Intel Corporation Valuation – April 2019 #INTC

Company Profile (excerpt from Reuters): Intel Corporation, incorporated on March 1, 1989, is engaged in designing and manufacturing products and technologies, such as the cloud. The Company’s segments are Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Intel Security Group (ISecG), Programmable Solutions Group (PSG), All Other and New Technology Group (NTG). The Company delivers computer, networking and communications platforms to a set of customers, including original equipment manufacturers (OEMs), original design manufacturers (ODMs), cloud and communications service providers, as well as industrial, communications and automotive equipment manufacturers. It offers platforms to integrate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. Its platforms are managed by additional hardware, software and services offered by Intel.

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – April 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 $249,631,094,870 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.73 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 61.87% Pass
6. Moderate PEmg Ratio PEmg < 20 16.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.42 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 1.73 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.06 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 PassModernGraham Valuation of INTC – April 2019

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.40
MG Growth Estimate 8.02%
MG Value $83.35
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $49.26
MG Value based on 0% Growth $28.88
Market Implied Growth Rate 3.91%
Current Price $55.45
% of Intrinsic Value 66.53%

Intel 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 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 $2.21 in 2015 to an estimated $3.4 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.91% 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 Intel Corporation revealed the company was trading above its Graham Number of $39.14. The company pays a dividend of $1.2 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 16.32, which was below the industry average of 35.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.24.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.24
Graham Number $39.14
PEmg 16.32
Current Ratio 1.73
PB Ratio 3.42
Current Dividend $1.20
Dividend Yield 2.16%
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 12/1/2018
Total Current Assets $28,787,000,000
Total Current Liabilities $16,626,000,000
Long-Term Debt $25,098,000,000
Total Assets $127,963,000,000
Intangible Assets $36,349,000,000
Total Liabilities $52,981,000,000
Shares Outstanding (Diluted Average) 4,620,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Dec2018 $4.48
Dec2017 $1.99
Dec2016 $2.12
Dec2015 $2.33
Dec2014 $2.31
Dec2013 $1.89
Dec2012 $2.13
Dec2011 $2.39
Dec2010 $2.01
Dec2009 $0.77
Dec2008 $0.92
Dec2007 $1.18
Dec2006 $0.86
Dec2005 $1.40
Dec2004 $1.16
Dec2003 $0.85
Dec2002 $0.46
Dec2001 $0.19
Dec2000 $1.51
Dec1999 $1.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.40
Dec2018 $2.91
Dec2017 $2.13
Dec2016 $2.18
Dec2015 $2.21
Dec2014 $2.15
Dec2013 $2.00
Dec2012 $1.91
Dec2011 $1.69
Dec2010 $1.27
Dec2009 $0.95
Dec2008 $1.06
Dec2007 $1.11
Dec2006 $1.04
Dec2005 $1.02
Dec2004 $0.83
Dec2003 $0.72

Recommended Reading:

Other ModernGraham posts about the company

Intel Corp Valuation – November 2018 $INTC
Intel Corp Valuation – February 2018 $INTC
5 Overvalued Dow Components – July 2016
Intel Corporation Valuation – May 2016 $INTC
11 Best Stocks For Value Investors This Week – 11/21/15

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Emerson Electric Co Valuation – April 2019 #EMR
Skyworks Solutions Inc Valuation – March 2019 #SWKS
Garmin Ltd Valuation – March 2019 #GRMN
Hewlett Packard Enterprise Co Valuation – March 2019 #HPE
Fortive Corp Valuation – March 2019 #FTV

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.

