.73
Dec2004 $0.46
Dec2003 $0.32
Dec2002 $0.30

Recommended Reading:

Other ModernGraham posts about the company

Trueblue Inc Valuation – Initial Coverage $TBI

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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.

Trueblue Inc Valuation – Initial Coverage $TBI

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 Trueblue Inc (TBI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TrueBlue, Inc. is a provider of specialized workforce solutions. The Company is engaged in providing staffing, on-site workforce management and recruitment process outsourcing services. The Company operates through three segments: PeopleReady, PeopleManagement and PeopleScout. Its PeopleReady segment provides blue-collar contingent staffing through the PeopleReady service line. Its PeopleManagement segment provides primarily on-premise contingent staffing and on-premise management of those contingent staffing services through four segments: Staff Management a SMX (Staff Management), SIMOS Insourcing Solutions Corporation (SIMOS), Centerline and PlaneTechs. Its PeopleScout segment provides permanent employee recruitment process outsourcing (RPO) and management of outsourced labor service providers through two segments: PeopleScout and PeopleScout MSP.

TBI Chart

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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 TBI – March 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,124,245,737 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.70 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 433.93% Pass
6. Moderate PEmg Ratio PEmg < 20 24.88 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.13 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.70 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.77 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.08
MG Growth Estimate 4.87%
MG Value $19.69
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $15.65
MG Value based on 0% Growth $9.17
Market Implied Growth Rate 8.19%
Current Price $26.85
% of Intrinsic Value 136.34%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.81 in 2013 to an estimated $1.08 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.19% 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 Trueblue Inc revealed the company was trading above its Graham Number of $21.42. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 24.88, which was above the industry average of 21.9. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.26.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.26
Graham Number $21.42
PEmg 24.88
Current Ratio 1.70
PB Ratio 2.13
Current Dividend $0.00
Dividend Yield 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 12/1/2016
Total Current Assets $427,803,000
Total Current Liabilities $251,135,000
Long-Term Debt $135,362,000
Total Assets $1,130,445,000
Intangible Assets $349,894,000
Total Liabilities $605,266,000
Shares Outstanding (Diluted Average) 41,648,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.65
Dec2016 -$0.37
Dec2015 $1.71
Dec2014 $1.59
Dec2013 $1.11
Dec2012 $0.84
Dec2011 $0.73
Dec2010 $0.46
Dec2009 $0.20
Dec2008 -$0.10
Dec2007 $1.44
Dec2006 $1.45
Dec2005 $1.18
Dec2004 $0.75
Dec2003 $0.41
Dec2002 $0.28
Dec2001 $0.23
Dec2000 $0.24
Dec1999 $0.53
Dec1998 $0.46
Dec1997 $0.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.08
Dec2016 $0.85
Dec2015 $1.38
Dec2014 $1.12
Dec2013 $0.81
Dec2012 $0.59
Dec2011 $0.49
Dec2010 $0.48
Dec2009 $0.60
Dec2008 $0.85
Dec2007 $1.23
Dec2006 $1.02
Dec2005 $0.73
Dec2004 $0.46
Dec2003 $0.32
Dec2002 $0.30
Dec2001 $0.32

Recommended Reading:

Other ModernGraham posts about the company

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

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Korn-Ferry International Valuation – Initial Coverage $KFY
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Kelly Services Inc Valuation – Initial Coverage $KELYA
Alliance Data Systems Corp Valuation – February 2017 $ADS
John Wiley & Sons Inc Valuation – Initial Coverage $JW.A

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.

IHS Markit Ltd Valuation – February 2019 $INFO

Company Profile (excerpt from Reuters): IHS Markit Ltd., formerly Markit Ltd., incorporated on January 16, 2014, is a provider of critical information and analytics for the major industries, financial markets and governments. The Company operates through four segments: Resources, Transportation, Consolidated Markets & Solutions (CMS) and Financial Services. The Resources segment includes its energy and chemicals product offerings. The Transportation segment includes its aerospace, defense and security (AD&S); automotive, and maritime and trade (M&T) product offerings. The CMS segment includes its product design; technology, media and telecommunication, and economics and country risk (ECR) product offerings. The Financial Services segment includes its information, processing and solutions product offerings.

