Invesco Ltd Valuation – January 2019 $IVZ

Company Profile (excerpt from Reuters): Invesco Ltd. (Invesco), incorporated on September 12, 2007, is an independent investment management company. The Company provides a range of investment capabilities and outcomes, which are delivered through a set of investment vehicles, to help clients achieve their investment objectives. The Company has a presence in the retail and institutional markets within the investment management industry in North America; Europe, Middle East and Africa (EMEA), and Asia-Pacific. It served clients in more than 100 countries, as of December 31, 2016. The Company’s Jemstep solution provides wealth management home offices and their advisors with a suite of technology solutions that are customizable and are integrated into existing systems. The solution offers advisors an open architecture platform that includes Invesco’s fundamental and factor-based investment strategies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IVZ – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,099,659,454 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 115.57% Pass
5. Moderate PEmg Ratio PEmg < 20 7.21 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.77 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.39
MG Growth Estimate 3.99%
MG Value $39.47
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $34.72
MG Value based on 0% Growth $20.35
Market Implied Growth Rate -0.65%
Current Price $17.26
% of Intrinsic Value 43.73%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.39 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.65% annual earnings loss over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Invesco Ltd. revealed the company was trading below its Graham Number of $33.89. The company pays a dividend of $1.15 per share, for a yield of 6.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 7.21, which was below the industry average of 18, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Invesco Ltd. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $33.89
PEmg 7.21
PB Ratio 0.77
Dividend Yield 6.66%
TTM Dividend $1.15
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Long-Term Debt & Capital Lease Obligation $7,635,100,000
Total Assets $32,503,800,000
Intangible Assets $9,468,000,000
Total Liabilities $23,185,000,000
Shares Outstanding (Diluted Average) 414,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.39
Dec2017 $2.75
Dec2016 $2.06
Dec2015 $2.26
Dec2014 $2.27
Dec2013 $2.10
Dec2012 $1.49
Dec2011 $1.57
Dec2010 $1.01
Dec2009 $0.76
Dec2008 $1.21
Dec2007 $1.64
Dec2006 $1.19
Dec2005 $0.54
Dec2004 -$0.10
Dec2003 $0.61
Dec2002 $0.03
Dec2001 $0.28
Dec2000 $0.63
Dec1999 $0.44
Dec1998 $0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.39
Dec2017 $2.36
Dec2016 $2.12
Dec2015 $2.08
Dec2014 $1.89
Dec2013 $1.60
Dec2012 $1.30
Dec2011 $1.22
Dec2010 $1.08
Dec2009 $1.10
Dec2008 $1.14
Dec2007 $1.00
Dec2006 $0.60
Dec2005 $0.30
Dec2004 $0.21
Dec2003 $0.38
Dec2002 $0.27

Recommended Reading:

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5 Low P/E Companies In The S&P 500 – August 2018
Best Stocks Below Their Graham Number – August 2018
10 Low PE Stock Picks for the Defensive Investor – August 2018
10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2018
Best Stocks Below Their Graham Number – June 2018

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Disclaimer:

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

Verizon Communications Inc Valuation – November 2018 $VZ

Company Profile (excerpt from Reuters): Verizon Communications Inc., incorporated on October 7, 1983, is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales, to consumer, business and government customers across the United States. The Wireline segment offers voice, data and video communications products and services, such as broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services, and local and long distance voice services. The Company has combined Yahoo! Inc operating assets with its existing AOL Inc. business to create a new subsidiary, Oath Inc, a diverse house of more than 50 media and technology brands. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, BUILD Studios, Yahoo Finance and Yahoo Mail.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VZ – 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 $248,416,727,707 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 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 335.73% Pass
6. Moderate PEmg Ratio PEmg < 20 12.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.44 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -105.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.87
MG Growth Estimate 15.00%
MG Value $187.32
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $70.55
MG Value based on 0% Growth $41.36
Market Implied Growth Rate 1.93%
Current Price $60.15
% of Intrinsic Value 32.11%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.11 in 2014 to an estimated $4.87 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.93% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Verizon Communications Inc. revealed the company was trading above its Graham Number of $32.89. The company pays a dividend of $2.34 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 12.36, which was below the industry average of 30.21, 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 $-42.59.

