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Suncor Energy Inc Valuation – August 2018 $TSE:SU

Company Profile (excerpt from Reuters): Suncor Energy Inc. (Suncor), is an integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production (E&P), and Refining and Marketing. In addition, it explores for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. It transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. It also markets third-party petroleum products. Suncor conducts energy trading activities focused principally on the marketing and trading of crude oil, natural gas, power and byproducts.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SU – 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 $87,090,000,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.90 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 0.33% Fail
6. Moderate PEmg Ratio PEmg < 20 30.89 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.94 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.90 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.79 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.75
MG Growth Estimate -2.96%
MG Value $4.51
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $25.34
MG Value based on 0% Growth $14.85
Market Implied Growth Rate 11.19%
Current Price $53.97
% of Intrinsic Value 1195.92%

Suncor Energy Inc. (USA) does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $2.18 in 2014 to an estimated $1.75 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.19% 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 Suncor Energy Inc. (USA) revealed the company was trading above its Graham Number of $44.06. The company pays a dividend of $1.28 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 30.89, which was below the industry average of 59.52, 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 $-22.06.

Suncor Energy Inc. (USA) 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) -$22.06
Graham Number $44.06
PEmg 30.89
Current Ratio 0.90
PB Ratio 1.94
Current Dividend $1.28
Dividend Yield 2.37%
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 $10,697,000,000
Total Current Liabilities $11,951,000,000
Long-Term Debt $13,535,000,000
Total Assets $92,434,000,000
Intangible Assets $3,059,000,000
Total Liabilities $46,891,000,000
Shares Outstanding (Diluted Average) 1,641,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.12
Dec2017 $2.68
Dec2016 $0.27
Dec2015 -$1.38
Dec2014 $1.84
Dec2013 $2.60
Dec2012 $1.76
Dec2011 $2.67
Dec2010 $2.43
Dec2009 $0.95
Dec2008 $2.26
Dec2007 $3.17
Dec2006 $3.16
Dec2005 $1.24
Dec2004 $1.17
Dec2003 $1.13
Dec2002 $0.81
Dec2001 $0.39
Dec2000 $0.39
Dec1999 $0.18
Dec1998 $0.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.75
Dec2017 $1.11
Dec2016 $0.55
Dec2015 $0.96
Dec2014 $2.18
Dec2013 $2.26
Dec2012 $2.06
Dec2011 $2.24
Dec2010 $2.15
Dec2009 $2.06
Dec2008 $2.47
Dec2007 $2.38
Dec2006 $1.82
Dec2005 $1.08
Dec2004 $0.93
Dec2003 $0.73
Dec2002 $0.49

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Canadian Stocks for Intelligent Investors – March 2017
Suncor Energy Inc Valuation – Initial Coverage $TSE:SU

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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.

Suncor Energy Inc Valuation – Initial Coverage $TSE:SU

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 – February 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 Suncor Energy Inc (TSE:SU) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Suncor Energy Inc. (Suncor) is an integrated energy company. The Company is focused on developing Canada’s petroleum resource basin, Athabasca oil sands. The Company operates in three business segments: Oil Sands, Exploration and Production (E&P), and Refining and Marketing. The Company’s Oil Sands segment includes Oil Sands operations and Oil Sands ventures operations. Its E&P segment consists of offshore operations off the east coast of Canada and in the North Sea, and onshore assets in North America, Libya and Syria. The Company’s Refining and Marketing segment is engaged in Refining and Supply, and Marketing operations. In addition, it explores for, acquires, develops, produces and markets crude oil and natural gas in Canada and internationally. It transports and refines crude oil, and markets petroleum and petrochemical products primarily in Canada. It markets third-party petroleum products. Suncor also conducts energy trading activities.