Downloadable PDF version of this valuation:

ModernGraham Valuation of INFO – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,585,803,166 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.47 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 163.56% Pass
6. Moderate PEmg Ratio PEmg < 20 34.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.70 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.00 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.53
MG Growth Estimate 14.70%
MG Value $57.87
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $22.14
MG Value based on 0% Growth $12.98
Market Implied Growth Rate 13.18%
Current Price $53.21
% of Intrinsic Value 91.95%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.77 in 2015 to an estimated $1.53 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 13.18% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into IHS Markit Ltd revealed the company was trading above its Graham Number of $34.03. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 34.85, which was above the industry average of 29.23. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.05.

IHS Markit Ltd scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.05
Graham Number $34.03
PEmg 34.85
Current Ratio 0.47
PB Ratio 2.70
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 11/1/2018
Total Current Assets $1,099,400,000
Total Current Liabilities $2,320,300,000
Long-Term Debt $4,889,200,000
Total Assets $16,062,300,000
Intangible Assets $14,320,800,000
Total Liabilities $8,041,800,000
Shares Outstanding (Diluted Average) 407,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.53
Nov2018 $1.33
Nov2017 $1.00
Nov2016 $0.48
Nov2015 $0.97
Nov2014 $0.79
Nov2013 $0.55
Nov2012 $0.67
Nov2011 $0.58
Nov2010 $0.60
Nov2009 $0.59
Nov2008 $0.44
Nov2007 $0.39
Nov2006 $0.28
Nov2005 $0.21
Nov2004 $0.31
Nov2003 $0.17
Nov2002 $0.15
Nov2001 $0.01
Nov2000 -$0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.53
Nov2018 $0.99
Nov2017 $0.80
Nov2016 $0.69
Nov2015 $0.77
Nov2014 $0.66
Nov2013 $0.60
Nov2012 $0.60
Nov2011 $0.56
Nov2010 $0.52
Nov2009 $0.44
Nov2008 $0.36
Nov2007 $0.30
Nov2006 $0.24
Nov2005 $0.21
Nov2004 $0.18
Nov2003 $0.09

Recommended Reading:

Other ModernGraham posts about the company

IHS Markit Ltd Valuation – Initial Coverage April 2018 $INFO

Other ModernGraham posts about related companies

Automatic Data Processing Inc Valuation – February 2019 $ADP
Fiserv Inc Valuation – February 2019 $FISV
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Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI

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.

Automatic Data Processing Inc Valuation – February 2019 $ADP

Company Profile (excerpt from Reuters): Automatic Data Processing, Inc. (ADP), incorporated on June 12, 1961, is a provider of human capital management (HCM) solutions to employers, offering solutions to businesses of various sizes. The Company also provides business process outsourcing solutions. Its segments include Employer Services and Professional Employer Organization (PEO) Services. The Company markets its solutions primarily through its direct sales force. Employer Services also markets its solutions through indirect sales channels, such as marketing relationships with banks and certified public accountants, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADP – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $65,200,741,302 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.05 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 63.57% Pass
6. Moderate PEmg Ratio PEmg < 20 36.51 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 13.76 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.05 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.44 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 $4.10
MG Growth Estimate 5.66%
MG Value $81.26
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $59.44
MG Value based on 0% Growth $34.84
Market Implied Growth Rate 14.01%
Current Price $149.67
% of Intrinsic Value 184.18%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.98 in 2015 to an estimated $4.1 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.01% 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 Automatic Data Processing revealed the company was trading above its Graham Number of $30.23. The company pays a dividend of $2.52 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 36.51, which was above the industry average of 29.23. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.39.