Verizon Communications 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) -$42.59
Graham Number $32.89
PEmg 12.36
Current Ratio 0.97
PB Ratio 4.44
Current Dividend $2.34
Dividend Yield 3.88%
Number of Consecutive Years of Dividend Growth 11

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 $33,154,000,000
Total Current Liabilities $34,167,000,000
Long-Term Debt $106,440,000,000
Total Assets $265,562,000,000
Intangible Assets $132,937,000,000
Total Liabilities $209,475,000,000
Shares Outstanding (Diluted Average) 4,140,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.55
Dec2017 $7.36
Dec2016 $3.21
Dec2015 $4.37
Dec2014 $2.42
Dec2013 $4.00
Dec2012 $0.31
Dec2011 $0.85
Dec2010 $0.90
Dec2009 $1.72
Dec2008 -$0.77
Dec2007 $1.90
Dec2006 $2.12
Dec2005 $2.65
Dec2004 $2.79
Dec2003 $1.12
Dec2002 $1.49
Dec2001 $0.14
Dec2000 $4.31
Dec1999 $2.97
Dec1998 $1.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.87
Dec2017 $4.77
Dec2016 $3.27
Dec2015 $3.00
Dec2014 $2.11
Dec2013 $1.82
Dec2012 $0.69
Dec2011 $0.89
Dec2010 $1.00
Dec2009 $1.21
Dec2008 $1.21
Dec2007 $2.18
Dec2006 $2.22
Dec2005 $2.06
Dec2004 $1.83
Dec2003 $1.57
Dec2002 $1.92

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2018
10 Low PE Stock Picks for the Defensive Investor – June 2018
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2018
10 Undervalued Companies for the Defensive Investor – June 2018
5 Undervalued Companies for Value Investors with a Low Beta – May 2018

Other ModernGraham posts about related companies

Lumentum Holdings Inc Valuation – October 2018 $LITE
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Sierra Wireless Inc Valuation – September 2018 $TSE:SW
Frontier Communications Corp Valuation – August 2018 $FTR
Consolidated Communications Holdings Inc Valuation – August 2018 $CNSL
Comtech Telecommunications Corp Valuation – August 2018 $CMTL
Shaw Communications Inc Valuation – July 2018 $TSE:SJR.B
ARRIS International PLC Valuation – July 2018 $ARRS
Iridium Communications Inc Valuation – July 2018 $IRDM
CenturyLink Inc Valuation – June 2018 $CTL

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.

Invesco Ltd Valuation – March 2018 $IVZ

IVZ Chart

IVZ data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IVZ – 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 $13,114,229,621 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.17 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 136.83% Pass
6. Moderate PEmg Ratio PEmg < 20 12.24 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.48 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 1.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.76 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.63
MG Growth Estimate 5.87%
MG Value $53.25
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $38.15
MG Value based on 0% Growth $22.37
Market Implied Growth Rate 1.87%
Current Price $32.21
% of Intrinsic Value 60.49%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.63 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.87% 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 above the price.

At the time of valuation, further research into Invesco Ltd. revealed the company was trading below its Graham Number of $38.6. The company pays a dividend of $1.15 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.24, which was below the industry average of 21.55, 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 $-14.2.

