Sherwin-Williams Co Valuation – January 2019 $SHW

Company Profile (excerpt from Reuters): The Sherwin-Williams Company (Sherwin-Williams), incorporated on July 16, 1884, is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region, Europe and Asia. The Company’s segments are Paint Stores Group, Consumer Group, Global Finishes Group, Latin America Coatings Group and Administrative.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SHW – 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 $36,779,226,028 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 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 269.25% Pass
6. Moderate PEmg Ratio PEmg < 20 27.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.40 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 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 44.45 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

EPSmg $14.16
MG Growth Estimate 15.00%
MG Value $545.08
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $205.29
MG Value based on 0% Growth $120.34
Market Implied Growth Rate 9.62%
Current Price $392.83
% of Intrinsic Value 72.07%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.9 in 2014 to an estimated $14.16 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.62% 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 Sherwin-Williams Co revealed the company was trading above its Graham Number of $111.82. The company pays a dividend of $3.4 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 27.75, which was above the industry average of 18.63. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-115.29.

Sherwin-Williams Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$115.29
Graham Number $111.82
PEmg 27.75
Current Ratio 1.04
PB Ratio 9.40
Current Dividend $3.40
Dividend Yield 0.87%
Number of Consecutive Years of Dividend Growth 20

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $5,038,032,000
Total Current Liabilities $4,842,065,000
Long-Term Debt $8,710,831,000
Total Assets $19,980,696,000
Intangible Assets $12,253,184,000
Total Liabilities $16,005,857,000
Shares Outstanding (Diluted Average) 95,135,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $14.13
Dec2017 $18.67
Dec2016 $11.99
Dec2015 $11.15
Dec2014 $8.77
Dec2013 $7.26
Dec2012 $6.02
Dec2011 $4.14
Dec2010 $4.21
Dec2009 $3.78
Dec2008 $4.00
Dec2007 $4.70
Dec2006 $4.19
Dec2005 $3.28
Dec2004 $2.72
Dec2003 $2.26
Dec2002 $0.84
Dec2001 $1.68
Dec2000 $0.10
Dec1999 $1.80
Dec1998 $1.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $14.16
Dec2017 $13.30
Dec2016 $10.09
Dec2015 $8.59
Dec2014 $6.90
Dec2013 $5.67
Dec2012 $4.72
Dec2011 $4.11
Dec2010 $4.12
Dec2009 $4.04
Dec2008 $4.04
Dec2007 $3.85
Dec2006 $3.17
Dec2005 $2.49
Dec2004 $1.91
Dec2003 $1.45
Dec2002 $1.09

Recommended Reading:

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Sherwin-Williams Co Valuation – March 2018 $SHW
Sherwin-Williams Co Valuation – July 2016 $SHW
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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.

Molson Coors Brewing Co Valuation – January 2019 $TAP

Company Profile (excerpt from Reuters): Molson Coors Brewing Company (MCBC), incorporated on August 14, 2003, is a holding company. The Company operates as a brewer. The Company’s segments include MillerCoors LLC (United States segment), operating in the United States; Molson Coors Canada (Canada segment), operating in Canada; Molson Coors Europe (Europe segment), operating in Bulgaria, Croatia, Czech Republic, Hungary, Montenegro, Republic of Ireland, Romania, Serbia, the United Kingdom and various other European countries; Molson Coors International (Molson Coors International segment), operating in various other countries, and Corporate. The Company offers a portfolio of owned and partner brands, including Carling, Coors Light, Miller Lite, Molson Canadian and Staropramen, as well as craft and specialty beers, such as the Blue Moon Brewing Company brands, the Jacob Leinenkugel Brewing Company brands, Creemore Springs, Cobra and Doom Bar.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TAP – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,697,224,360 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 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 89.01% Pass
6. Moderate PEmg Ratio PEmg < 20 10.75 Pass
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 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.57 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.89
MG Growth Estimate 14.81%
MG Value $224.60
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $85.44
MG Value based on 0% Growth $50.09
Market Implied Growth Rate 1.12%
Current Price $63.34
% of Intrinsic Value 28.20%

Molson Coors Brewing Co Class B 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 $2.97 in 2014 to an estimated $5.89 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.12% 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 Molson Coors Brewing Co Class B revealed the company was trading below its Graham Number of $86.77. The company pays a dividend of $1.64 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.75, which was below the industry average of 19.84, 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 $-62.64.

