National Oilwell Varco Inc Valuation – February 2019 $NOV

Company Profile (excerpt from Reuters): National Oilwell Varco, Inc. (NOV), incorporated on July 14, 1995, is an oilfield equipment manufacturer and technology provider. The Company operates through four segments: Rig Technologies, Wellbore Technologies and Completion & Production Solutions. The Rig Technologies segment designs, manufactures, sells, and supports land rigs, offshore drilling equipment packages, and drilling rig components. The Wellbore Technologies segment designs, manufactures, rents and sells a range of equipment and technologies used to perform drilling operations. The Completion & Production Solutions segment integrates technologies for well completions and oil and gas production.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NOV – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,920,171,664 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.11 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 -106.13% Fail
6. Moderate PEmg Ratio PEmg < 20 -23.84 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.78 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 3.11 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.55 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.19
MG Growth Estimate -4.25%
MG Value $3.63
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$17.32
MG Value based on 0% Growth -$10.15
Market Implied Growth Rate -16.17%
Current Price $28.48
% of Intrinsic Value 784.65%

National-Oilwell Varco, 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 and PB ratios. 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 $3.07 in 2015 to an estimated $-1.19 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 National-Oilwell Varco, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.2 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was -23.84, which was below the industry average of 43.92, 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 $3.63.

National-Oilwell Varco, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.63
Graham Number $0.00
PEmg -23.84
Current Ratio 3.11
PB Ratio 0.78
Current Dividend $0.20
Dividend Yield 0.70%
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 $7,279,000,000
Total Current Liabilities $2,341,000,000
Long-Term Debt $2,704,000,000
Total Assets $19,796,000,000
Intangible Assets $9,284,000,000
Total Liabilities $5,907,000,000
Shares Outstanding (Diluted Average) 378,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.18
Dec2018 -$0.08
Dec2017 -$0.63
Dec2016 -$6.41
Dec2015 -$1.99
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.67
Dec2003 $0.47
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 -$0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.19
Dec2018 -$1.35
Dec2017 -$1.18
Dec2016 -$0.39
Dec2015 $3.07
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.11
Dec2005 $0.68
Dec2004 $0.53
Dec2003 $0.41

Recommended Reading:

Other ModernGraham posts about the company

10 Most Overvalued Stocks of the S&P 500 – July 2018
National Oilwell Varco Inc Valuation – May 2018 $NOV
National-Oilwell Varco Valuation – December 2016 $NOV
5 of the Worst Stocks to Invest In – August 2016
National-Oilwell Varco Inc Valuation – August 2016 $NOV

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EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP
Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL
ONEOK Inc Valuation – January 2019 $OKE
Marathon Oil Corp Valuation – January 2019 $MRO

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.

Varian Medical Systems Inc Valuation – January 2019 $VAR

Company Profile (excerpt from Reuters): Varian Medical Systems, Inc., incorporated on January 22, 1976, is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center (GTC). Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer. Its ProBeam system is capable of delivering intensity modulated proton therapy (IMPT) using pencil beam scanning technology. Its ProBeam Compact is a single room proton therapy product.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VAR – 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 $11,581,601,683 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.63 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 -13.86% Fail
6. Moderate PEmg Ratio PEmg < 20 38.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.40 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 1.63 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.29
MG Growth Estimate -2.38%
MG Value $12.28
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $47.65
MG Value based on 0% Growth $27.93
Market Implied Growth Rate 15.15%
Current Price $127.50
% of Intrinsic Value 1037.99%

Varian Medical Systems, 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 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 lack of earnings 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 $3.91 in 2015 to an estimated $3.29 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.15% 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 Varian Medical Systems, Inc. revealed the company was trading above its Graham Number of $42.64. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 38.8, which was below the industry average of 52.7, 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 $5.69.