SU Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SU – 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 $69,929,259,514 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.36 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 -86.17% Fail
6. Moderate PEmg Ratio PEmg < 20 49.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.56 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 1.36 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.55 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 $0.84
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $12.25
MG Value based on 0% Growth $7.18
Market Implied Growth Rate 20.49%
Current Price $41.79
% of Intrinsic Value N/A

Suncor Energy 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 high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.26 in 2013 to an estimated $0.84 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.49% 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 Suncor Energy Inc. revealed the company was trading above its Graham Number of $33.76. The company pays a dividend of $1.16 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 49.48, which was below the industry average of 69.19, 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 $-19.79.

Suncor Energy 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) -$19.79
Graham Number $33.76
PEmg 49.48
Current Ratio 1.36
PB Ratio 1.56
Current Dividend $1.16
Dividend Yield 2.78%
Number of Consecutive Years of Dividend Growth 8

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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 $11,019,000,000
Total Current Liabilities $8,117,000,000
Long-Term Debt $16,103,000,000
Total Assets $88,702,000,000
Intangible Assets $3,075,000,000
Total Liabilities $44,072,000,000
Shares Outstanding (Diluted Average) 1,670,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.89
Dec2016 $0.27
Dec2015 -$1.38
Dec2014 $1.84
Dec2013 $2.60
Dec2012 $1.76
Dec2011 $2.67
Dec2010 $2.43
Dec2009 $0.95
Dec2008 $2.26
Dec2007 $3.17
Dec2006 $3.16
Dec2005 $1.24
Dec2004 $1.17
Dec2003 $1.13
Dec2002 $0.81
Dec2001 $0.39
Dec2000 $0.39
Dec1999 $0.18
Dec1998 $0.20
Dec1997 $0.26

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.84
Dec2016 $0.55
Dec2015 $0.96
Dec2014 $2.18
Dec2013 $2.26
Dec2012 $2.06
Dec2011 $2.24
Dec2010 $2.15
Dec2009 $2.06
Dec2008 $2.47
Dec2007 $2.38
Dec2006 $1.82
Dec2005 $1.08
Dec2004 $0.93
Dec2003 $0.73
Dec2002 $0.49
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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Denbury Resources Inc Valuation – February 2017 $DNR
California Resources Corp Valuation – Initial Coverage $CRC
Crew Energy Inc Valuation – Initial Coverage $TSE:CR
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2017 Oil & Gas Industry Review

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.

Marathon Oil Corp Valuation – January 2019 $MRO

Company Profile (excerpt from Reuters): Marathon Oil Corporation, incorporated on May 30, 2001, is an exploration and production (E&P) company. The Company operates through two segments: United States E&P, International E&P. The United States E&P segment explores for, produces and markets crude oil and condensate, natural gas liquids (NGLs) and natural gas in the United States. The International E&P segment explores for, produces and markets crude oil and condensate, NGLs and natural gas outside of the United States, and produces and markets products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol, in Equatorial Guinea (E.G.).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MRO – 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 $13,312,884,632 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.43 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 -186.73% Fail
6. Moderate PEmg Ratio PEmg < 20 -7.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.13 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 1.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.96 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 -$2.17
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$31.52
MG Value based on 0% Growth -$18.48
Market Implied Growth Rate -7.93%
Current Price $16.02
% of Intrinsic Value N/A

Marathon Oil Corporation 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, 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 $3.38 in 2014 to an estimated $-2.17 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Marathon Oil Corporation revealed the company was trading below its Graham Number of $16.13. The company pays a dividend of $0.2 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was -7.37, which was below the industry average of 41.28, 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 $-7.86.