Automatic Data Processing 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) -$5.39
Graham Number $30.23
PEmg 36.51
Current Ratio 1.05
PB Ratio 13.76
Current Dividend $2.52
Dividend Yield 1.68%
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 12/1/2018
Total Current Assets $31,682,600,000
Total Current Liabilities $30,296,900,000
Long-Term Debt $2,002,300,000
Total Assets $38,806,300,000
Intangible Assets $3,248,100,000
Total Liabilities $34,042,400,000
Shares Outstanding (Diluted Average) 438,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.15
Jun2018 $3.66
Jun2017 $3.85
Jun2016 $3.25
Jun2015 $3.05
Jun2014 $3.14
Jun2013 $2.89
Jun2012 $2.82
Jun2011 $2.52
Jun2010 $2.40
Jun2009 $2.63
Jun2008 $2.34
Jun2007 $2.04
Jun2006 $2.68
Jun2005 $1.32
Jun2004 $1.18
Jun2003 $1.34
Jun2002 $1.75
Jun2001 $1.44
Jun2000 $1.31
Jun1999 $1.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.10
Jun2018 $3.51
Jun2017 $3.37
Jun2016 $3.10
Jun2015 $2.98
Jun2014 $2.88
Jun2013 $2.71
Jun2012 $2.60
Jun2011 $2.45
Jun2010 $2.42
Jun2009 $2.35
Jun2008 $2.11
Jun2007 $1.91
Jun2006 $1.78
Jun2005 $1.35
Jun2004 $1.38
Jun2003 $1.45

Recommended Reading:

Other ModernGraham posts about the company

Automatic Data Processing Inc Valuation – April 2018 $ADP
Automatic Data Processing Valuation – November 2016 $ADP
Automatic Data Processing Valuation – May 2016 $ADP
Automatic Data Processing Analysis – September 2015 Update $ADP
Automatic Data Processing Analysis – June 2015 Update $ADP

Other ModernGraham posts about related companies

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Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI
Convergys Corp Valuation – September 2018 $CVG

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.

Fiserv Inc Valuation – February 2019 $FISV

Company Profile (excerpt from Reuters): Fiserv, Inc., incorporated on February 19, 1992, is a provider of financial services technology. The Company provides account processing systems; electronic payments processing products and services, such as electronic bill payment and presentment services, card-based transaction processing and network services, automated clearing house (ACH) transaction processing, account-to-account transfers, and person-to-person payments; Internet and mobile banking systems, and related services, including document and payment card production and distribution, check processing and imaging, source capture systems, and lending and risk management products and services. The Company operates through two segments: Payments and Industry Products (Payments) and the Financial Institution Services (Financial). The Payments segment provides electronic bill payment and presentment services, Internet and mobile banking software and services, person-to-person payment services, debit and credit card processing and other electronic payments software and services. The Financial segment provides banks, thrifts, credit unions, and leasing and finance companies with account processing services, item processing and source capture services, loan origination and servicing products, cash management and consulting services, and other products and services. The Company serves banks, thrifts, credit unions, investment management firms, leasing and finance companies, retailers, merchants, mutual savings banks and building societies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FISV – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $33,052,344,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.11 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 157.29% Pass
6. Moderate PEmg Ratio PEmg < 20 29.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 14.91 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.11 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 27.83 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.86
MG Growth Estimate 15.00%
MG Value $110.10
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $41.47
MG Value based on 0% Growth $24.31
Market Implied Growth Rate 10.52%
Current Price $84.50
% of Intrinsic Value 76.75%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.4 in 2015 to an estimated $2.86 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.52% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Fiserv Inc revealed the company was trading above its Graham Number of $21.04. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 29.55, which was above the industry average of 29.23. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.67.

Fiserv Inc 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) -$16.67
Graham Number $21.04
PEmg 29.55
Current Ratio 1.11
PB Ratio 14.91
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,224,000,000
Total Current Liabilities $2,010,000,000
Long-Term Debt $5,955,000,000
Total Assets $11,262,000,000
Intangible Assets $7,845,000,000
Total Liabilities $8,969,000,000
Shares Outstanding (Diluted Average) 404,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.42
Dec2018 $2.87
Dec2017 $2.89
Dec2016 $2.08
Dec2015 $1.50
Dec2014 $1.49
Dec2013 $1.22
Dec2012 $1.11
Dec2011 $1.64
Dec2010 $0.82
Dec2009 $0.77
Dec2008 $0.87
Dec2007 $0.65
Dec2006 $0.64
Dec2005 $0.68
Dec2004 $0.48
Dec2003 $0.40
Dec2002 $0.34
Dec2001 $0.27
Dec2000 $0.23
Dec1999 $0.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.86
Dec2018 $2.44
Dec2017 $2.10
Dec2016 $1.63
Dec2015 $1.40
Dec2014 $1.32
Dec2013 $1.19
Dec2012 $1.13
Dec2011 $1.08
Dec2010 $0.78
Dec2009 $0.75
Dec2008 $0.71
Dec2007 $0.61
Dec2006 $0.56
Dec2005 $0.50
Dec2004 $0.39
Dec2003 $0.32