Varian Medical Systems, 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) $5.69
Graham Number $42.64
PEmg 38.80
Current Ratio 1.63
PB Ratio 7.40
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 9/1/2018
Total Current Assets $2,188,400,000
Total Current Liabilities $1,339,700,000
Long-Term Debt $0
Total Assets $3,252,700,000
Intangible Assets $394,700,000
Total Liabilities $1,664,000,000
Shares Outstanding (Diluted Average) 92,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.67
Sep2018 $1.62
Sep2017 $2.35
Sep2016 $4.16
Sep2015 $4.09
Sep2014 $3.83
Sep2013 $3.98
Sep2012 $3.76
Sep2011 $3.36
Sep2010 $2.91
Sep2009 $2.55
Sep2008 $2.19
Sep2007 $1.83
Sep2006 $1.81
Sep2005 $1.50
Sep2004 $1.18
Sep2003 $0.92
Sep2002 $0.67
Sep2001 $0.40
Sep2000 $0.41
Sep1999 -$0.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.29
Sep2018 $2.80
Sep2017 $3.49
Sep2016 $4.02
Sep2015 $3.91
Sep2014 $3.73
Sep2013 $3.56
Sep2012 $3.22
Sep2011 $2.82
Sep2010 $2.45
Sep2009 $2.14
Sep2008 $1.86
Sep2007 $1.61
Sep2006 $1.41
Sep2005 $1.11
Sep2004 $0.85
Sep2003 $0.60

Recommended Reading:

Other ModernGraham posts about the company

Varian Medical Systems Inc Valuation – March 2018 $VAR
Varian Medical Systems Inc Valuation – July 2016 $VAR
Varian Medical Systems Inc. Valuation – November 2015 Update $VAR
The Best Companies of the Medical Industry – September 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15

Other ModernGraham posts about related companies

Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
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UnitedHealth Group Inc Valuation – November 2018 $UNH
Luminex Corp Valuation – October 2018 $LMNX
LHC Group Inc Valuation – September 2018 $LHCG
Chartwell Retirement Residences Valuation – August 2018 $TSE:CSH.UN
STERIS PLC Valuation – August 2018 $STE
CryoLife Inc Valuation – August 2018 $CRY
Charles River Laboratories International Inc Valuation – August 2018 $CRL

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.

National Oilwell Varco Inc Valuation – May 2018 $NOV

Company Profile (excerpt from Reuters): National Oilwell Varco, Inc. (NOV), incorporated on July 14, 1995, is an oilfield equipment manufacturer and technology provider. The Company operates through four segments: Rig Technologies, Wellbore Technologies and Completion & Production Solutions. The Rig Technologies segment designs, manufactures, sells, and supports land rigs, offshore drilling equipment packages, and drilling rig components. The Wellbore Technologies segment designs, manufactures, rents and sells a range of equipment and technologies used to perform drilling operations. The Completion & Production Solutions segment integrates technologies for well completions and oil and gas production.

NOV Chart

NOV data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NOV – May 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 $14,671,302,739 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.37 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 -159.10% Fail
6. Moderate PEmg Ratio PEmg < 20 -27.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.03 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 3.37 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.54 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 -$1.38
MG Growth Estimate -4.25%
MG Value $3.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$20.07
MG Value based on 0% Growth -$11.76
Market Implied Growth Rate -18.13%
Current Price $38.42
% of Intrinsic Value 1151.38%

National-Oilwell Varco, 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 poor dividend history, and the high PEmg and PB ratios. 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 $5.45 in 2014 to an estimated $-1.38 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 National-Oilwell Varco, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.2 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was -27.76, which was below the industry average of 97.7, 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 $3.34.

National-Oilwell Varco, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.34
Graham Number $0.00
PEmg -27.76
Current Ratio 3.37
PB Ratio 1.03
Current Dividend $0.20
Dividend Yield 0.52%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $7,186,000,000
Total Current Liabilities $2,132,000,000
Long-Term Debt $2,707,000,000
Total Assets $20,010,000,000
Intangible Assets $9,432,000,000
Total Liabilities $5,928,000,000
Shares Outstanding (Diluted Average) 377,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.17
Dec2017 -$0.63
Dec2016 -$6.41
Dec2015 -$1.99
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.67
Dec2003 $0.47
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 -$0.07
Dec1998 $0.60

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.38
Dec2017 -$1.18
Dec2016 -$0.39
Dec2015 $3.07
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.11
Dec2005 $0.68
Dec2004 $0.53
Dec2003 $0.41
Dec2002 $0.36

Recommended Reading:

Other ModernGraham posts about the company

National-Oilwell Varco Valuation – December 2016 $NOV
5 of the Worst Stocks to Invest In – August 2016
National-Oilwell Varco Inc Valuation – August 2016 $NOV
26 Best Stocks For Value Investors This Week – 2/6/16
National Oilwell Varco Inc Valuation – February 2016 Update $NOV

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EOG Resources Inc Valuation – April 2018 $EOG
ConocoPhillips Valuation – April 2018 $COP
Devon Energy Corp Valuation – March 2018 $DVN
Noble Energy Inc Valuation – March 2018 $NBL
ONEOK Inc Valuation – March 2018 $OKE
Marathon Oil Corp Valuation – March 2018 $MRO

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.