Mattel Inc Valuation – March 2019 #MAT

Company Profile (excerpt from Reuters): Mattel, Inc., incorporated on March 6, 1968, designs, manufactures, and markets a range of toy products around the world, which are sold to its customers and directly to consumers. The Company’s segments are North America, which consists of the United States and Canada; International, and American Girl. The Company’s portfolio of brands and products are grouped into approximately four brand categories, including Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts & Crafts Brands.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAT – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,472,878,134 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.88 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 -182.75% Fail
6. Moderate PEmg Ratio PEmg < 20 -12.70 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.69 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 1.88 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.59 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.02
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$14.79
MG Value based on 0% Growth -$8.67
Market Implied Growth Rate -10.60%
Current Price $12.95
% of Intrinsic Value N/A

Mattel 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 net current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.7 in 2015 to an estimated $-1.02 for 2019. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Mattel Inc revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -12.7, which was below the industry average of 28.42, 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 $-6.43.

Mattel 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) -$6.43
Graham Number $0.00
PEmg -12.70
Current Ratio 1.88
PB Ratio 6.69
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 $2,352,440,000
Total Current Liabilities $1,252,608,000
Long-Term Debt $2,851,723,000
Total Assets $5,243,465,000
Intangible Assets $1,973,952,000
Total Liabilities $4,574,000,000
Shares Outstanding (Diluted Average) 345,726,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.57
Dec2018 -$1.54
Dec2017 -$3.07
Dec2016 $0.92
Dec2015 $1.08
Dec2014 $1.45
Dec2013 $2.58
Dec2012 $2.22
Dec2011 $2.18
Dec2010 $1.86
Dec2009 $1.45
Dec2008 $1.05
Dec2007 $1.54
Dec2006 $1.53
Dec2005 $1.01
Dec2004 $1.35
Dec2003 $1.22
Dec2002 $0.52
Dec2001 $0.68
Dec2000 -$1.01
Dec1999 -$0.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.02
Dec2018 -$0.91
Dec2017 -$0.20
Dec2016 $1.38
Dec2015 $1.70
Dec2014 $2.03
Dec2013 $2.23
Dec2012 $1.96
Dec2011 $1.76
Dec2010 $1.52
Dec2009 $1.34
Dec2008 $1.29
Dec2007 $1.38
Dec2006 $1.25
Dec2005 $1.06
Dec2004 $0.90
Dec2003 $0.53

Recommended Reading:

Other ModernGraham posts about the company

Mattel Inc Valuation – June 2018 $MAT
Mattel Inc. Valuation – June 2017 $MAT
Mattel Inc Valuation – January 2016 Update $MAT
Mattel Inc. Analysis – September 2015 Update $MAT
30 Companies in the Spotlight This Week – 5/23/15

Other ModernGraham posts about related companies

Hasbro Inc Valuation – January 2019 $HAS
Electronic Arts Inc Valuation – November 2018 $EA
Activision Blizzard Inc Valuation – June 2018 $ATVI
Mattel Inc Valuation – June 2018 $MAT
Hasbro Inc Valuation – March 2018 $HAS
Electronic Arts Inc Valuation – February 2018 $EA
Mattel Inc. Valuation – June 2017 $MAT
Hasbro Inc Valuation – July 2016 $HAS
Electronic Arts Inc Valuation – May 2016 $EA
Mattel Inc Valuation – January 2016 Update $MAT

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.

Constellation Brands Inc Valuation – March 2019 #STZ

Company Profile (excerpt from Reuters): Constellation Brands, Inc., incorporated on December 4, 1972, is an international beverage alcohol company. The Company is a producer and marketer of beer, wine and spirits with operations in the United States, Canada, Mexico, New Zealand and Italy. The Company’s segments include Beer, Wine and Spirits, and Corporate Operations and Other. The Company’s wine portfolio is complemented by select spirits brands and other select beverage alcohol products. It is a multi-category supplier (beer, wine and spirits) of beverage alcohol in the United States.

STZ Chart

STZ data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of STZ – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $31,587,195,102 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.08 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 514.04% Pass
6. Moderate PEmg Ratio PEmg < 20 16.86 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.81 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 1.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 42.79 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.84
MG Growth Estimate 15.00%
MG Value $378.81
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $142.67
MG Value based on 0% Growth $83.63
Market Implied Growth Rate 4.18%
Current Price $165.91
% of Intrinsic Value 43.80%

Constellation Brands, Inc. Class A 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. 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 Undervalued after growing its EPSmg (normalized earnings) from $4.88 in 2015 to an estimated $9.84 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.18% 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 above the price.