Marathon Oil Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.86
Graham Number $16.13
PEmg -7.37
Current Ratio 1.43
PB Ratio 1.13
Current Dividend $0.20
Dividend Yield 1.25%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,065,000,000
Total Current Liabilities $2,142,000,000
Long-Term Debt $5,498,000,000
Total Assets $21,778,000,000
Intangible Assets $97,000,000
Total Liabilities $9,734,000,000
Shares Outstanding (Diluted Average) 849,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.84
Dec2017 -$6.73
Dec2016 -$2.61
Dec2015 -$3.26
Dec2014 $4.46
Dec2013 $2.47
Dec2012 $2.23
Dec2011 $4.13
Dec2010 $3.61
Dec2009 $2.06
Dec2008 $4.95
Dec2007 $5.69
Dec2006 $7.25
Dec2005 $4.22
Dec2004 $1.86
Dec2003 $2.13
Dec2002 $0.83
Dec2001 $0.53
Dec2000 $0.68
Dec1999 $0.87
Dec1998 $0.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.17
Dec2017 -$2.83
Dec2016 -$0.37
Dec2015 $1.17
Dec2014 $3.38
Dec2013 $2.86
Dec2012 $3.17
Dec2011 $3.79
Dec2010 $3.98
Dec2009 $4.39
Dec2008 $5.30
Dec2007 $5.06
Dec2006 $4.25
Dec2005 $2.47
Dec2004 $1.47
Dec2003 $1.18
Dec2002 $0.72

Recommended Reading:

Other ModernGraham posts about the company

Marathon Oil Corp Valuation – March 2018 $MRO
Marathon Oil Corp Valuation – July 2016 $MRO
18 Companies in the Spotlight This Week – 3/21/15
Marathon Oil Corporation Annual Valuation – 2015 $MRO
19 Companies in the Spotlight This Week – 3/15/14

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Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

HollyFrontier Corp Valuation – January 2019 $HFC

Company Profile (excerpt from Reuters): HollyFrontier Corporation, incorporated on January 25, 1947, is an independent petroleum refiner. The Company produces various light products, such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. The Company operates through two segments: Refining and Holly Energy Partners, L.P. (HEP). The Refining segment includes the operations of the Company’s El Dorado, Kansas (the El Dorado Refinery); refinery facilities located in Tulsa, Oklahoma (collectively, the Tulsa Refineries); a refinery in Artesia, New Mexico that is operated in conjunction with crude oil distillation and vacuum distillation and other facilities situated 65 miles away in Lovington, New Mexico (collectively, the Navajo Refinery); refinery located in Cheyenne, Wyoming (the Cheyenne Refinery); a refinery in Woods Cross, Utah (the Woods Cross Refinery), and HollyFrontier Asphalt Company (HFC Asphalt). The HEP segment involves all of the operations of HEP.

Downloadable PDF version of this valuation:

ModernGraham Valuation of HFC – 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 $9,387,931,192 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.50 Pass
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 33.29% Fail
6. Moderate PEmg Ratio PEmg < 20 13.96 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 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 2.50 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.04 Pass
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 $3.88
MG Growth Estimate -0.59%
MG Value $28.38
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $56.27
MG Value based on 0% Growth $32.99
Market Implied Growth Rate 2.73%
Current Price $54.18
% of Intrinsic Value 190.94%

HollyFrontier Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years. The Enterprising Investor has concerns regarding 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 $4.04 in 2014 to an estimated $3.88 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.73% 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 HollyFrontier Corp revealed the company was trading below its Graham Number of $69.4. The company pays a dividend of $1.32 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.96, which was below the industry average of 41.28, 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 $-6.07.

HollyFrontier Corp receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.07
Graham Number $69.40
PEmg 13.96
Current Ratio 2.50
PB Ratio 1.46
Current Dividend $1.32
Dividend Yield 2.44%
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 $3,857,725,000
Total Current Liabilities $1,540,635,000
Long-Term Debt $2,409,148,000
Total Assets $11,495,126,000
Intangible Assets $2,691,357,000
Total Liabilities $4,931,614,000
Shares Outstanding (Diluted Average) 176,927,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.07
Dec2017 $4.52
Dec2016 -$1.48
Dec2015 $3.90
Dec2014 $1.42
Dec2013 $3.64
Dec2012 $8.38
Dec2011 $6.42
Dec2010 $0.97
Dec2009 $0.20
Dec2008 $1.19
Dec2007 $2.99
Dec2006 $2.29
Dec2005 $1.33
Dec2004 $0.65
Dec2003 $0.36
Jul2002 $0.25
Jul2001 $0.60
Jul2000 $0.09
Jul1999 $0.15
Jul1998 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.88
Dec2017 $2.32
Dec2016 $1.87
Dec2015 $3.95
Dec2014 $4.04
Dec2013 $4.87
Dec2012 $4.80
Dec2011 $2.80
Dec2010 $1.16
Dec2009 $1.37
Dec2008 $1.87
Dec2007 $1.98
Dec2006 $1.31
Dec2005 $0.76
Dec2004 $0.45
Dec2003 $0.33
Jul2002 $0.29