Varian Medical Systems Inc Valuation – March 2018 $VAR

Company Profile (excerpt from Reuters): Varian Medical Systems, Inc., incorporated on January 22, 1976, is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company also has Varian Particle Therapy (VPT) and the operations of the Ginzton Technology Center (GTC). Its VPT business develops, designs, manufactures, sells and services products and systems for delivering proton therapy, another form of external beam radiotherapy using proton beams for the treatment of cancer. Its ProBeam system is capable of delivering intensity modulated proton therapy (IMPT) using pencil beam scanning technology. Its ProBeam Compact is a single room proton therapy product.

VAR Chart

VAR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VAR – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,328,280,884 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.45 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 26.30% Fail
6. Moderate PEmg Ratio PEmg < 20 32.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.18 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 1.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.78
MG Growth Estimate 0.18%
MG Value $33.46
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $54.76
MG Value based on 0% Growth $32.10
Market Implied Growth Rate 12.15%
Current Price $123.87
% of Intrinsic Value 370.23%

Varian Medical Systems, 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 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 low current ratio, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.73 in 2014 to an estimated $3.78 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.15% 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 Varian Medical Systems, Inc. revealed the company was trading above its Graham Number of $39.58. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 32.8, which was below the industry average of 43.8, 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 $4.79.

Varian Medical Systems, 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) $4.79
Graham Number $39.58
PEmg 32.80
Current Ratio 1.45
PB Ratio 8.18
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 12/1/2017
Total Current Assets $2,351,600,000
Total Current Liabilities $1,616,400,000
Long-Term Debt $0
Total Assets $3,299,800,000
Intangible Assets $289,000,000
Total Liabilities $1,913,200,000
Shares Outstanding (Diluted Average) 91,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.27
Sep2017 $2.68
Sep2016 $4.19
Sep2015 $4.09
Sep2014 $3.83
Sep2013 $3.98
Sep2012 $3.76
Sep2011 $3.36
Sep2010 $2.91
Sep2009 $2.55
Sep2008 $2.19
Sep2007 $1.83
Sep2006 $1.81
Sep2005 $1.50
Sep2004 $1.18
Sep2003 $0.92
Sep2002 $0.67
Sep2001 $0.40
Sep2000 $0.41
Sep1999 -$0.20
Sep1998 $0.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.78
Sep2017 $3.60
Sep2016 $4.03
Sep2015 $3.91
Sep2014 $3.73
Sep2013 $3.56
Sep2012 $3.22
Sep2011 $2.82
Sep2010 $2.45
Sep2009 $2.14
Sep2008 $1.86
Sep2007 $1.61
Sep2006 $1.41
Sep2005 $1.11
Sep2004 $0.85
Sep2003 $0.60
Sep2002 $0.42

Recommended Reading:

Other ModernGraham posts about the company

Varian Medical Systems Inc Valuation – July 2016 $VAR
Varian Medical Systems Inc. Valuation – November 2015 Update $VAR
The Best Companies of the Medical Industry – September 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
Varian Medical Systems Inc Analysis – August 2015 Update $VAR

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UnitedHealth Group Inc Valuation – February 2018 $UNH
VCA Inc Valuation – Initial Coverage $WOOF
Universal Health Services Inc Valuation – August 2017 $UHS
Telefex Inc Valuation – Initial Coverage $TFX
BIO-TECHNE Corp Valuation – Initial Coverage $TECH
LifePoint Health Inc Valuation – Initial Coverage $LPNT
Psychemedics Corp Valuation – April 2017 $PMD

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.

National-Oilwell Varco Valuation – December 2016 $NOV

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 – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how National-Oilwell Varco (NOV) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): National Oilwell Varco, Inc. (NOV) is engaged in providing design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations. The Company operates through four segments: Rig Systems, which makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore; Rig Aftermarket, which provides aftermarket products and services to support land and offshore rigs, and drilling rig components manufactured by the Company’s Rig Systems segment; Wellbore Technologies, which sells and rents solids control equipment, and provides solids control, waste management and drilling fluids services, and Completion & Production Solutions, which provides technologies for well completions and oil and gas production. The Company also provides oilfield services to the upstream oil and gas industry. The Company conducts operations in approximately 830 locations across the world.