Molson Coors Brewing Co Class B fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$62.64
Graham Number $86.77
PEmg 10.75
Current Ratio 0.64
PB Ratio 0.97
Current Dividend $1.64
Dividend Yield 2.59%
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 $2,812,300,000
Total Current Liabilities $4,422,600,000
Long-Term Debt $8,970,300,000
Total Assets $30,470,300,000
Intangible Assets $22,329,400,000
Total Liabilities $16,380,300,000
Shares Outstanding (Diluted Average) 216,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.45
Dec2017 $6.53
Dec2016 $9.34
Dec2015 $2.12
Dec2014 $2.76
Dec2013 $3.08
Dec2012 $2.44
Dec2011 $3.63
Dec2010 $3.78
Dec2009 $3.87
Dec2008 $2.04
Dec2007 $2.71
Dec2006 $2.08
Dec2005 $0.84
Dec2004 $2.60
Dec2003 $2.39
Dec2002 $2.21
Dec2001 $1.66
Dec2000 $1.47
Dec1999 $1.23
Dec1998 $0.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.89
Dec2017 $5.66
Dec2016 $4.80
Dec2015 $2.63
Dec2014 $2.97
Dec2013 $3.17
Dec2012 $3.19
Dec2011 $3.44
Dec2010 $3.20
Dec2009 $2.71
Dec2008 $2.10
Dec2007 $2.13
Dec2006 $1.90
Dec2005 $1.85
Dec2004 $2.26
Dec2003 $1.99
Dec2002 $1.70

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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.

Windstream Holdings Inc Valuation – September 2018 $WIN

Company Profile (excerpt from Reuters): Windstream Holdings, Inc., incorporated on May 23, 2013, is a holding company. The Company is a provider of advanced network communications and technology solutions for consumers, businesses, enterprise organizations and wholesale customers in the United States. The Company operates through four segments: ILEC Consumer and Small Business, Wholesale, Enterprise, and CLEC Consumer and Small Business. It provides data, cloud solutions, unified communications and managed services to small business and enterprise clients. The Company also offers bundled services, including broadband, security solutions, voice and digital television to consumers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WIN – September 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $164,000,000 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.70 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -283.03% Fail
6. Moderate PEmg Ratio PEmg < 20 -0.15 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -0.11 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 0.70 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.44 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$24.92
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$361.39
MG Value based on 0% Growth -$211.85
Market Implied Growth Rate -4.33%
Current Price $3.82
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $6.74 in 2014 to an estimated $-24.92 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Windstream Holdings Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.5 per share, for a yield of 39.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -0.15, which was below the industry average of 43.01, 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 $-290.03.

Windstream Holdings 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) -$290.03
Graham Number $0.00
PEmg -0.15
Current Ratio 0.70
PB Ratio -0.11
Current Dividend $1.50
Dividend Yield 39.27%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $935,200,000
Total Current Liabilities $1,341,500,000
Long-Term Debt $5,867,900,000
Total Assets $10,839,800,000
Intangible Assets $4,223,300,000
Total Liabilities $12,246,300,000
Shares Outstanding (Diluted Average) 39,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$12.39
Dec2017 -$62.60
Dec2016 -$20.55
Dec2015 $1.20
Dec2014 -$2.25
Dec2013 $12.05
Dec2012 $8.40
Dec2011 $9.60
Dec2010 $19.80
Dec2009 $22.80
Dec2008 $27.90
Dec2007 $58.20
Dec2006 $37.50
Dec2005 $27.90
Dec2004 $28.80
Dec2003 $21.90
Dec2002 $5.10
Dec2001 -$23.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$24.92
Dec2017 -$25.60
Dec2016 -$4.81
Dec2015 $3.97
Dec2014 $6.74
Dec2013 $12.34
Dec2012 $14.22
Dec2011 $20.64
Dec2010 $28.52
Dec2009 $33.54
Dec2008 $37.96
Dec2007 $40.28
Dec2006 $28.96
Dec2005 $20.50
Dec2004 $13.38
Dec2003 $4.04
Dec2002 -$4.46

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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.