Recommended Reading:

Other ModernGraham posts about the company

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

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Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

Hess Corp Valuation – January 2019 $HES

Company Profile (excerpt from Reuters): Hess Corporation, incorporated on February 7, 1920, is an exploration and production company. The Company is engaged in exploration, development, production, transportation, purchase and sale of crude oil, natural gas liquids (NGL) and natural gas. The Company’s segments include Exploration and Production, and Bakken Midstream. Its Exploration and Production segment explores for, develops, produces, purchases and sells crude oil, NGLs and natural gas with production operations primarily in the United States, Denmark, the Malaysia/Thailand Joint Development Area (JDA), Malaysia and Norway. The Bakken Midstream segment provides fee-based services, including crude oil and natural gas gathering, processing of natural gas and the fractionation of NGLs, transportation of crude oil by rail car, terminaling and loading crude oil and NGLs, and the storage and terminaling of propane, primarily in the Bakken shale play of North Dakota.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HES – 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 $15,319,242,358 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.30 Pass
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 -351.35% Fail
6. Moderate PEmg Ratio PEmg < 20 -5.79 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.38 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 2.30 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.60 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 -$8.92
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$129.41
MG Value based on 0% Growth -$75.86
Market Implied Growth Rate -7.15%
Current Price $51.68
% of Intrinsic Value N/A

Hess Corp. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings 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 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 $8.75 in 2014 to an estimated $-8.92 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Hess Corp. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was -5.79, which was below the industry average of 41.28, 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 $-20.12.

Hess 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) -$20.12
Graham Number $0.00
PEmg -5.79
Current Ratio 2.30
PB Ratio 1.38
Current Dividend $1.00
Dividend Yield 1.93%
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 $4,501,000,000
Total Current Liabilities $1,958,000,000
Long-Term Debt $6,609,000,000
Total Assets $21,467,000,000
Intangible Assets $360,000,000
Total Liabilities $10,421,000,000
Shares Outstanding (Diluted Average) 294,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.52
Dec2017 -$13.12
Dec2016 -$19.92
Dec2015 -$10.78
Dec2014 $7.53
Dec2013 $14.82
Dec2012 $5.95
Dec2011 $5.01
Dec2010 $6.47
Dec2009 $2.27
Dec2008 $7.24
Dec2007 $5.74
Dec2006 $6.08
Dec2005 $3.93
Dec2004 $3.19
Dec2003 $2.37
Dec2002 -$0.83
Dec2001 $3.42
Dec2000 $3.79
Dec1999 $1.62
Dec1998 -$1.71

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$8.92
Dec2017 -$9.85
Dec2016 -$5.64
Dec2015 $2.51
Dec2014 $8.75
Dec2013 $8.54
Dec2012 $5.40
Dec2011 $5.20
Dec2010 $5.38
Dec2009 $4.91
Dec2008 $5.90
Dec2007 $4.90
Dec2006 $3.97
Dec2005 $2.75
Dec2004 $2.24
Dec2003 $1.87
Dec2002 $1.50

Recommended Reading:

Other ModernGraham posts about the company

Hess Corp Valuation – March 2018 $HES
Hess Corp Valuation – July 2016 $HES
47 Companies in the Spotlight This Week – 5/16/15
Hess Corporation Annual Valuation – 2015 $HES
10 Companies Benjamin Graham Would Invest In Today – May 2015

Other ModernGraham posts about related companies

EQT Corp Valuation – January 2019 $EQT
Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