At the time of valuation, further research into Constellation Brands, Inc. Class A revealed the company was trading above its Graham Number of $110.32. The company pays a dividend of $2.08 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 16.86, which was below the industry average of 22.75, 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 $-65.35.

Constellation Brands, Inc. Class A receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$65.35
Graham Number $110.32
PEmg 16.86
Current Ratio 1.08
PB Ratio 2.81
Current Dividend $2.08
Dividend Yield 1.25%
Number of Consecutive Years of Dividend Growth 3

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 $3,638,500,000
Total Current Liabilities $3,363,400,000
Long-Term Debt $11,772,500,000
Total Assets $27,890,400,000
Intangible Assets $11,369,600,000
Total Liabilities $16,370,400,000
Shares Outstanding (Diluted Average) 194,820,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $12.86
Feb2018 $11.55
Feb2017 $7.52
Feb2016 $5.18
Feb2015 $4.17
Feb2014 $9.83
Feb2013 $2.04
Feb2012 $2.13
Feb2011 $2.62
Feb2010 $0.45
Feb2009 -$1.40
Feb2008 -$2.83
Feb2007 $1.38
Feb2006 $1.36
Feb2005 $1.19
Feb2004 $1.03
Feb2003 $1.10
Feb2002 $0.78
Feb2001 $0.65
Feb2000 $0.53
Feb1999 $0.34

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.84
Feb2018 $8.10
Feb2017 $6.17
Feb2016 $5.22
Feb2015 $4.88
Feb2014 $4.63
Feb2013 $1.74
Feb2012 $1.12
Feb2011 $0.43
Feb2010 -$0.51
Feb2009 -$0.68
Feb2008 -$0.08
Feb2007 $1.27
Feb2006 $1.17
Feb2005 $1.04
Feb2004 $0.91
Feb2003 $0.79

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies for Value Investors with a Low Beta – January 2019
Constellation Brands Inc Valuation – May 2018 $STZ
Constellation Brands Inc Valuation – February 2017 $STZ
Constellation Brands Inc Valuation – August 2016 $STZ
19 Best Stocks For Value Investors This Week – 1/9/16

Other ModernGraham posts about related companies

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Brown-Forman Corp Valuation – May 2018 $BF.B
Philip Morris International Inc Valuation – March 2018 $PM
Altria Group Inc Valuation – March 2018 $MO
Molson Coors Brewing Co Valuation – March 2018 $TAP
Molson Coors Brewing Co Valuation – Initial Coverage $TAP

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.

Host Hotels & Resorts Inc Valuation – February 2019 $HST

Company Profile (excerpt from Reuters): Host Hotels & Resorts, Inc. (Host Inc.), incorporated on September 28, 1998, operates as a self-managed and self-administered real estate investment trust (REIT). The Company operates through hotel ownership segment. The Company owned properties and conducted operations through Host Hotels & Resorts, L.P. (Host L.P.), of which Host Inc. was the general partner and of which it held approximately 99% of the partnership interests (OP units), as of December 31, 2016. As of February 20, 2017, its lodging portfolio consisted of 96 primarily luxury and upper-upscale hotels containing approximately 53,500 rooms, with the majority located in the United States, and with seven of the properties located outside of the United States in Australia, Brazil, Canada and Mexico. In addition, it owns non-controlling interests in two international joint ventures: approximately a 33% interest in a joint venture in Europe, which owns 10 luxury and upper-upscale hotels with approximately 3,900 rooms in Belgium, France, Germany, Spain, Sweden, the Netherlands and the United Kingdom, and a 9% indirect interest, through joint ventures, in five operating hotels and two hotels in the final stages of completion in India.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HST – 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 $13,386,799,159 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.13 Pass
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 -494.12% Fail
6. Moderate PEmg Ratio PEmg < 20 20.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.81 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 7.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.51 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 $0.87
MG Growth Estimate 15.00%
MG Value $33.47
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $12.61
MG Value based on 0% Growth $7.39
Market Implied Growth Rate 6.13%
Current Price $18.04
% of Intrinsic Value 53.90%