Recommended Reading:

Other ModernGraham posts about the company

Fiserv Inc Valuation – April 2018 $FISV
Fiserv Inc Valuation – August 2016 $FISV
Fiserv Inc. Analysis – 2015 Annual Update $FISV
15 Companies in the Spotlight This Week – 5/31/14
Fiserv Inc. 2014 Annual Valuation $FISV

Other ModernGraham posts about related companies

Rollins Inc Valuation – February 2019 $ROL
Iron Mountain Inc Valuation – February 2019 $IRM
Cintas Corp Valuation – February 2019 $CTAS
Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI
Convergys Corp Valuation – September 2018 $CVG
Strategic Education Inc Valuation – August 2018 $STRA

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.

Rollins Inc Valuation – February 2019 $ROL

Company Profile (excerpt from Reuters): Rollins, Inc., incorporated on February 24, 1948, is a service company, which operates in pest and termite control business segment. The Company, through its subsidiaries, provides its services to both residential and commercial customers in North America, Australia, and Europe with international franchises in Central America, the Caribbean, the Middle East, Asia, the Mediterranean, Europe, Africa, Canada, Australia, and Mexico. The Company’s subsidiaries include Orkin LLC. (Orkin), Western Pest Services (Western), The Industrial Fumigant Company, LLC (IFC), HomeTeam Pest Defense (HomeTeam), Rollins Australia and Rollins Wildlife Services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ROL – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,218,781,539 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 121.29% Pass
6. Moderate PEmg Ratio PEmg < 20 57.04 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 17.18 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $0.65
MG Growth Estimate 9.09%
MG Value $17.47
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $9.50
MG Value based on 0% Growth $5.57
Market Implied Growth Rate 24.27%
Current Price $37.36
% of Intrinsic Value 213.80%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.41 in 2015 to an estimated $0.65 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 24.27% 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 Rollins, Inc. revealed the company was trading above its Graham Number of $6.14. The company pays a dividend of $0.37 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 57.04, which was above the industry average of 29.23. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.29.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.29
Graham Number $6.14
PEmg 57.04
Current Ratio 0.96
PB Ratio 17.18
Current Dividend $0.37
Dividend Yield 1.00%
Number of Consecutive Years of Dividend Growth 17

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $286,021,000
Total Current Liabilities $299,029,000
Long-Term Debt $0
Total Assets $1,094,124,000
Intangible Assets $611,739,000
Total Liabilities $382,216,000
Shares Outstanding (Diluted Average) 327,316,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.77
Dec2018 $0.71
Dec2017 $0.55
Dec2016 $0.51
Dec2015 $0.47
Dec2014 $0.42
Dec2013 $0.37
Dec2012 $0.34
Dec2011 $0.31
Dec2010 $0.27
Dec2009 $0.25
Dec2008 $0.20
Dec2007 $0.19
Dec2006 $0.17
Dec2005 $0.15
Dec2004 $0.15
Dec2003 $0.10
Dec2002 $0.08
Dec2001 $0.05
Dec2000 $0.03
Dec1999 $0.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.65
Dec2018 $0.58
Dec2017 $0.49
Dec2016 $0.45
Dec2015 $0.41
Dec2014 $0.37
Dec2013 $0.33
Dec2012 $0.30
Dec2011 $0.26
Dec2010 $0.23
Dec2009 $0.21
Dec2008 $0.18
Dec2007 $0.16
Dec2006 $0.14
Dec2005 $0.12
Dec2004 $0.10
Dec2003 $0.07

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

Iron Mountain Inc Valuation – February 2019 $IRM
Cintas Corp Valuation – February 2019 $CTAS
Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI
Convergys Corp Valuation – September 2018 $CVG
Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL

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.