NOV Chart

NOV data by YCharts

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ModernGraham Valuation of NOV – December 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,703,279,742 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.33 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 -109.20% Fail
6. Moderate PEmg Ratio PEmg < 20 394.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.97 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 3.33 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.53 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 $0.10
MG Growth Estimate -4.25%
MG Value $3.55
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $1.41
MG Value based on 0% Growth $0.83
Market Implied Growth Rate 192.96%
Current Price $38.39
% of Intrinsic Value 1081.25%

National-Oilwell Varco, 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 the poor dividend history, 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 $4.79 in 2012 to an estimated $0.1 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 192.96% 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 National-Oilwell Varco, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.02 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 394.42, which was above the industry average of 69.19. Finally, the company was trading above its Net Current Asset Value (NCAV) of $3.55.

National-Oilwell Varco, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.55
Graham Number $0.00
PEmg 394.42
Current Ratio 3.33
PB Ratio 0.97
Current Dividend $1.02
Dividend Yield 2.66%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $8,711,000,000
Total Current Liabilities $2,615,000,000
Long-Term Debt $3,210,000,000
Total Assets $22,194,000,000
Intangible Assets $9,641,000,000
Total Liabilities $7,376,000,000
Shares Outstanding (Diluted Average) 376,000,000

Earnings Per Share History

Next Fiscal Year Estimate -$4.95
Dec2015 -$1.99
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.67
Dec2003 $0.47
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 -$0.07
Dec1998 $0.60
Dec1997 $0.50
Dec1996 $0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.10
Dec2015 $3.07
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.11
Dec2005 $0.68
Dec2004 $0.53
Dec2003 $0.41
Dec2002 $0.36
Dec2001 $0.33
Dec2000 $0.20

Recommended Reading:

Other ModernGraham posts about the company

5 of the Worst Stocks to Invest In – August 2016
National-Oilwell Varco Inc Valuation – August 2016 $NOV
26 Best Stocks For Value Investors This Week – 2/6/16
National Oilwell Varco Inc Valuation – February 2016 Update $NOV
10 Low PE Stocks for the Enterprising Investor – February 2016

Other ModernGraham posts about related companies

Canadian Energy Services & Technology Corp Valuation – Initial Coverage $CEU
WPX Energy Inc Valuation – September 2016 $WPX
Newfield Exploration Co Valuation – December 2016 $NFX
World Fuel Services Corp Valuation – Initial Coverage $INT
Shawcor Ltd Valuation – Initial Coverage $TSE:SCL
Imperial Oil Limited Valuation – Initial Coverage $IMO
Phillips 66 Valuation – August 2016 $PSX
FMC Technologies Inc Valuation – August 2016 $FTI
Marathon Petroleum Corp Valuation – August 2016 $MPC
Magellan Midstream Partners LP Valuation – August 2016 $MMP

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.

National-Oilwell Varco Inc Valuation – August 2016 $NOV

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

Company Profile (obtained from Google Finance): National Oilwell Varco, Inc. (NOV) is engaged in providing design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations. The Company operates through four segments: Rig Systems, which makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore; Rig Aftermarket, which provides aftermarket products and services to support land and offshore rigs, and drilling rig components manufactured by the Company’s Rig Systems segment; Wellbore Technologies, which sells and rents solids control equipment, and provides solids control, waste management and drilling fluids services, and Completion & Production Solutions, which provides technologies for well completions and oil and gas production. The Company also provides oilfield services to the upstream oil and gas industry. The Company conducts operations in approximately 830 locations across the world.

NOV Chart

NOV data by YCharts

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ModernGraham Valuation of NOV – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,899,566,370 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.12 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 -82.51% Fail
6. Moderate PEmg Ratio PEmg < 20 28.25 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.78 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 3.12 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.52 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

NOV value chart August 2016

EPSmg $1.18
MG Growth Estimate -4.25%
MG Value $4.10
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $17.12
MG Value based on 0% Growth $10.04
Market Implied Growth Rate 9.87%
Current Price $33.35
% of Intrinsic Value 813.15%

National-Oilwell Varco, 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, the poor dividend history, 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 $4.79 in 2012 to an estimated $1.18 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.87% 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 National-Oilwell Varco, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.43 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 28.25, which was below the industry average of 55.24, 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 $4.1.