Host Hotels and Resorts 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, and the high PEmg 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 $0.43 in 2014 to an estimated $0.87 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.13% 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 Host Hotels and Resorts Inc revealed the company was trading above its Graham Number of $13.82. The company pays a dividend of $0.8 per share, for a yield of 4.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.75, which was below the industry average of 81.61, 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 $-3.88.

Host Hotels and Resorts Inc performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.88
Graham Number $13.82
PEmg 20.75
Current Ratio 7.13
PB Ratio 1.81
Current Dividend $0.80
Dividend Yield 4.43%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,889,000,000
Total Current Liabilities $265,000,000
Long-Term Debt $4,079,000,000
Total Assets $12,155,000,000
Intangible Assets $0
Total Liabilities $4,760,000,000
Shares Outstanding (Diluted Average) 740,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.90
Dec2017 $0.76
Dec2016 $1.02
Dec2015 $0.74
Dec2014 $0.96
Dec2013 $0.42
Dec2012 $0.08
Dec2011 -$0.02
Dec2010 -$0.21
Dec2009 -$0.45
Dec2008 $0.72
Dec2007 $1.30
Dec2006 $1.45
Dec2005 $0.37
Dec2004 -$0.12
Dec2003 -$0.07
Dec2002 -$0.19
Dec2001 $0.08
Dec2000 $0.62
Dec1999 $0.90
Dec1998 $0.22

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.87
Dec2017 $0.83
Dec2016 $0.79
Dec2015 $0.60
Dec2014 $0.43
Dec2013 $0.10
Dec2012 -$0.03
Dec2011 $0.03
Dec2010 $0.22
Dec2009 $0.52
Dec2008 $0.92
Dec2007 $0.87
Dec2006 $0.54
Dec2005 $0.06
Dec2004 -$0.04
Dec2003 $0.09
Dec2002 $0.22

Recommended Reading:

Other ModernGraham posts about the company

Host Hotels & Resorts Inc Valuation – April 2018 $HST
Host Hotels and Resorts Inc Valuation – July 2016 $HST
23 Companies in the Spotlight This Week – 3/9/15
Host Hotels and Resorts Inc. Annual Valuation – 2015 $HST
16 Companies in the Spotlight This Week – 3/8/14

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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.

TE Connectivity Ltd Valuation – January 2019 $TEL

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TEL – 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 $26,914,447,325 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 124.33% Pass
6. Moderate PEmg Ratio PEmg < 20 13.42 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.54 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 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.70 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 $5.85
MG Growth Estimate 5.69%
MG Value $116.24
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $84.78
MG Value based on 0% Growth $49.70
Market Implied Growth Rate 2.46%
Current Price $78.46
% of Intrinsic Value 67.50%

TE Connectivity Ltd 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 $4.24 in 2015 to an estimated $5.85 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 the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into TE Connectivity Ltd revealed the company was trading above its Graham Number of $62.63. The company pays a dividend of $1.68 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 13.42, which was below the industry average of 33.25, 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 $-9.59.