Iron Mountain Inc Valuation – February 2019 $IRM

Company Profile (excerpt from Reuters): Iron Mountain Incorporated, incorporated on June 26, 2014, is a holding company, which stores records, primarily physical records and data backup media, and provides information management services in various locations throughout North America, Europe, Latin America, Asia Pacific and Africa. The Company operates through five segments: North American Records and Information Management Business, North American Data Management Business, Western European Business, Other International Business, and Corporate and Other Business. The Company offers records and information management services, and data management services. The Company provides storage and information management services to legal, financial, healthcare, insurance, life sciences, energy, businesses services, entertainment and government organizations. As of December 31, 2016, the Company’s courier fleet consisted of approximately 4,500 owned or leased vehicles. Its other services include information destruction services (primarily secure shredding) (Destruction), information governance and digital solutions, compliant records management and consulting services, and other ancillary services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IRM – February 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,478,514,374 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -27.40% Fail
6. Moderate PEmg Ratio PEmg < 20 47.79 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.42 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -258.44 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.77
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $11.11
MG Value based on 0% Growth $6.51
Market Implied Growth Rate 19.65%
Current Price $36.61
% of Intrinsic Value N/A

Iron Mountain Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. 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 $1.13 in 2014 to an estimated $0.77 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 19.65% 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 Iron Mountain Inc revealed the company was trading above its Graham Number of $13.03. The company pays a dividend of $2.24 per share, for a yield of 6.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 47.79, which was above the industry average of 29.23. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.15.

Iron Mountain Inc 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) -$30.15
Graham Number $13.03
PEmg 47.79
Current Ratio 0.97
PB Ratio 5.42
Current Dividend $2.24
Dividend Yield 6.11%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,215,975,000
Total Current Liabilities $1,247,352,000
Long-Term Debt $8,109,179,000
Total Assets $11,805,969,000
Intangible Assets $6,002,212,000
Total Liabilities $9,867,093,000
Shares Outstanding (Diluted Average) 286,982,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.93
Dec2017 $0.69
Dec2016 $0.42
Dec2015 $0.58
Dec2014 $1.66
Dec2013 $0.50
Dec2012 $0.98
Dec2011 $2.02
Dec2010 -$0.29
Dec2009 $1.08
Dec2008 $0.40
Dec2007 $0.76
Dec2006 $0.64
Dec2005 $0.56
Dec2004 $0.48
Dec2003 $0.43
Dec2002 $0.30
Dec2001 -$0.24
Dec2000 -$0.15
Dec1999 -$0.13
Dec1998 -$0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.77
Dec2017 $0.71
Dec2016 $0.76
Dec2015 $1.00
Dec2014 $1.13
Dec2013 $0.87
Dec2012 $0.98
Dec2011 $0.92
Dec2010 $0.42
Dec2009 $0.74
Dec2008 $0.57
Dec2007 $0.63
Dec2006 $0.54
Dec2005 $0.43
Dec2004 $0.29
Dec2003 $0.15
Dec2002 -$0.01

Recommended Reading:

Other ModernGraham posts about the company

Iron Mountain Inc Valuation – April 2018 $IRM
Iron Mountain Inc Valuation – July 2016 $IRM
Iron Mountain Inc. Annual Valuation – 2015 $IRM
18 Companies in the Spotlight This Week – 5/17/14
Iron Mountain Inc. (IRM) Annual Valuation – 2014

Other ModernGraham posts about related companies

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Avery Dennison Corp Valuation – January 2019 $AVY
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Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI
Convergys Corp Valuation – September 2018 $CVG
Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA

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.

Cintas Corp Valuation – February 2019 $CTAS

Company Profile (excerpt from Reuters): Cintas Corporation, incorporated on November 13, 1986, is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. The Company’s segments include uniform rental and facility services, and first aid and safety services. Rental processing plants, rental branches, first aid and safety facilities, fire protection facilities, direct sales offices, distribution centers and manufacturing facilities are all utilized by the businesses included in All Other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,646,953,154 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.99 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 262.24% Pass
6. Moderate PEmg Ratio PEmg < 20 29.17 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.82 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.30 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.44
MG Growth Estimate 15.00%
MG Value $248.02
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $93.41
MG Value based on 0% Growth $54.76
Market Implied Growth Rate 10.34%
Current Price $187.92
% of Intrinsic Value 75.77%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.94 in 2015 to an estimated $6.44 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.34% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cintas Corporation revealed the company was trading above its Graham Number of $68.91. The company pays a dividend of $1.62 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 29.17, which was below the industry average of 29.23, 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 $-19.68.