Invesco Ltd. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$14.20
Graham Number $38.60
PEmg 12.24
Current Ratio 1.17
PB Ratio 1.48
Current Dividend $1.15
Dividend Yield 3.57%
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 12/1/2017
Total Current Assets $17,309,000,000
Total Current Liabilities $14,820,100,000
Long-Term Debt $6,875,600,000
Total Assets $31,668,800,000
Intangible Assets $8,149,400,000
Total Liabilities $22,972,700,000
Shares Outstanding (Diluted Average) 398,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.10
Dec2017 $2.75
Dec2016 $2.06
Dec2015 $2.26
Dec2014 $2.27
Dec2013 $2.10
Dec2012 $1.49
Dec2011 $1.57
Dec2010 $1.01
Dec2009 $0.76
Dec2008 $1.21
Dec2007 $1.64
Dec2006 $1.19
Dec2005 $0.54
Dec2004 -$0.10
Dec2003 $0.61
Dec2002 $0.03
Dec2001 $0.28
Dec2000 $0.63
Dec1999 $0.44
Dec1998 $0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.63
Dec2017 $2.36
Dec2016 $2.12
Dec2015 $2.08
Dec2014 $1.89
Dec2013 $1.60
Dec2012 $1.30
Dec2011 $1.22
Dec2010 $1.08
Dec2009 $1.10
Dec2008 $1.14
Dec2007 $1.00
Dec2006 $0.60
Dec2005 $0.30
Dec2004 $0.21
Dec2003 $0.38
Dec2002 $0.27

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Other ModernGraham posts about the company

10 Most Undervalued Companies for the Defensive Investor – July 2016
5 Companies for Value Investors with a High Beta – July 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2016
10 Companies Benjamin Graham Would Invest In Today – June 2016
10 Companies Benjamin Graham Would Invest In Today – May 2016

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Disclaimer:

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

Verizon Communications Inc Valuation – February 2018 $VZ

Company Profile (obtained from Marketwatch): Verizon Communications, Inc. is a holding company, which engages in the provision of broadband and communication services. It operates through the following segments: Wireless and Wireline. The Wireless segment provides wireless voice and data services and equipment sales, which are provided to consumer, business, and government customers. The Wireline segment offers broadband video and data; corporate networking solutions; data center and cloud services; security and managed network services; and local and long distance voice services. Through its subsidiary, Oath, Inc. the company oversees a diverse house of more than 50 media and technology brands under Yahoo and AOL, engaging more than a billion people globally. The Oath portfolio includes HuffPost, Yahoo Sports, AOL.com, MAKERS, Tumblr, BUILD Studios, Yahoo Finance, Yahoo Mail and more, with an aim to build consumer-friendly brands. The company was founded on June 30, 2000 and is headquartered in New York, NY.

VZ Chart

VZ data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VZ – February 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 $200,259,753,323 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.91 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 311.24% Pass
6. Moderate PEmg Ratio PEmg < 20 10.71 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.66 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 0.91 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -36.38 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.58
MG Growth Estimate 15.00%
MG Value $176.41
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $66.44
MG Value based on 0% Growth $38.95
Market Implied Growth Rate 1.11%
Current Price $49.09
% of Intrinsic Value 27.83%

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

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

At the time of valuation, further research into Verizon Communications Inc. revealed the company was trading above its Graham Number of $29.66. The company pays a dividend of $2.34 per share, for a yield of 4.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.71, which was below the industry average of 37.96, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-45.

Verizon Communications Inc. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$45.00
Graham Number $29.66
PEmg 10.71
Current Ratio 0.91
PB Ratio 4.66
Current Dividend $2.34
Dividend Yield 4.76%
Number of Consecutive Years of Dividend Growth 11

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 $29,913,000,000
Total Current Liabilities $33,037,000,000
Long-Term Debt $113,642,000,000
Total Assets $257,143,000,000
Intangible Assets $127,836,000,000
Total Liabilities $214,047,000,000
Shares Outstanding (Diluted Average) 4,092,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.70
Dec2017 $7.36
Dec2016 $3.21
Dec2015 $4.37
Dec2014 $2.42
Dec2013 $4.00
Dec2012 $0.31
Dec2011 $0.85
Dec2010 $0.90
Dec2009 $1.72
Dec2008 -$0.77
Dec2007 $1.90
Dec2006 $2.12
Dec2005 $2.65
Dec2004 $2.79
Dec2003 $1.12
Dec2002 $1.49
Dec2001 $0.14
Dec2000 $4.31
Dec1999 $2.97
Dec1998 $1.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.58
Dec2017 $4.77
Dec2016 $3.27
Dec2015 $3.00
Dec2014 $2.11
Dec2013 $1.82
Dec2012 $0.69
Dec2011 $0.89
Dec2010 $1.00
Dec2009 $1.21
Dec2008 $1.21
Dec2007 $2.18
Dec2006 $2.22
Dec2005 $2.06
Dec2004 $1.83
Dec2003 $1.57
Dec2002 $1.92

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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.