Cimarex Energy Co Valuation – January 2019 $XEC

Company Profile (excerpt from Reuters): Cimarex Energy Co., incorporated on February 14, 2002, is an independent oil and gas exploration and production company. The Company operates in exploration and production (E&P) segment. The Company’s operations are located mainly in Oklahoma, Texas and New Mexico. The Company’s E&P activities take place primarily in two areas: the Permian Basin and the Mid-Continent region. Its Permian Basin region encompasses west Texas and southeast New Mexico. Its Mid-Continent region consists of Oklahoma and the Texas Panhandle. As of fiscal year ended December 31, 2016 (fiscal 2016), its activities in the Mid-Continent were focused in the Woodford shale and the Meramec horizon, both in Oklahoma. During fiscal 2016, production from the Mid-Continent averaged 457 millions of cubic feet equivalent (MMcfe) per day, or 47% of total company production.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEC – 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 $6,962,019,156 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 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 -20.71% Fail
6. Moderate PEmg Ratio PEmg < 20 -107.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.26 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 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.56 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 -$0.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$9.79
MG Value based on 0% Growth -$5.74
Market Implied Growth Rate -58.16%
Current Price $72.81
% of Intrinsic Value N/A

Cimarex Energy Co 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 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 $5.81 in 2014 to an estimated $-0.68 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cimarex Energy Co revealed the company was trading above its Graham Number of $62.01. The company pays a dividend of $0.32 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was -107.81, which was below the industry average of 41.28, 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 $-14.54.

Cimarex Energy Co 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) -$14.54
Graham Number $62.01
PEmg -107.81
Current Ratio 1.69
PB Ratio 2.26
Current Dividend $0.32
Dividend Yield 0.44%
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 $1,427,715,000
Total Current Liabilities $845,345,000
Long-Term Debt $1,488,147,000
Total Assets $5,818,435,000
Intangible Assets $620,232,000
Total Liabilities $2,792,613,000
Shares Outstanding (Diluted Average) 93,867,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.35
Dec2017 $5.19
Dec2016 -$4.38
Dec2015 -$27.75
Dec2014 $6.00
Dec2013 $6.47
Dec2012 $4.07
Dec2011 $6.15
Dec2010 $6.70
Dec2009 -$3.82
Dec2008 -$11.22
Dec2007 $4.09
Dec2006 $4.11
Dec2005 $4.90
Dec2004 $3.59
Dec2003 $2.22
Dec2002 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.68
Dec2017 -$3.76
Dec2016 -$6.53
Dec2015 -$5.40
Dec2014 $5.81
Dec2013 $5.11
Dec2012 $3.08
Dec2011 $1.85
Dec2010 -$0.21
Dec2009 -$2.57
Dec2008 -$0.93
Dec2007 $4.07
Dec2006 $3.78
Dec2005 $3.21
Dec2004 $2.05
Dec2003 $1.09
Dec2002 $0.44

Recommended Reading:

Other ModernGraham posts about the company

Cimarex Energy Co Valuation – Initial Coverage $XEC

Other ModernGraham posts about related companies

EQT Corp Valuation – January 2019 $EQT
Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU

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.

EQT Corp Valuation – January 2019 $EQT

Company Profile (excerpt from Reuters): EQT Corporation (EQT), incorporated on June 10, 2008, is a natural gas company. The Company operates through three segments: EQT Production, EQT Gathering and EQT Transmission. EQT Production is a natural gas producer in the Appalachian Basin. EQT Gathering and EQT Transmission provide gathering, transmission and storage services for the Company’s produced gas, as well as for independent third parties across the Appalachian Basin.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EQT – 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 $5,398,930,337 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.47 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 -109.58% Fail
6. Moderate PEmg Ratio PEmg < 20 -175.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.34 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 -5.53 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 -$0.12
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$1.75
MG Value based on 0% Growth -$1.03
Market Implied Growth Rate -92.01%
Current Price $21.18
% of Intrinsic Value N/A

EQT Corporation 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, 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 $2.31 in 2014 to an estimated $-0.12 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into EQT Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.12 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was -175.52, which was below the industry average of 41.28, 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 $-43.19.