National-Oilwell Varco, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

NOV charts August 2016

Net Current Asset Value (NCAV) $4.10
Graham Number $0.00
PEmg 28.25
Current Ratio 3.12
PB Ratio 0.78
Current Dividend $1.43
Dividend Yield 4.29%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $9,204,000,000
Total Current Liabilities $2,947,000,000
Long-Term Debt $3,268,000,000
Total Assets $23,784,000,000
Intangible Assets $10,695,000,000
Total Liabilities $7,666,000,000
Shares Outstanding (Diluted Average) 375,000,000

Earnings Per Share History

Next Fiscal Year Estimate -$1.70
Dec2015 -$1.99
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.64
Dec2003 $0.45
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 $0.02
Dec1998 $0.65
Dec1997 $0.49

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.18
Dec2015 $3.07
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.10
Dec2005 $0.66
Dec2004 $0.51
Dec2003 $0.41
Dec2002 $0.38
Dec2001 $0.36
Dec2000 $0.23

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
National Oilwell Varco Inc Valuation – February 2016 Update $NOV
10 Low PE Stocks for the Enterprising Investor – February 2016
10 Low PE Stocks for the Enterprising Investor – January 2016
13 Best Stocks For Value Investors This Week – 10/17/15

Other ModernGraham posts about related companies

EOG Resources Inc Valuation – July 2016 $EOG
Noble Corp PLC Valuation – July 2016 $NE
Baker Hughes Inc Valuation – July 2016 $BHI
Rowan Companies PLC Valuation – July 2016 $RDC
ConocoPhillips Valuation – July 2016 $COP
Devon Energy Corp Valuation – July 2016 $DVN
Noble Energy Inc Valuation – July 2016 $NBL
Diamond Offshore Drilling Inc Valuation – July 2016 $DO
Nabors Industries Ltd Valuation – July 2016 $NBR
Transocean Ltd Valuation – July 2016 $RIG

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.

Varian Medical Systems Inc Valuation – July 2016 $VAR

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

Company Profile (obtained from Google Finance): Varian Medical Systems Inc. is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company is a supplier of X-ray imaging components for medical, scientific, and industrial applications and supplies X-ray imaging products for cargo screening and industrial inspection. The Company offers tools for fighting cancer, taking X-ray images and protecting ports and borders. The Company’s products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, accessories, information management, treatment planning and image processing software. The Company’s customers include university research and community hospitals, private and governmental institutions, healthcare agencies, doctors’ offices and cancer care clinics.

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of VAR – July 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,967,875,583 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.64 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 86.61% Pass
6. Moderate PEmg Ratio PEmg < 20 20.13 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.68 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 1.64 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.29 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

VAR value chart July 2016

EPSmg $4.08
MG Growth Estimate 4.04%
MG Value $67.75
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $59.23
MG Value based on 0% Growth $34.72
Market Implied Growth Rate 5.82%
Current Price $82.23
% of Intrinsic Value 121.37%

Varian Medical Systems, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. 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 $3.22 in 2012 to an estimated $4.08 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.82% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

VAR charts July 2016

Net Current Asset Value (NCAV) $6.20
Graham Number $41.56
PEmg 20.13
Current Ratio 1.64
PB Ratio 4.68
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $2,773,217,000
Total Current Liabilities $1,694,140,000
Long-Term Debt $312,500,000
Total Assets $3,866,258,000
Intangible Assets $283,947,000
Total Liabilities $2,176,487,000
Shares Outstanding (Diluted Average) 96,179,000

Earnings Per Share History

Next Fiscal Year Estimate $4.34
Sep2015 $4.09
Sep2014 $3.83
Sep2013 $3.98
Sep2012 $3.76
Sep2011 $3.36
Sep2010 $2.91
Sep2009 $2.55
Sep2008 $2.19
Sep2007 $1.83
Sep2006 $1.81
Sep2005 $1.50
Sep2004 $1.18
Sep2003 $0.92
Sep2002 $0.67
Sep2001 $0.40
Sep2000 $0.41
Sep1999 -$0.20
Sep1998 $0.61
Sep1997 $0.92
Sep1996 $0.95

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.08
Sep2015 $3.91
Sep2014 $3.73
Sep2013 $3.56
Sep2012 $3.22
Sep2011 $2.82
Sep2010 $2.45
Sep2009 $2.14
Sep2008 $1.86
Sep2007 $1.61
Sep2006 $1.41
Sep2005 $1.11
Sep2004 $0.85
Sep2003 $0.60
Sep2002 $0.42
Sep2001 $0.34
Sep2000 $0.39