Cintas Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.68
Graham Number $68.91
PEmg 29.17
Current Ratio 1.99
PB Ratio 6.82
Current Dividend $1.62
Dividend Yield 0.86%
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 11/1/2018
Total Current Assets $2,215,870,000
Total Current Liabilities $1,114,686,000
Long-Term Debt $2,536,408,000
Total Assets $7,405,083,000
Intangible Assets $3,354,133,000
Total Liabilities $4,377,839,000
Shares Outstanding (Diluted Average) 109,874,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.44
May2018 $7.56
May2017 $4.38
May2016 $6.21
May2015 $3.63
May2014 $3.05
May2013 $2.52
May2012 $2.27
May2011 $1.68
May2010 $1.40
May2009 $1.48
May2008 $2.15
May2007 $2.09
May2006 $1.92
May2005 $1.69
May2004 $1.54
May2003 $1.45
May2002 $1.36
May2001 $1.30
May2000 $1.14
May1999 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.44
May2018 $5.62
May2017 $4.42
May2016 $4.14
May2015 $2.94
May2014 $2.46
May2013 $2.07
May2012 $1.83
May2011 $1.66
May2010 $1.70
May2009 $1.85
May2008 $1.99
May2007 $1.85
May2006 $1.68
May2005 $1.53
May2004 $1.42
May2003 $1.31

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
Cintas Corp Valuation – April 2018 $CTAS
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Other ModernGraham posts about related companies

Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI
Convergys Corp Valuation – September 2018 $CVG
Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA

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.

Fidelity National Information Services Inc Valuation – January 2019 $FIS

Company Profile (excerpt from Reuters): Fidelity National Information Services, Inc. (FIS), incorporated on March 2, 2001, is a financial services technology company. The Company focuses on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. The Company operates through three segments: Integrated Financial Solutions (IFS), Global Financial Solutions (GFS), and Corporate and Other.

FIS Chart

FIS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FIS – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $34,661,328,720 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 183.97% Pass
6. Moderate PEmg Ratio PEmg < 20 36.36 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.45 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.94 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.91
MG Growth Estimate 8.96%
MG Value $76.92
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $42.20
MG Value based on 0% Growth $24.74
Market Implied Growth Rate 13.93%
Current Price $105.84
% of Intrinsic Value 137.61%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.82 in 2014 to an estimated $2.91 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.93% 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 Fidelity National Information Servcs Inc revealed the company was trading above its Graham Number of $48.48. The company pays a dividend of $1.16 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 36.36, which was above the industry average of 26.19. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.

Fidelity National Information Servcs Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$30.00
Graham Number $48.48
PEmg 36.36
Current Ratio 1.34
PB Ratio 3.45
Current Dividend $1.16
Dividend Yield 1.10%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,597,000,000
Total Current Liabilities $2,692,000,000
Long-Term Debt $8,998,000,000
Total Assets $23,694,000,000
Intangible Assets $18,599,000,000
Total Liabilities $13,528,000,000
Shares Outstanding (Diluted Average) 331,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.21
Dec2017 $3.93
Dec2016 $1.72
Dec2015 $2.19
Dec2014 $2.35
Dec2013 $1.68
Dec2012 $1.55
Dec2011 $1.53
Dec2010 $1.15
Dec2009 $0.44
Dec2008 $1.11
Dec2007 $2.86
Dec2006 $1.37
Dec2005 $1.53
Dec2004 $1.48
Dec2003 $1.40
Dec2002 $1.30
Dec2001 $1.26
Dec2000 $1.30
Dec1999 $1.07
Dec1998 $0.85

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.91
Dec2017 $2.63
Dec2016 $1.95
Dec2015 $2.00
Dec2014 $1.82
Dec2013 $1.46
Dec2012 $1.29
Dec2011 $1.24
Dec2010 $1.20
Dec2009 $1.30
Dec2008 $1.71
Dec2007 $1.92
Dec2006 $1.43
Dec2005 $1.44
Dec2004 $1.38
Dec2003 $1.31
Dec2002 $1.23