EQT Corporation 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) -$43.19
Graham Number $0.00
PEmg -175.52
Current Ratio 0.47
PB Ratio 0.34
Current Dividend $0.12
Dividend Yield 0.57%
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 $1,234,658,000
Total Current Liabilities $2,646,076,000
Long-Term Debt $7,808,570,000
Total Assets $28,661,329,000
Intangible Assets $2,672,901,000
Total Liabilities $12,443,937,000
Shares Outstanding (Diluted Average) 259,560,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$5.90
Dec2017 $8.04
Dec2016 -$2.71
Dec2015 $0.56
Dec2014 $2.54
Dec2013 $2.57
Dec2012 $1.22
Dec2011 $3.19
Dec2010 $1.57
Dec2009 $1.19
Dec2008 $2.00
Dec2007 $2.10
Dec2006 $1.80
Dec2005 $2.10
Dec2004 $2.22
Dec2003 $1.34
Dec2002 $1.14
Dec2001 $1.13
Dec2000 $0.80
Dec1999 $0.51
Dec1998 -$0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.12
Dec2017 $2.58
Dec2016 $0.18
Dec2015 $1.75
Dec2014 $2.31
Dec2013 $2.11
Dec2012 $1.86
Dec2011 $2.13
Dec2010 $1.64
Dec2009 $1.73
Dec2008 $2.01
Dec2007 $1.99
Dec2006 $1.86
Dec2005 $1.79
Dec2004 $1.53
Dec2003 $1.12
Dec2002 $0.90

Recommended Reading:

Other ModernGraham posts about the company

EQT Corporation Valuation – March 2018 $EQT
EQT Corporation Valuation – July 2016 $EQT
5 Speculative and Overvalued Companies to Avoid – May 2015
47 Companies in the Spotlight This Week – 5/16/15
EQT Corporation Annual Valuation – 2015 $EQT

Other ModernGraham posts about related companies

Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW

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.

Helmerich & Payne Inc Valuation – January 2019 $HP

Company Profile (excerpt from Reuters): Helmerich & Payne, Inc., incorporated on February 29, 1944, is engaged in contract drilling of oil and gas wells for others. The Company operates in the contract drilling industry. The Company’s contract drilling business consists of three segments: U.S. Land, Offshore and International Land. The Company is also engaged in the ownership, development and operation of commercial real estate and the research and development of rotary steerable technology. Its real estate investments are located within Tulsa, Oklahoma, and include a shopping center containing approximately 441,000 leasable square feet, multi-tenant industrial warehouse properties containing approximately one million leasable square feet and approximately 210 acres of undeveloped real estate. The Company’s subsidiaries include Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela, C.A.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HP – 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 $5,825,900,373 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.96 Pass
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 -63.64% Fail
6. Moderate PEmg Ratio PEmg < 20 39.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.34 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 2.96 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.67 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $19.72
MG Value based on 0% Growth $11.56
Market Implied Growth Rate 15.39%
Current Price $53.43
% of Intrinsic Value N/A

Helmerich & Payne, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding 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 $5.34 in 2015 to an estimated $1.36 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.39% 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 Helmerich & Payne, Inc. revealed the company was trading above its Graham Number of $26.06. The company pays a dividend of $2.81 per share, for a yield of 5.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 39.29, which was below the industry average of 41.28, 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 $-6.54.