Recommended Reading:

Other ModernGraham posts about the company

Varian Medical Systems Inc. Valuation – November 2015 Update $VAR
The Best Companies of the Medical Industry – September 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
Varian Medical Systems Inc Analysis – August 2015 Update $VAR
47 Companies in the Spotlight This Week – 5/16/15

Other ModernGraham posts about related companies

St. Jude Medical Inc Valuation – June 2016 $STJ
Zimmer Biomet Holdings Inc Valuation – June 2016 $ZBH
Waters Corporation Valuation – May 2016 $WAT
Align Technology Inc Valuation – May 2016 $ALGN
C.R. Bard Inc Stock Valuation – February 2016 $BCR
Psychemedics Corp Stock Valuation – February 2016 $PMD
Patterson Companies Inc Stock Valuation – February 2016 $PDCO
Edwards Lifesciences Corp Valuation – February 2016 $EW
Baxter International Inc Valuation – February 2016 $BAX
Cerner Corporation Valuation – February 2016 Update $CERN

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.

National Oilwell Varco Inc Valuation – February 2016 Update $NOV

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

Company Profile (obtained from Google Finance): National Oilwell Varco, Inc. (NOV) is engaged in providing design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations. The Company also provides oilfield services to the upstream oil and gas industry. The Company operates through four segments: Rig Systems, Rig Aftermarket, Wellbore Technologies, and Completion & Production Solutions. Its Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. Its Rig Aftermarket segment provides aftermarket products and services to support land and offshore rigs, and drilling rig components manufactured by the Company’s Rig Systems segment. Its Wellbore Technologies segment sells and rents solids control equipment; and provides solids control, waste management and drilling fluids services. Its Completion & Production Solutions segment provides technologies for well completions and oil and gas production.

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

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

ModernGraham Valuation of NOV – February 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,643,395,822 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.49 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 24.12% Fail
6. Moderate PEmg Ratio PEmg < 20 6.58 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.60 Pass
Score
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 2.49 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.51 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

NOV value Chart February 2016

EPSmg $4.36
MG Growth Estimate 0.44%
MG Value $40.92
Opinion Undervalued
MG Value based on 3% Growth $63.23
MG Value based on 0% Growth $37.07
Market Implied Growth Rate -0.96%
Current Price $28.68
% of Intrinsic Value 70.10%

National Oilwell Varco Inc qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the short dividend history.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $4.24 in 2011 to an estimated $4.36 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of negative 0.96% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Stage 3: Information for Further Research

NOV Charts February 2016

Net Current Asset Value (NCAV) $3.76
Graham Number $45.29
PEmg 6.58
Current Ratio 2.49
PB Ratio 0.60
Dividend Yield 6.42%
Number of Consecutive Years of Dividend Growth 7

 

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $12,933,000,000
Total Current Liabilities $5,193,000,000
Long-Term Debt $3,981,000,000
Total Assets $29,628,000,000
Intangible Assets $12,552,000,000
Total Liabilities $11,502,000,000
Shares Outstanding (Diluted Average) 381,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.89
Dec2014 $5.82
Dec2013 $5.44
Dec2012 $5.83
Dec2011 $4.70
Dec2010 $3.98
Dec2009 $3.52
Dec2008 $4.90
Dec2007 $3.76
Dec2006 $1.94
Dec2005 $0.91
Dec2004 $0.67
Dec2003 $0.47
Dec2002 $0.45
Dec2001 $0.64
Dec2000 $0.08
Dec1999 -$0.07
Dec1998 $0.60
Dec1997 $0.50
Dec1996 $0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.36
Dec2014 $5.45
Dec2013 $5.07
Dec2012 $4.79
Dec2011 $4.24
Dec2010 $3.88
Dec2009 $3.55
Dec2008 $3.19
Dec2007 $2.07
Dec2006 $1.11
Dec2005 $0.68
Dec2004 $0.53
Dec2003 $0.41
Dec2002 $0.36
Dec2001 $0.33
Dec2000 $0.20
Dec1999 $0.25

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stocks for the Enterprising Investor – February 2016
The Best Companies of the Oil & Gas Industry – August 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15
National Oilwell Varco Analysis – July 2015 Update $NOV
5 Undervalued Companies for Value Investors with a High Beta – July 2015