Recommended Reading:

Other ModernGraham posts about the company

Fidelity National Information Services Inc Valuation – March 2018 $FIS
Fidelity National Information Services Valuation – July 2016 $FIS
47 Companies in the Spotlight This Week – 5/16/15
Fidelity National Information Services Inc. Annual Valuation – 2015 $FIS
40 Companies in the Spotlight This Week – 2/21/15

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Disclaimer:

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

Avery Dennison Corp Valuation – January 2019 $AVY

Company Profile (excerpt from Reuters): Avery Dennison Corporation (Avery Dennison), incorporated on February 23, 1977, is engaged in the production of pressure-sensitive materials and a range of tickets, tags, labels and other converted products. The Company’s segments include Label and Graphic Materials (LGM); Retail Branding and Information Solutions (RBIS), and Industrial and Healthcare Materials (IHM). Some pressure-sensitive materials are sold to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting. Some materials are sold by it in converted form as tapes and reflective sheeting. The Company also manufactures and sells a range of other converted products and items not involving pressure-sensitive components, such as fasteners, tickets, tags, radio-frequency identification (RFID) inlays and tags, and imprinting equipment and related services, which the Company markets to retailers, apparel manufacturers, and brand owners. As of December 31, 2016, the Company operated approximately 180 manufacturing and distribution facilities and had operations in over 50 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AVY – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,116,923,152 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.00 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 -599.19% Fail
6. Moderate PEmg Ratio PEmg < 20 23.58 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.92 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.00 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2,158.83 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.98
MG Growth Estimate 11.25%
MG Value $123.25
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $57.66
MG Value based on 0% Growth $33.80
Market Implied Growth Rate 7.54%
Current Price $93.75
% of Intrinsic Value 76.06%

Avery Dennison 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 and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.27 in 2014 to an estimated $3.98 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 7.54% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Avery Dennison Corp revealed the company was trading above its Graham Number of $38.74. The company pays a dividend of $1.76 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 23.58, which was below the industry average of 26.19, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.07.

Avery Dennison 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) -$20.07
Graham Number $38.74
PEmg 23.58
Current Ratio 1.00
PB Ratio 7.92
Current Dividend $1.76
Dividend Yield 1.88%
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 9/1/2018
Total Current Assets $2,358,800,000
Total Current Liabilities $2,358,200,000
Long-Term Debt $1,295,300,000
Total Assets $5,181,900,000
Intangible Assets $1,101,700,000
Total Liabilities $4,134,800,000
Shares Outstanding (Diluted Average) 88,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.61
Dec2017 $3.13
Dec2016 $3.54
Dec2015 $2.95
Dec2014 $2.56
Dec2013 $2.13
Dec2012 $2.08
Dec2011 $1.78
Dec2010 $2.97
Dec2009 -$7.21
Dec2008 $2.70
Dec2007 $3.07
Dec2006 $3.72
Dec2005 $2.26
Dec2004 $2.78
Dec2003 $2.67
Dec2002 $2.59
Dec2001 $2.47
Dec2000 $2.84
Dec1999 $2.13
Dec1998 $2.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.98
Dec2017 $3.06
Dec2016 $2.90
Dec2015 $2.49
Dec2014 $2.27
Dec2013 $1.54
Dec2012 $0.98
Dec2011 $0.51
Dec2010 $0.26
Dec2009 -$0.42
Dec2008 $2.95
Dec2007 $3.02
Dec2006 $2.93
Dec2005 $2.54
Dec2004 $2.68
Dec2003 $2.60
Dec2002 $2.52

Recommended Reading:

Other ModernGraham posts about the company

Avery Dennison Corp Valuation – March 2018 $AVY
Avery Dennison Corp Valuation – June 2016 $AVY
Avery Dennison Corporation Annual Valuation – 2015 $AVY
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ModernGraham Valuation: Avery Dennison Corp (AVY)

Other ModernGraham posts about related companies

Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
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Convergys Corp Valuation – September 2018 $CVG
Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB

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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