Verizon Communications Inc Valuation – July 2016 $VZ

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 Verizon Communications Inc (VZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Verizon Communications Inc. (Verizon) is a holding company. The Company, through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses and governmental agencies. The Company offers voice, data and video services and solutions on its wireless and wireline networks. The Company’s segments include Wireless and Wireline. The Wireless segment offers communications products and services, including wireless voice and data services and equipment sales that are provided to consumer, business and government customers across the United States. The Wireline’s segment offers voice, data and video communications products and services, such as broadband video and data, corporate networking solutions, data center and cloud services, security and managed network services and local and long distance voice services. The Company provides these products and services to consumers as well as to carriers, businesses and government customers.

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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.

Downloadable PDF version of this valuation:

ModernGraham Valuation of VZ – 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 $225,706,013,402 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.61 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 80.73% Pass
6. Moderate PEmg Ratio PEmg < 20 17.02 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.65 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 0.61 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.85 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

VZ value chart July 2016

EPSmg $3.22
MG Growth Estimate 15.00%
MG Value $124.10
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $46.74
MG Value based on 0% Growth $27.40
Market Implied Growth Rate 4.26%
Current Price $54.86
% of Intrinsic Value 44.21%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.83 in 2012 to an estimated $3.22 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.26% 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.

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

Stage 3: Information for Further Research

VZ charts July 2016

Net Current Asset Value (NCAV) -$46.95
Graham Number $18.03
PEmg 17.02
Current Ratio 0.61
PB Ratio 11.65
Current Dividend $2.26
Dividend Yield 4.12%
Number of Consecutive Years of Dividend Growth 10

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 $20,844,000,000
Total Current Liabilities $34,408,000,000
Long-Term Debt $92,922,000,000
Total Assets $231,870,000,000
Intangible Assets $119,797,000,000
Total Liabilities $212,626,000,000
Shares Outstanding (Diluted Average) 4,085,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.06
Dec2015 $4.37
Dec2014 $2.42
Dec2013 $4.00
Dec2012 $0.31
Dec2011 $0.85
Dec2010 $0.90
Dec2009 $1.29
Dec2008 $2.26
Dec2007 $1.90
Dec2006 $2.12
Dec2005 $2.65
Dec2004 $2.79
Dec2003 $1.11
Dec2002 $1.49
Dec2001 $0.14
Dec2000 $4.31
Dec1999 $2.65
Dec1998 $1.86
Dec1997 $1.56
Dec1996 $1.98

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.22
Dec2015 $3.00
Dec2014 $2.11
Dec2013 $1.79
Dec2012 $0.83
Dec2011 $1.21
Dec2010 $1.49
Dec2009 $1.87
Dec2008 $2.22
Dec2007 $2.17
Dec2006 $2.22
Dec2005 $2.06
Dec2004 $1.83
Dec2003 $1.55
Dec2002 $1.87
Dec2001 $2.08
Dec2000 $2.86

Recommended Reading:

Other ModernGraham posts about the company

23 Companies in the Spotlight This Week – 3/9/15
Verizon Communications Annual Valuation – 2015 $VZ
5 Most Overvalued Dow Components – February 2015
5 Most Overvalued Dow Components – January 2015
5 Most Overvalued Dow Components – December 2014

Other ModernGraham posts about related companies

AT&T Inc Valuation – July 2016 $T
Harris Corporation Valuation – February 2016 $HRS
CenturyLink Inc Valuation – February 2016 $CTL
Frontier Communications Corp Valuation – November 2015 Update $FTR
Harris Corporation Analysis – September 2015 Update $HRS
Arris Group Inc. Analysis – Initial Coverage $ARRS
Level 3 Communications Inc. Analysis – Initial Coverage $LVLT
Windstream Holdings Analysis – 2015 Update $WIN
Harris Corporation Analysis – June 2015 Update $HRS
Harris Corporation Quarterly Valuation – March 2015 $HRS

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.