TE Connectivity Ltd performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.59
Graham Number $62.63
PEmg 13.42
Current Ratio 1.41
PB Ratio 2.54
Current Dividend $1.68
Dividend Yield 2.14%
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 $6,199,000,000
Total Current Liabilities $4,410,000,000
Long-Term Debt $3,037,000,000
Total Assets $20,386,000,000
Intangible Assets $7,388,000,000
Total Liabilities $9,555,000,000
Shares Outstanding (Diluted Average) 350,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.55
Sep2018 $7.27
Sep2017 $4.70
Sep2016 $5.44
Sep2015 $5.89
Sep2014 $4.27
Sep2013 $3.02
Sep2012 $2.59
Sep2011 $2.81
Sep2010 $2.41
Sep2009 -$7.11
Sep2008 $3.67
Sep2007 -$1.11
Sep2006 $2.40
Sep2005 $2.30
Sep2004 $1.53
Sep2003 -$0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.85
Sep2018 $5.83
Sep2017 $4.97
Sep2016 $4.81
Sep2015 $4.24
Sep2014 $3.28
Sep2013 $2.11
Sep2012 $1.39
Sep2011 $0.57
Sep2010 -$0.35
Sep2009 -$1.14
Sep2008 $1.82
Sep2007 $0.90
Sep2006 $1.66
Sep2005 $1.08
Sep2004 $0.39
Sep2003 -$0.15

Recommended Reading:

Other ModernGraham posts about the company

TE Connectivity Ltd Valuation – March 2018 $TEL
9 Best Stocks For Value Investors This Week – 6/24/16
TE Connectivity Ltd Valuation – June 2016 $TEL
13 Best Stocks For Value Investors This Week – 12/12/15
TE Connectivity Ltd Valuation – December 2015 Update $TEL

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Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN

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.

Intel Corp Valuation – November 2018 $INTC

Company Profile (excerpt from Reuters): Intel Corporation, incorporated on March 1, 1989, is engaged in designing and manufacturing products and technologies, such as the cloud. The Company’s segments are Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Intel Security Group (ISecG), Programmable Solutions Group (PSG), All Other and New Technology Group (NTG). The Company delivers computer, networking and communications platforms to a set of customers, including original equipment manufacturers (OEMs), original design manufacturers (ODMs), cloud and communications service providers, as well as industrial, communications and automotive equipment manufacturers. It offers platforms to integrate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. Its platforms are managed by additional hardware, software and services offered by Intel.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – November 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 $222,860,087,779 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.51 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 67.70% Pass
6. Moderate PEmg Ratio PEmg < 20 16.61 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.18 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 1.51 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.53 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 $2.94
MG Growth Estimate 5.48%
MG Value $57.21
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $42.62
MG Value based on 0% Growth $24.98
Market Implied Growth Rate 4.06%
Current Price $48.83
% of Intrinsic Value 85.35%

Intel 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.15 in 2014 to an estimated $2.94 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.06% 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 Intel Corporation revealed the company was trading above its Graham Number of $38.87. The company pays a dividend of $1.08 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 16.61, which was below the industry average of 36.27, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.85.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.85
Graham Number $38.87
PEmg 16.61
Current Ratio 1.51
PB Ratio 3.18
Current Dividend $1.08
Dividend Yield 2.21%
Number of Consecutive Years of Dividend Growth 3

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 $29,590,000,000
Total Current Liabilities $19,574,000,000
Long-Term Debt $25,338,000,000
Total Assets $128,242,000,000
Intangible Assets $36,513,000,000
Total Liabilities $56,759,000,000
Shares Outstanding (Diluted Average) 4,648,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.56
Dec2017 $1.99
Dec2016 $2.12
Dec2015 $2.33
Dec2014 $2.31
Dec2013 $1.89
Dec2012 $2.13
Dec2011 $2.39
Dec2010 $2.01
Dec2009 $0.77
Dec2008 $0.92
Dec2007 $1.18
Dec2006 $0.86
Dec2005 $1.40
Dec2004 $1.16
Dec2003 $0.85
Dec2002 $0.46
Dec2001 $0.19
Dec2000 $1.51
Dec1999 $1.05
Dec1998 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.94
Dec2017 $2.13
Dec2016 $2.18
Dec2015 $2.21
Dec2014 $2.15
Dec2013 $2.00
Dec2012 $1.91
Dec2011 $1.69
Dec2010 $1.27
Dec2009 $0.95
Dec2008 $1.06
Dec2007 $1.11
Dec2006 $1.04
Dec2005 $1.02
Dec2004 $0.83
Dec2003 $0.72
Dec2002 $0.70

Recommended Reading:

Other ModernGraham posts about the company

Intel Corp Valuation – February 2018 $INTC
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Intel Corporation Valuation – May 2016 $INTC
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Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY
Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC

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.