Helmerich & Payne, 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) -$6.54
Graham Number $26.06
PEmg 39.29
Current Ratio 2.96
PB Ratio 1.34
Current Dividend $2.81
Dividend Yield 5.26%
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 9/1/2018
Total Current Assets $1,115,550,000
Total Current Liabilities $377,168,000
Long-Term Debt $493,968,000
Total Assets $6,214,867,000
Intangible Assets $137,984,000
Total Liabilities $1,832,132,000
Shares Outstanding (Diluted Average) 109,534,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.75
Sep2018 $4.37
Sep2017 -$1.20
Sep2016 -$0.54
Sep2015 $3.85
Sep2014 $6.44
Sep2013 $6.79
Sep2012 $5.34
Sep2011 $3.99
Sep2010 $1.45
Sep2009 $3.31
Sep2008 $4.34
Sep2007 $4.27
Sep2006 $2.77
Sep2005 $0.62
Sep2004 $0.05
Sep2003 $0.09
Sep2002 $0.27
Sep2001 $0.79
Sep2000 $0.82
Sep1999 $0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.36
Sep2018 $1.97
Sep2017 $1.54
Sep2016 $3.40
Sep2015 $5.34
Sep2014 $5.65
Sep2013 $4.90
Sep2012 $3.86
Sep2011 $3.24
Sep2010 $2.99
Sep2009 $3.53
Sep2008 $3.22
Sep2007 $2.30
Sep2006 $1.13
Sep2005 $0.32
Sep2004 $0.25
Sep2003 $0.40

Recommended Reading:

Other ModernGraham posts about the company

Helmerich & Payne Inc Valuation – March 2018 $HP
Helmerich & Payne Inc Valuation – June 2016 $HP
Helmerich & Payne Inc Valuation – November 2015 Update $HP
Dividend Growth Stocks for the Intelligent Investor – November 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – November 2015

Other ModernGraham posts about related companies

Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO

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.

Williams Companies Inc Valuation – January 2019 $WMB

Company Profile (excerpt from Reuters): The Williams Companies, Inc., incorporated on February 3, 1987, is an energy infrastructure company. The Company is focused on connecting North America’s hydrocarbon resource plays to markets for natural gas, natural gas liquids (NGL), and olefins. As of December 31, 2016, the Company’s interstate gas pipelines, midstream and olefins production interests were held through its investment in Williams Partners L.P. (WPZ). The Company’s segments include Williams Partners, Williams NGL & Petchem Services and Other. The Williams Partners segment includes its consolidated master limited partnership, WPZ. The Williams NGL & Petchem Services segment includes its Texas Belle pipeline and certain other domestic olefins pipeline assets. Other segment includes its corporate operations and Canadian construction services company.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WMB – 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 $30,487,499,623 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.72 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 -436.84% Fail
6. Moderate PEmg Ratio PEmg < 20 29.71 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.52 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.72 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -27.55 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 $0.85
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $12.30
MG Value based on 0% Growth $7.21
Market Implied Growth Rate 10.60%
Current Price $25.19
% of Intrinsic Value N/A

Williams Companies 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 high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.37 in 2014 to an estimated $0.85 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.6% 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 Williams Companies Inc revealed the company was trading above its Graham Number of $11.58. The company pays a dividend of $1.2 per share, for a yield of 4.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 29.71, which was below the industry average of 41.28, 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 $-27.56.

Williams Companies 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) -$27.56
Graham Number $11.58
PEmg 29.71
Current Ratio 0.72
PB Ratio 1.52
Current Dividend $1.20
Dividend Yield 4.76%
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 $1,984,000,000
Total Current Liabilities $2,761,000,000
Long-Term Debt $21,409,000,000
Total Assets $47,153,000,000
Intangible Assets $8,324,000,000
Total Liabilities $30,194,000,000
Shares Outstanding (Diluted Average) 1,023,587,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.51
Dec2017 $2.62
Dec2016 -$0.57
Dec2015 -$0.76
Dec2014 $2.92
Dec2013 $0.62
Dec2012 $1.37
Dec2011 $0.63
Dec2010 -$1.88
Dec2009 $0.49
Dec2008 $2.40
Dec2007 $1.63
Dec2006 $0.51
Dec2005 $0.53
Dec2004 $0.31
Dec2003 -$1.01
Dec2002 -$1.64
Dec2001 -$0.95
Dec2000 $1.17
Dec1999 $0.35
Dec1998 $0.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.85
Dec2017 $1.00
Dec2016 $0.37
Dec2015 $0.87
Dec2014 $1.37
Dec2013 $0.48
Dec2012 $0.47
Dec2011 $0.24
Dec2010 $0.24
Dec2009 $1.23
Dec2008 $1.43
Dec2007 $0.76
Dec2006 $0.13
Dec2005 -$0.22
Dec2004 -$0.54
Dec2003 -$0.78
Dec2002 -$0.50