Invesco Ltd Valuation – July 2016 $IVZ

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 Invesco Ltd (IVZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Invesco Ltd. (Invesco) is an independent global investment management company. The Company provides a range of investment capabilities and outcomes, which are delivered through a diverse set of investment vehicles, to help clients achieve their investment objectives. It operates in the investment management segment. The Company has a presence in the retail and institutional markets within the investment management industry in North America, the United Kingdom, Europe, the Middle East and Asia-Pacific, serving clients in approximately 100 countries. Its Invesco Jemstep solution provides wealth management home offices and their advisors with a suite of technology solutions that are customizable and are integrated into existing systems. Approximately 47.8% of its assets under management (AUM) are invested in equity securities and over 52.2% are invested in fixed income and other investments.

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ModernGraham Valuation of IVZ – 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 $12,014,816,894 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.50 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 84.76% Pass
6. Moderate PEmg Ratio PEmg < 20 13.24 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.47 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 0.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.19 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

IVZ value chart July 2016

EPSmg $2.15
MG Growth Estimate 9.81%
MG Value $60.45
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $31.17
MG Value based on 0% Growth $18.27
Market Implied Growth Rate 2.37%
Current Price $28.45
% of Intrinsic Value 47.06%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.3 in 2012 to an estimated $2.15 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.37% 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.

Invesco Ltd. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

IVZ charts July 2016

Net Current Asset Value (NCAV) -$25.68
Graham Number $30.20
PEmg 13.24
Current Ratio 0.50
PB Ratio 1.47
Current Dividend $1.08
Dividend Yield 3.80%
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 3/1/2016
Total Current Assets $4,280,000,000
Total Current Liabilities $8,598,100,000
Long-Term Debt $5,134,400,000
Total Assets $22,658,200,000
Intangible Assets $7,653,600,000
Total Liabilities $14,754,200,000
Shares Outstanding (Diluted Average) 407,900,000

Earnings Per Share History

Next Fiscal Year Estimate $2.14
Dec2015 $2.26
Dec2014 $2.27
Dec2013 $2.10
Dec2012 $1.49
Dec2011 $1.57
Dec2010 $1.01
Dec2009 $0.76
Dec2008 $1.21
Dec2007 $1.64
Dec2006 $0.60
Dec2005 $0.26
Dec2004 -$0.42
Dec2003 -$0.04
Dec2002 $0.03
Dec2001 $0.28
Dec2000 $0.24
Dec1999 $0.18
Dec1998 $0.10
Dec1997 $0.34

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.15
Dec2015 $2.08
Dec2014 $1.89
Dec2013 $1.60
Dec2012 $1.30
Dec2011 $1.22
Dec2010 $1.04
Dec2009 $1.00
Dec2008 $0.97
Dec2007 $0.70
Dec2006 $0.18
Dec2005 -$0.01
Dec2004 -$0.09
Dec2003 $0.10
Dec2002 $0.16
Dec2001 $0.23
Dec2000 $0.19

Recommended Reading:

Other ModernGraham posts about the company

10 Most Undervalued Companies for the Defensive Investor – July 2016
5 Companies for Value Investors with a High Beta – July 2016
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2016
10 Companies Benjamin Graham Would Invest In Today – June 2016
10 Companies Benjamin Graham Would Invest In Today – May 2016