Other ModernGraham posts about related companies

Southwestern Energy Company Valuation – February 2016 Update $SWN
Apache Corporation Valuation – January 2016 Update $APA
Anadarko Petroleum Corp Valuation – January 2016 Update $APC
Cabot Oil & Gas Corp Valuation – December 2015 Update $COG
Helmerich & Payne Inc Valuation – November 2015 Update $HP
Murphy Oil Corporation Valuation – November 2015 Update $MUR
Denbury Resources Inc. Valuation – November 2015 Update $DNR
Western Refining Inc. Valuation – October 2015 Update $WNR
Valero Energy Corporation Valuation – October 2015 Update $VLO
Schlumberger Limited Valuation – October 2015 Update $SLB

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.

Varian Medical Systems Inc. Valuation – November 2015 Update $VAR

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 Most Undervalued Companies for the Defensive Investor – October 2015.  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 Varian Medical Systems Inc. (VAR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Varian Medical Systems Inc. is a manufacturer of medical devices and software for treating cancer and other medical conditions with radiotherapy, radiosurgery, proton therapy and brachytherapy. The Company is a supplier of X-ray imaging components for medical, scientific, and industrial applications and supplies X-ray imaging products for cargo screening and industrial inspection. The Company offers tools for fighting cancer, taking X-ray images and protecting ports and borders. The Company’s products include linear accelerators, brachytherapy afterloaders, treatment simulation and verification equipment, accessories, information management, treatment planning and image processing software. The Company’s customers include university research and community hospitals, private and governmental institutions, healthcare agencies, doctors’ offices and cancer care clinics.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of VAR – November 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,823,307,192 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.83 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 87.21% Pass
6. Moderate PEmg Ratio PEmg < 20 19.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.60 Fail
Score
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 1.83 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.30 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

VAR value Chart November 2015

EPSmg $4.10
MG Growth Estimate 4.11%
MG Value $68.48
Opinion Overvalued
MG Value based on 3% Growth $59.42
MG Value based on 0% Growth $34.83
Market Implied Growth Rate 5.42%
Current Price $79.25
% of Intrinsic Value 115.72%

Varian Medical Systems Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, lack of dividends, and the high PB ratio.  The Enterprising Investor is only concerned with the lack of dividends.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $3.22 in 2012 to an estimated $4.10 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 5.42% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

VAR Charts November 2015

Net Current Asset Value (NCAV) $6.40
Graham Number $41.17
PEmg 19.34
Current Ratio 1.83
PB Ratio 4.60
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $2,525,045,000
Total Current Liabilities $1,382,904,000
Long-Term Debt $337,500,000
Total Assets $3,600,748,000
Intangible Assets $283,452,000
Total Liabilities $1,889,148,000
Shares Outstanding (Diluted Average) 99,300,000

Earnings Per Share History

Next Fiscal Year Estimate $4.38
Sep15 $4.09
Sep14 $3.83
Sep13 $3.98
Sep12 $3.76
Sep11 $3.36
Sep10 $2.91
Sep09 $2.55
Sep08 $2.19
Sep07 $1.83
Sep06 $1.81
Sep05 $1.50
Sep04 $1.18
Sep03 $0.92
Sep02 $0.67
Sep01 $0.40
Sep00 $0.41
Sep99 -$0.20
Sep98 $0.61
Sep97 $0.92
Sep96 $0.95

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.10
Sep15 $3.91
Sep14 $3.73
Sep13 $3.56
Sep12 $3.22
Sep11 $2.82
Sep10 $2.45
Sep09 $2.14
Sep08 $1.86
Sep07 $1.61
Sep06 $1.41
Sep05 $1.11
Sep04 $0.85
Sep03 $0.60
Sep02 $0.42
Sep01 $0.34
Sep00 $0.39

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Medical Industry – September 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
Varian Medical Systems Inc Analysis – August 2015 Update $VAR
47 Companies in the Spotlight This Week – 5/16/15
Varian Medical Systems Inc. Quarterly Valuation – May 2015 $VAR

Other ModernGraham posts about related companies

Psychemedics Corporation Valuation – November 2015 Update $PMD
C.R. Bard Inc. Valuation – November 2015 Update $BCR
Henry Schein Inc. Valuation – October 2015 Update $HSIC
Medtronic PLC Valuation – October 2015 Update $MDT
PerkinElmer Inc. Analysis – October 2015 Update $PKI
Quest Diagnostics Inc. Analysis – October 2015 Update $DGX
Stryker Corporation Analysis – October 2015 Update $SYK
The Best Companies of the Medical Industry – September 2015
Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH
Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

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.