Recommended Reading:

Other ModernGraham posts about the company

Williams Companies Inc Valuation – March 2018 $WMB
Williams Companies Inc Valuation – June 2016 $WMB
34 Companies in the Spotlight This Week – 2/7/15
Williams Companies Annual Valuation – 2015 $WMB
15 Companies in the Spotlight This Week – 2/1/14

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Exxon Mobil Corp Valuation – November 2018 $XOM
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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.

Exxon Mobil Corp Valuation – November 2018 $XOM

Company Profile (excerpt from Reuters): Exxon Mobil Corporation, incorporated on August 5, 1882, is engaged in energy business. The Company is engaged in the exploration, production, transportation and sale of crude oil and natural gas, and the manufacture, transportation and sale of petroleum products. The Company also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and a range of specialty products. The Company’s segments include Upstream, Downstream, Chemical, and Corporate and Financing. The Upstream segment operates to explore for and produce crude oil and natural gas. The Downstream operates to manufacture and sell petroleum products. The Chemical segment operates to manufacture and sell petrochemicals. The Company has exploration and development activities in projects located in the United States, Canada/South America, Europe, Africa, Asia and Australia/Oceania.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XOM – 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 $334,301,427,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 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 -40.71% Fail
6. Moderate PEmg Ratio PEmg < 20 19.07 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.71 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.82 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 $4.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $60.04
MG Value based on 0% Growth $35.20
Market Implied Growth Rate 5.28%
Current Price $78.96
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $7.98 in 2014 to an estimated $4.14 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.28% 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 Exxon Mobil Corporation revealed the company was trading above its Graham Number of $67.18. The company pays a dividend of $3.06 per share, for a yield of 3.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.07, which was below the industry average of 50.98, 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 $-24.31.

Exxon Mobil Corporation scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.31
Graham Number $67.18
PEmg 19.07
Current Ratio 0.83
PB Ratio 1.71
Current Dividend $3.06
Dividend Yield 3.88%
Number of Consecutive Years of Dividend Growth 15

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 $53,975,000,000
Total Current Liabilities $65,288,000,000
Long-Term Debt $20,624,000,000
Total Assets $354,628,000,000
Intangible Assets $0
Total Liabilities $157,797,000,000
Shares Outstanding (Diluted Average) 4,271,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.53
Dec2017 $4.63
Dec2016 $1.88
Dec2015 $3.85
Dec2014 $7.60
Dec2013 $7.37
Dec2012 $9.70
Dec2011 $8.42
Dec2010 $6.22
Dec2009 $3.98
Dec2008 $8.66
Dec2007 $7.26
Dec2006 $6.62
Dec2005 $5.71
Dec2004 $3.89
Dec2003 $3.23
Dec2002 $1.68
Dec2001 $2.21
Dec2000 $2.52
Dec1999 $1.13
Dec1998 $1.14

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.14
Dec2017 $4.32
Dec2016 $4.80
Dec2015 $6.64
Dec2014 $7.98
Dec2013 $7.82
Dec2012 $7.83
Dec2011 $6.90
Dec2010 $6.28
Dec2009 $6.35
Dec2008 $7.17
Dec2007 $6.06
Dec2006 $5.05
Dec2005 $3.96
Dec2004 $2.96
Dec2003 $2.38
Dec2002 $1.88

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Dow Components – June 2018
5 Overvalued Dow Components – February 2018
Exxon Mobil Corp Valuation – February 2018 $XOM
Most Overvalued Stocks of the S&P 500 – March 2017
5 Overvalued Dow Components – February 2017

Other ModernGraham posts about related companies

Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC

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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