Other ModernGraham posts about related companies

Nasdaq Inc Valuation – July 2016 $NDAQ
Leucadia National Corp Valuation – July 2016 $LUK
E*Trade Financial Corp Valuation – July 2016 $ETFC
CBRE Group Inc Valuation – July 2016 $CBG
Fidelity National Information Services Valuation – July 2016 $FIS
Capital One Financial Corp Valuation – July 2016 $COF
Intercontinental Exchange Inc Valuation – July 2016 $ICE
H&R Block Inc Valuation – June 2016 $HRB
Visa Inc Valuation – June 2016 $V
Legg Mason Inc Valuation – June 2016 $LM

Disclaimer:

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

Invesco Ltd Valuation – January 2016 Update $IVZ

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 – November 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 Invesco Ltd (IVZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Invesco Ltd. (Invesco) is an independent global investment manager. The Company delivers an array of investment capabilities and services to retail and institutional investors through its global platform. The Company has presence in the institutional and retail markets within the investment management industry in North America, the United Kingdom, Europe, the Middle East and Asia-Pacific. The Company offers a range of domestic and global institutional strategies, including traditional and quantitative equities, fixed income (including money market funds for institutional clients), real estate, private equity, financial structures and absolute return strategies. Invesco offers retail investment solutions to clients through third-party financial intermediaries, including traditional broker-dealers, fund supermarkets, retirement platforms, financial advisors, banks, insurance companies and trust companies.

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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 IVZ

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 $12,495,459,997 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.62 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 66.58% Pass
6. Moderate PEmg Ratio PEmg < 20 13.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.48 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 0.62 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.43 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

IVZ value chart January 2016

EPSmg $2.12
MG Growth Estimate 11.11%
MG Value $64.97
Opinion Undervalued
MG Value based on 3% Growth $30.67
MG Value based on 0% Growth $17.98
Market Implied Growth Rate 2.52%
Current Price $28.65
% of Intrinsic Value 44.09%

Invesco Ltd qualifies for both the Enterprising Investor and the more conservative Defensive Investor.  The Defensive Investor is only initially concerned by the low current ratio while the Enterprising Investor is willing to overlook concerns regarding the level of debt relative to the current assets because the company passes the more stringent Defensive Investor requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.22 in 2011 to an estimated $2.12 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.52% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Invesco Ltd (IVZ)?  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

IVZ charts January 2016

Net Current Asset Value (NCAV) -$28.64
Graham Number $31.84
PEmg 13.54
Current Ratio 0.62
PB Ratio 1.48
Dividend Yield 3.63%
Number of Consecutive Years of Dividend Growth 6

 

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep15
Total Current Assets $4,887,900,000
Total Current Liabilities $7,916,600,000
Long-Term Debt $7,359,000,000
Total Assets $24,962,200,000
Intangible Assets $7,626,900,000
Total Liabilities $16,869,500,000
Shares Outstanding (Diluted Average) 418,300,000

Earnings Per Share History

Next Fiscal Year Estimate $2.36
Dec14 $2.27
Dec13 $2.10
Dec12 $1.49
Dec11 $1.57
Dec10 $1.01
Dec09 $0.76
Dec08 $1.21
Dec07 $1.64
Dec06 $1.19
Dec05 $0.54
Dec04 -$0.10
Dec03 $0.61
Dec02 $0.06
Dec01 $0.55
Dec00 $1.26
Dec99 $0.87
Dec98 $0.20
Dec97 $0.34

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.12
Dec14 $1.89
Dec13 $1.60
Dec12 $1.30
Dec11 $1.22
Dec10 $1.08
Dec09 $1.10
Dec08 $1.14
Dec07 $1.00
Dec06 $0.61
Dec05 $0.32
Dec04 $0.30
Dec03 $0.56
Dec02 $0.55
Dec01 $0.74
Dec00 $0.74
Dec99 $0.41

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – December 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – November 2015
8 Best Stocks For Value Investors This Week – 10/13/15
5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – October 2015
Invesco Limited Analysis – October 2015 Update $IVZ

Other ModernGraham posts about related companies

Legg Mason Inc Valuation – December 2015 Update $LM
Visa Inc Valuation – November 2015 Update $V
Ameriprise Financial Inc. Valuation – November 2015 Update $AMP
BlackRock Inc. Valuation – November 2015 Update $BLK
Goldman Sachs Group Inc. Valuation – November 2015 Update $GS
American Express Company Valuation – October 2015 Update $AXP
KKR & Co. LP Valuation – October 2015 Update $KKR
Invesco Limited Analysis – October 2015 Update $IVZ
CME Group Inc. Analysis – October 2015 Update $CME
T.Rowe Price Group Inc. Analysis – September 2015 Update $TROW

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.