LaSalle Hotel Properties Valuation – September 2018 $LHO

Company Profile (excerpt from Reuters): LaSalle Hotel Properties, incorporated on January 15, 1998, is a self-administered and self-managed real estate investment trust. The Company primarily buys, owns, redevelops and leases upscale and luxury full-service hotels located in convention, resort and urban business markets. The Company owns interests in hotels and guest rooms located in nine states of the United States and the District of Columbia (DC). The Company’s operations are conducted through LaSalle Hotel Operating Partnership, L.P. (the Operating Partnership).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LHO – September 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 $3,842,945,759 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.62 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 -840.74% Fail
6. Moderate PEmg Ratio PEmg < 20 28.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.63 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 1.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.17 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 $1.23
MG Growth Estimate 4.92%
MG Value $22.47
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $17.77
MG Value based on 0% Growth $10.42
Market Implied Growth Rate 9.95%
Current Price $34.81
% of Intrinsic Value 154.89%

LaSalle Hotel Properties 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 high PEmg 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 Overvalued after growing its EPSmg (normalized earnings) from $0.92 in 2014 to an estimated $1.23 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.95% 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 LaSalle Hotel Properties revealed the company was trading above its Graham Number of $13.85. The company pays a dividend of $1.8 per share, for a yield of 5.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 28.41, which was below the industry average of 75.38, 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 $-8.56.

LaSalle Hotel Properties receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$8.56
Graham Number $13.85
PEmg 28.41
Current Ratio 1.62
PB Ratio 1.63
Current Dividend $1.80
Dividend Yield 5.17%
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 6/1/2018
Total Current Assets $343,334,000
Total Current Liabilities $211,316,000
Long-Term Debt $1,078,403,000
Total Assets $3,651,538,000
Intangible Assets $0
Total Liabilities $1,289,719,000
Shares Outstanding (Diluted Average) 110,552,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.39
Dec2017 $1.54
Dec2016 $2.07
Dec2015 $1.09
Dec2014 $1.88
Dec2013 $0.73
Dec2012 $0.52
Dec2011 $0.16
Dec2010 -$0.36
Dec2009 -$0.34
Dec2008 $0.25
Dec2007 $1.53
Dec2006 $1.85
Dec2005 $0.67
Dec2004 $0.39
Dec2003 $1.37
Dec2002 -$0.21
Dec2001 $0.21
Dec2000 $0.32
Dec1999 $0.91
Dec1998 $0.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.23
Dec2017 $1.58
Dec2016 $1.49
Dec2015 $1.09
Dec2014 $0.92
Dec2013 $0.34
Dec2012 $0.12
Dec2011 $0.02
Dec2010 $0.17
Dec2009 $0.55
Dec2008 $0.98
Dec2007 $1.28
Dec2006 $1.04
Dec2005 $0.59
Dec2004 $0.50
Dec2003 $0.55
Dec2002 $0.22

Recommended Reading:

Other ModernGraham posts about the company

5 Best Stocks for Value Investors This Week – 3/18/17
LaSalle Hotel Properties Valuation – Initial Coverage $LHO

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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.

Littelfuse Inc Valuation – September 2018 $LFUS

Company Profile (excerpt from Reuters): Littelfuse, Inc., incorporated on November 25, 1991, is a supplier of circuit protection products for the electronics, automotive and industrial markets. The Company operates through three segments: Electronics, Automotive and Industrial. In addition to the portfolio of circuit protection products and solutions, the Company offers electronic reed switches and sensors, automotive sensors for comfort and safety systems and a range of electromechanical and electronic switch and control devices for commercial and specialty vehicles, as well as protection relays and power distribution centers for the control and distribution of electricity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LFUS – September 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 $5,704,732,255 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.59 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 120.38% Pass
6. Moderate PEmg Ratio PEmg < 20 40.15 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.86 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 3.59 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.99 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.57
MG Growth Estimate 6.28%
MG Value $117.27
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $80.75
MG Value based on 0% Growth $47.33
Market Implied Growth Rate 15.82%
Current Price $223.56
% of Intrinsic Value 190.63%