National Oilwell Varco Inc. Valuation – October 2015 Update $NOV

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 Most Undervalued Companies for the Defensive Investor – October 2015.  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 National Oilwell Varco Inc. (NOV) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): National Oilwell Varco, Inc. (NOV) is engaged in providing design, manufacture and sale of equipment and components used in oil and gas drilling, completion and production operations. The Company also provides oilfield services to the upstream oil and gas industry. The Company operates through four segments: Rig Systems, Rig Aftermarket, Wellbore Technologies, and Completion & Production Solutions. Its Rig Systems segment makes and supports the capital equipment and integrated systems needed to drill oil and gas wells on land and offshore. Its Rig Aftermarket segment provides aftermarket products and services to support land and offshore rigs, and drilling rig components manufactured by the Company’s Rig Systems segment. Its Wellbore Technologies segment sells and rents solids control equipment; and provides solids control, waste management and drilling fluids services. Its Completion & Production Solutions segment provides technologies for well completions and oil and gas production.

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of NOV – October 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,933,993,540 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.50 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 28.46% Fail
6. Moderate PEmg Ratio PEmg < 20 8.62 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.80 Pass
Score
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 0.49 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

NOV value Chart October 2015

EPSmg $4.51
MG Growth Estimate 0.98%
MG Value $47.26
Opinion Fairly Valued
MG Value based on 3% Growth $65.45
MG Value based on 0% Growth $38.37
Market Implied Growth Rate 0.06%
Current Price $38.91
% of Intrinsic Value 82.34%

National Oilwell Varco Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the short dividend record, and the insufficient earnings growth over the last ten years.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $4.24 in 2011 to an estimated $4.51 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 0.06% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

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

Stage 3: Information for Further Research

NOV Charts October 2015

Net Current Asset Value (NCAV) $4.82
Graham Number $50.89
PEmg 8.62
Current Ratio 2.50
PB Ratio 0.80
Dividend Yield 4.73%
Number of Consecutive Years of Dividend Growth 7

 

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $14,167,000,000
Total Current Liabilities $5,672,000,000
Long-Term Debt $4,154,000,000
Total Assets $31,225,000,000
Intangible Assets $12,764,000,000
Total Liabilities $12,298,000,000
Shares Outstanding (Diluted Average) 388,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.35
Dec14 $5.82
Dec13 $5.44
Dec12 $5.83
Dec11 $4.70
Dec10 $3.98
Dec09 $3.52
Dec08 $4.90
Dec07 $3.76
Dec06 $1.94
Dec05 $0.91
Dec04 $0.67
Dec03 $0.47
Dec02 $0.45
Dec01 $0.64
Dec00 $0.08
Dec99 -$0.07
Dec98 $0.60
Dec97 $0.50
Dec96 $0.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.51
Dec14 $5.45
Dec13 $5.07
Dec12 $4.79
Dec11 $4.24
Dec10 $3.88
Dec09 $3.55
Dec08 $3.19
Dec07 $2.07
Dec06 $1.11
Dec05 $0.68
Dec04 $0.53
Dec03 $0.41
Dec02 $0.36
Dec01 $0.33
Dec00 $0.20
Dec99 $0.25

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Oil & Gas Industry – August 2015
The 20 Best Stocks For Value Investors This Week – 7/25/15
National Oilwell Varco Analysis – July 2015 Update $NOV
5 Undervalued Companies for Value Investors with a High Beta – July 2015
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – July 2015

Other ModernGraham posts about related companies

Tesoro Corporation Analysis – October 2015 Update $TSO
Cameron International Company Analysis – September 2015 Update $CAM
Halliburton Company Analysis – September 2015 Update $HAL
Kinder Morgan Inc. Analysis – September 2015 Update $KMI
Range Resources Corporation Analysis – August 2015 Update $RRC
Helmerich & Payne Inc. Analysis – August 2015 Update $HP
FMC Technologies Inc. Analysis – August 2015 Update $FTI
Denbury Resources Inc. Analysis – August 2015 Update $DNR
Western Refining Inc. Analysis – Initial Coverage $WNR
WPX Energy Inc. Analysis – 2015 Update $WPX

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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