Invesco Limited Analysis – October 2015 Update $IVZ

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 – September 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 Invesco Limited (IVZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Invesco Ltd. (Invesco) is an independent global investment manager. The Company delivers an array of investment capabilities and services to retail and institutional investors through its global platform. The Company has presence in the institutional and retail markets within the investment management industry in North America, the United Kingdom, Europe, the Middle East and Asia-Pacific. The Company offers a range of domestic and global institutional strategies, including traditional and quantitative equities, fixed income (including money market funds for institutional clients), real estate, private equity, financial structures and absolute return strategies. Invesco offers retail investment solutions to clients through third-party financial intermediaries, including traditional broker-dealers, fund supermarkets, retirement platforms, financial advisors, banks, insurance companies and trust companies.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of IVZ – 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 $13,890,498,749 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.78 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 67.57% Pass
6. Moderate PEmg Ratio PEmg < 20 15.22 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.64 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 0.78 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.45 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

IVZ value Chart October 2015

EPSmg $2.13
MG Growth Estimate 11.27%
MG Value $66.08
Opinion Undervalued
MG Value based on 3% Growth $30.87
MG Value based on 0% Growth $18.09
Market Implied Growth Rate 3.36%
Current Price $32.40
% of Intrinsic Value 49.03%

Invesco Limited qualifies for the both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the low current ratio.  The Enterprising Investor is satisfied because the company meets the more stringent Defensive Investor requirements.  As a result, all value 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 $1.22 in 2011 to an estimated $2.13 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.36% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Invesco Limited (IVZ)?  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

IVZ Charts October 2015

Net Current Asset Value (NCAV) -$23.60
Graham Number $32.39
PEmg 15.22
Current Ratio 0.78
PB Ratio 1.64
Dividend Yield 3.15%
Number of Consecutive Years of Dividend Growth 6

 

[/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 $4,630,000,000
Total Current Liabilities $5,920,700,000
Long-Term Debt $7,029,600,000
Total Assets $22,898,300,000
Intangible Assets $7,809,600,000
Total Liabilities $14,570,000,000
Shares Outstanding (Diluted Average) 421,200,000

Earnings Per Share History

Next Fiscal Year Estimate $2.40
Dec14 $2.27
Dec13 $2.10
Dec12 $1.49
Dec11 $1.57
Dec10 $1.01
Dec09 $0.76
Dec08 $1.21
Dec07 $1.64
Dec06 $1.19
Dec05 $0.54
Dec04 -$0.10
Dec03 $0.61
Dec02 $0.06
Dec01 $0.55
Dec00 $1.26
Dec99 $0.87
Dec98 $0.20
Dec97 $0.34

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.13
Dec14 $1.89
Dec13 $1.60
Dec12 $1.30
Dec11 $1.22
Dec10 $1.08
Dec09 $1.10
Dec08 $1.14
Dec07 $1.00
Dec06 $0.61
Dec05 $0.32
Dec04 $0.30
Dec03 $0.56
Dec02 $0.55
Dec01 $0.74
Dec00 $0.74
Dec99 $0.41

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – September 2015
The Best Stocks of the Financial Services Industry – September 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – August 2015
5 Undervalued Companies for Value Investors with a High Beta – August 2015
5 Undervalued Companies for Value Investors with a High Beta – July 2015

Other ModernGraham posts about related companies

CME Group Inc. Analysis – October 2015 Update $CME
T.Rowe Price Group Inc. Analysis – September 2015 Update $TROW
Moody’s Corporation Analysis – September 2015 Update $MCO
The Best Stocks of the Financial Services Industry – September 2015
Franklin Resources Inc. Analysis – September 2015 $BEN
Northern Trust Corporation Analysis – September 2015 Update $NTRS
Legg Mason Analysis – August 2015 Update $LM
Capital One Financial Corporation Analysis – August 2015 Update $COF
Affiliated Managers Group Analysis – Initial Coverage $AMG
Visa Inc. Analysis – August 2015 Update $V

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.