Littelfuse, 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 PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.93 in 2014 to an estimated $5.57 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.82% 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 Littelfuse, Inc. revealed the company was trading above its Graham Number of $83.77. The company pays a dividend of $1.36 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 40.15, which was below the industry average of 40.28, 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 $-6.29.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.29
Graham Number $83.77
PEmg 40.15
Current Ratio 3.59
PB Ratio 3.86
Current Dividend $1.36
Dividend Yield 0.61%
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 6/1/2018
Total Current Assets $958,201,000
Total Current Liabilities $267,163,000
Long-Term Debt $687,538,000
Total Assets $2,587,994,000
Intangible Assets $1,222,279,000
Total Liabilities $1,117,974,000
Shares Outstanding (Diluted Average) 25,401,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.49
Dec2017 $5.21
Dec2016 $4.60
Dec2015 $3.56
Dec2014 $4.32
Dec2013 $3.94
Dec2012 $3.40
Dec2011 $3.90
Dec2010 $3.52
Dec2009 $0.43
Dec2008 $0.37
Dec2007 $1.64
Dec2006 $1.06
Dec2005 $0.78
Dec2004 $1.59
Dec2003 $0.70
Dec2002 $0.44
Dec2001 $0.19
Dec2000 $1.69
Dec1999 $1.16
Dec1998 $0.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.57
Dec2017 $4.51
Dec2016 $4.10
Dec2015 $3.84
Dec2014 $3.93
Dec2013 $3.50
Dec2012 $2.96
Dec2011 $2.48
Dec2010 $1.65
Dec2009 $0.76
Dec2008 $0.98
Dec2007 $1.24
Dec2006 $1.00
Dec2005 $0.90
Dec2004 $0.94
Dec2003 $0.69
Dec2002 $0.75

Recommended Reading:

Other ModernGraham posts about the company

Littelfuse Inc Valuation – Initial Coverage $LFUS

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Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR

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.

Comtech Telecommunications Corp Valuation – August 2018 $CMTL

Company Profile (excerpt from Reuters): Comtech Telecommunications Corp., incorporated on December 30, 1986, designs, develops, produces and markets products, systems and services for communications solutions. The Company operates through two segments: Commercial Solutions and Government Solutions. The Company offers communications solutions, including command and control technologies, safety and security technologies, and enterprise technologies. The Company serves system and network suppliers in the global satellite, defense, broadcast and aerospace industries, as well as the federal government of the United States, the state and local governments of the United States, and foreign governments.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMTL – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $823,471,047 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.72 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 -76.45% Fail
6. Moderate PEmg Ratio PEmg < 20 44.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.62 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 1.72 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.48 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.76
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $10.98
MG Value based on 0% Growth $6.44
Market Implied Growth Rate 17.93%
Current Price $33.60
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.42 in 2014 to an estimated $0.76 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.93% 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 Comtech Telecomm. Corp. revealed the company was trading above its Graham Number of $23.15. The company pays a dividend of $0.6 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 44.37, which was above the industry average of 37.58. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.09.