Invesco Limited Analysis – July 2015 Update $IVZ

Invesco_Advisers_Inc._98795Benjamin 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 5 Most Undervalued Companies for the Defensive Investor – June 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 Invesco Limited (IVZ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Invesco Ltd. (Invesco) is an independent global investment manager. The Company delivers an array of investment capabilities and services to retail and institutional investors through its global platform. The Company has presence in the institutional and retail markets within the investment management industry in North America, the United Kingdom, Europe, the Middle East and Asia-Pacific. The Company offers a range of domestic and global institutional strategies, including traditional and quantitative equities, fixed income (including money market funds for institutional clients), real estate, private equity, financial structures and absolute return strategies. Invesco offers retail investment solutions to clients through third-party financial intermediaries, including traditional broker-dealers, fund supermarkets, retirement platforms, financial advisors, banks, insurance companies and trust companies.

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To read the rest of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.
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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

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

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $37.96
MG Value $69.75
MG Opinion Undervalued
Value Based on 3% Growth $31.49
Value Based on 0% Growth $18.46
Market Implied Growth Rate 4.49%
Net Current Asset Value (NCAV) -$14.74
PEmg 17.48
Current Ratio 0.70
PB Ratio 1.98

Balance Sheet – March 2015

Current Assets $7,674,000,000
Current Liabilities $10,933,000,000
Total Debt $1,601,000,000
Total Assets $21,961,000,000
Intangible Assets $7,696,000,000
Total Liabilities $13,884,000,000
Outstanding Shares 421,200,000

Earnings Per Share

2015 (estimate) $2.53
2014 $2.27
2013 $2.10
2012 $1.49
2011 $1.57
2010 $1.01
2009 $0.76
2008 $1.21
2007 $1.64
2006 $1.19
2005 $0.54

Earnings Per Share – ModernGraham

2015 (estimate) $2.17
2014 $1.89
2013 $1.60
2012 $1.30
2011 $1.22
2010 $1.08

Dividend History

Conclusion:

Invesco Limited qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the low current ratio.  The Enterprising Investor has concerns with the level of debt relative to the current assets, but is willing to overlook those issues since the company meets the more conservative Defensive Investor’s requirements.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the evaluation.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.22 in 2011 to an estimated $2.17 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.49% 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 well above the price.

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

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

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

Verizon Communications Annual Valuation – 2015 $VZ

500px-Verizon_logo.svg

Verizon Communications does not qualify for either the Defensive Investor or the Enterprising Investor. The Defensive Investor is concerned with the low current ratio, the insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor takes issue with the level of debt relative to the current assets. As a result, any purchase of the company is made with a speculative nature behind it. That said, any speculator interested in pursuing the company should still proceed to the next part of the analysis, which is a determination of the company’s intrinsic value.

With regard to that intrinsic value, the company has grown its EPSmg (normalized earnings) from $1.61 in 2010 to $2.11 for 2014. This level of demonstrated growth does not support the market’s implied estimate for earnings growth of 7.38% annually over the next 7-10 years. The ModernGraham valuation model therefore returns an estimate of intrinsic value below the current price, indicating the company is overvalued at the present time.

Be sure to check out previous ModernGraham valuations of Verizon Communications (VZ) for a greater perspective!

Read the full valuation on Seeking Alpha!

VZ Chart

VZ data by YCharts

Disclaimer: The author did not hold a position in Verizon Communications (VZ) at the time of publication and had no intention of changing that position within the next 72 hours. Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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