Comtech Telecomm. Corp. 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) -$3.09
Graham Number $23.15
PEmg 44.37
Current Ratio 1.72
PB Ratio 1.62
Current Dividend $0.60
Dividend Yield 1.79%
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 4/1/2018
Total Current Assets $261,906,000
Total Current Liabilities $152,505,000
Long-Term Debt $161,856,000
Total Assets $834,072,000
Intangible Assets $536,698,000
Total Liabilities $336,288,000
Shares Outstanding (Diluted Average) 24,052,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.17
Jul2017 $0.67
Jul2016 -$0.46
Jul2015 $1.42
Jul2014 $1.37
Jul2013 $0.97
Jul2012 $1.42
Jul2011 $2.22
Jul2010 $1.91
Jul2009 $1.73
Jul2008 $2.76
Jul2007 $2.42
Jul2006 $1.72
Jul2005 $1.42
Jul2004 $0.92
Jul2003 $0.53
Jul2002 $0.07
Jul2001 $0.38
Jul2000 -$0.31
Jul1999 $0.51
Jul1998 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.76
Jul2017 $0.63
Jul2016 $0.72
Jul2015 $1.37
Jul2014 $1.42
Jul2013 $1.52
Jul2012 $1.86
Jul2011 $2.12
Jul2010 $2.09
Jul2009 $2.12
Jul2008 $2.16
Jul2007 $1.71
Jul2006 $1.21
Jul2005 $0.86
Jul2004 $0.49
Jul2003 $0.26
Jul2002 $0.14

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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.

Stella-Jones Inc Valuation – July 2018 $TSE-SJ

Company Profile (excerpt from Reuters): Stella-Jones Inc is a Canada-based company, which is a producer and marketer of pressure treated wood products. The Company supplies North America’s railroad operators with railway ties and timbers, and the continent’s electrical utilities and telecommunication companies with utility poles. It manufactures and distributes residential lumber and accessories to retailers for outdoor applications, as well as industrial products, which include marine and foundation pilings, construction timbers, wood for bridges and coal tar-based products. It has treating and pole peeling facilities across Canada and the United States, and sells its products primarily in these two countries. The Company operates approximately 35 treating plants, approximately 15 pole-peeling facilities and a coal tar distillery. These facilities are located in approximately five Canadian provinces and approximately 18 American states, and are complemented by an extensive distribution network across North America.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SJ – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,116,609,944 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.27 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 241.72% Pass
6. Moderate PEmg Ratio PEmg < 20 20.27 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.71 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 6.27 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.63 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.22
MG Growth Estimate 11.98%
MG Value $72.20
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $32.26
MG Value based on 0% Growth $18.91
Market Implied Growth Rate 5.88%
Current Price $45.09
% of Intrinsic Value 62.45%

Stella-Jones Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.24 in 2014 to an estimated $2.22 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.88% 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 Stella-Jones Inc revealed the company was trading above its Graham Number of $28.79. The company pays a dividend of $0.44 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 20.27, which was below the industry average of 24.98, 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 $3.39.

Stella-Jones Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.39
Graham Number $28.79
PEmg 20.27
Current Ratio 6.27
PB Ratio 2.71
Current Dividend $0.44
Dividend Yield 0.98%
Number of Consecutive Years of Dividend Growth 12

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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $1,056,037,000
Total Current Liabilities $168,298,000
Long-Term Debt $559,570,000
Total Assets $1,976,668,000
Intangible Assets $411,721,000
Total Liabilities $821,258,000
Shares Outstanding (Diluted Average) 69,351,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.29
Dec2017 $2.42
Dec2016 $2.22
Dec2015 $2.04
Dec2014 $1.50
Dec2013 $1.34
Dec2012 $1.13
Dec2011 $0.87
Dec2010 $0.57
Dec2009 $0.59
Dec2008 $0.56
Dec2007 $0.51
Dec2006 $0.44
Dec2005 $0.27
Dec2004 $0.18
Dec2003 $0.10
Dec2002 $0.10
Dec2001 $0.01
Dec2000 $0.09
Dec1999 $0.09
Dec1998 $0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.22
Dec2017 $2.10
Dec2016 $1.84
Dec2015 $1.56
Dec2014 $1.24
Dec2013 $1.04
Dec2012 $0.84
Dec2011 $0.67
Dec2010 $0.56
Dec2009 $0.53
Dec2008 $0.46
Dec2007 $0.37
Dec2006 $0.27
Dec2005 $0.17
Dec2004 $0.11
Dec2003 $0.08
Dec2002 $0.07

Recommended Reading:

Other ModernGraham posts about the company

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Disclaimer:

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

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