Alexander & Baldwin Inc Valuation – July 2018 $ALEX

Company Profile (excerpt from Reuters): Alexander & Baldwin, Inc. (A&B), incorporated in March 19, 2012, is a real estate company. The Company operates through three segments: Commercial Real Estate, Land Operations, and Materials and Construction. In addition to its 15 retail centers in Hawaii, the Company owned seven industrial assets, seven office properties and a portfolio of urban ground leases comprising 106 acres in Hawaii, as of December 31, 2016. On the United States mainland, the Company owned seven remaining commercial assets, as of December 31, 2016. Its total portfolio gross leasable area (GLA) was 4.7 million square feet, as of December 31, 2016.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALEX – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,674,345,366 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.45 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 97.51% Pass
6. Moderate PEmg Ratio PEmg < 20 15.76 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.27 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 1.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 14.42 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.48
MG Growth Estimate 11.60%
MG Value $46.81
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $21.41
MG Value based on 0% Growth $12.55
Market Implied Growth Rate 3.63%
Current Price $23.27
% of Intrinsic Value 49.71%

Alexander & Baldwin Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability 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 Undervalued after growing its EPSmg (normalized earnings) from $0.83 in 2014 to an estimated $1.48 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.63% 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 Alexander & Baldwin Inc revealed the company was trading above its Graham Number of $13.3. The company pays a dividend of $0.21 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 15.76, which was below the industry average of 49.54, 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 $-11.18.

Alexander & Baldwin 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) -$11.18
Graham Number $13.30
PEmg 15.76
Current Ratio 1.45
PB Ratio 1.27
Current Dividend $0.21
Dividend Yield 0.90%
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 $178,500,000
Total Current Liabilities $123,300,000
Long-Term Debt $795,800,000
Total Assets $2,310,700,000
Intangible Assets $182,800,000
Total Liabilities $985,500,000
Shares Outstanding (Diluted Average) 72,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.60
Dec2017 $4.34
Dec2016 -$0.18
Dec2015 $0.54
Dec2014 $1.25
Dec2013 $0.76
Dec2012 $0.44
Dec2011 $0.55
Dec2010 $0.78
Dec2009 $1.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.48
Dec2017 $1.72
Dec2016 $0.46
Dec2015 $0.76
Dec2014 $0.83
Dec2013 $0.66
Dec2012 $0.59
Dec2011 $0.61
Dec2010 $0.55
Dec2009 $0.36

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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.

Sherwin-Williams Co Valuation – March 2018 $SHW

Company Profile (excerpt from Reuters): The Sherwin-Williams Company (Sherwin-Williams), incorporated on July 16, 1884, is engaged in the development, manufacture, distribution and sale of paint, coatings and related products to professional, industrial, commercial and retail customers primarily in North and South America with additional operations in the Caribbean region, Europe and Asia. The Company’s segments are Paint Stores Group, Consumer Group, Global Finishes Group, Latin America Coatings Group and Administrative.

SHW Chart

SHW data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SHW – 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 $36,725,256,088 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 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 304.62% Pass
6. Moderate PEmg Ratio PEmg < 20 25.07 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.08 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 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 20.65 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 $15.59
MG Growth Estimate 15.00%
MG Value $600.14
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $226.03
MG Value based on 0% Growth $132.50
Market Implied Growth Rate 8.28%
Current Price $390.72
% of Intrinsic Value 65.11%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.9 in 2014 to an estimated $15.59 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.28% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Sherwin-Williams Co revealed the company was trading above its Graham Number of $127.67. The company pays a dividend of $3.4 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 25.07, which was below the industry average of 28.57, 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 $-123.88.

Sherwin-Williams Co receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$123.88
Graham Number $127.67
PEmg 25.07
Current Ratio 1.12
PB Ratio 10.08
Current Dividend $3.40
Dividend Yield 0.87%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $4,465,840,000
Total Current Liabilities $3,987,180,000
Long-Term Debt $9,885,745,000
Total Assets $19,958,427,000
Intangible Assets $12,816,706,000
Total Liabilities $16,266,239,000
Shares Outstanding (Diluted Average) 95,256,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $18.42
Dec2017 $18.67
Dec2016 $11.99
Dec2015 $11.15
Dec2014 $8.77
Dec2013 $7.26
Dec2012 $6.02
Dec2011 $4.14
Dec2010 $4.21
Dec2009 $3.78
Dec2008 $4.00
Dec2007 $4.70
Dec2006 $4.19
Dec2005 $3.28
Dec2004 $2.72
Dec2003 $2.26
Dec2002 $0.84
Dec2001 $1.68
Dec2000 $0.10
Dec1999 $1.80
Dec1998 $1.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $15.59
Dec2017 $13.30
Dec2016 $10.09
Dec2015 $8.59
Dec2014 $6.90
Dec2013 $5.67
Dec2012 $4.72
Dec2011 $4.11
Dec2010 $4.12
Dec2009 $4.04
Dec2008 $4.04
Dec2007 $3.85
Dec2006 $3.17
Dec2005 $2.49
Dec2004 $1.91
Dec2003 $1.45
Dec2002 $1.09

Recommended Reading:

Other ModernGraham posts about the company

47 Companies in the Spotlight This Week – 5/16/15
Sherwin Williams Company Annual Valuation – 2015 $SHW
16 Companies in the Spotlight This Week – 5/24/14
Sherwin-Williams Company 2014 Annual Valuation $SHW

Other ModernGraham posts about related companies

Flowserve Corp Valuation – February 2018 $FLS
Corning Inc Valuation – February 2018 $GLW
Home Depot Inc Valuation – February 2018 $HD
Caterpillar Inc Valuation – February 2018 $CAT
Eagle Materials Inc Valuation – Initial Coverage $EXP
Louisiana-Pacific Corp Valuation – Initial Coverage $LPX
Lowe’s Companies Inc Valuation – March 2017 $LOW
Cavco Industries Inc Valuation – Initial Coverage $CVCO
LGI Homes Inc Valuation – Initial Coverage $LGIH
Fortune Brands Home & Security Inc Valuation – Initial Coverage $FBHS

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.

Molson Coors Brewing Co Valuation – March 2018 $TAP

Company Profile (obtained from Marketwatch): Molson Coors Brewing Co. produces and sells beer. It brews, markets and sells a portfolio of brands such as Coors Light, Molson Canadian, Carling, Blue Moon and Keystone Light across the Americas, Europe and Asia. It operates through the following segments: the United States, Canada, Europe, and Molson Coors International (MCI). It operates in Canada through Molson Coors Canada, in the United States through MillerCoors LLC, in Europe through Molson Coors Europe and Molson Coors International operating in various other countries. It also markets and sells its brands, which include Coors, Coors 1873, Coors Extra, Coors Gold, Iceberg 9000, King Cobra, Royal Brew, and Zima. in various international markets. The company was founded in 1873 and is headquartered in Denver, CO.

TAP Chart

TAP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TAP – 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 $17,523,092,388 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.64 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 85.46% Pass
6. Moderate PEmg Ratio PEmg < 20 14.06 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.33 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 0.64 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -8.76 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 $5.76
MG Growth Estimate 14.13%
MG Value $211.75
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $83.51
MG Value based on 0% Growth $48.95
Market Implied Growth Rate 2.78%
Current Price $80.96
% of Intrinsic Value 38.23%

Molson Coors Brewing Co 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 $2.97 in 2014 to an estimated $5.76 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.78% 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 Molson Coors Brewing Co revealed the company was trading below its Graham Number of $83.53. The company pays a dividend of $1.64 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 14.06, which was below the industry average of 25.91, 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 $-68.5.

Molson Coors Brewing Co fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$68.50
Graham Number $83.53
PEmg 14.06
Current Ratio 0.64
PB Ratio 1.33
Current Dividend $1.64
Dividend Yield 2.03%
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 $2,189,700,000
Total Current Liabilities $3,399,300,000
Long-Term Debt $10,598,700,000
Total Assets $30,246,900,000
Intangible Assets $22,702,000,000
Total Liabilities $17,020,800,000
Shares Outstanding (Diluted Average) 216,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.05
Dec2017 $6.53
Dec2016 $9.34
Dec2015 $2.12
Dec2014 $2.76
Dec2013 $3.08
Dec2012 $2.44
Dec2011 $3.63
Dec2010 $3.78
Dec2009 $3.87
Dec2008 $2.04
Dec2007 $2.71
Dec2006 $2.08
Dec2005 $0.84
Dec2004 $2.60
Dec2003 $2.39
Dec2002 $2.21
Dec2001 $1.66
Dec2000 $1.47
Dec1999 $1.23
Dec1998 $0.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.76
Dec2017 $5.66
Dec2016 $4.80
Dec2015 $2.63
Dec2014 $2.97
Dec2013 $3.17
Dec2012 $3.19
Dec2011 $3.44
Dec2010 $3.20
Dec2009 $2.71
Dec2008 $2.10
Dec2007 $2.13
Dec2006 $1.90
Dec2005 $1.85
Dec2004 $2.26
Dec2003 $1.99
Dec2002 $1.70

Recommended Reading:

Other ModernGraham posts about the company

5 Best Stocks for Value Investors This Week – 2/25/17
Molson Coors Brewing Co Valuation – Initial Coverage $TAP
5 Speculative and Overvalued Companies to Avoid – November 2015
Molson Coors Brewing Co. Valuation – November 2015 Update $TAP
30 Companies in the Spotlight This Week – 11/15/14

Other ModernGraham posts about related companies

Molson Coors Brewing Co Valuation – Initial Coverage $TAP
Constellation Brands Inc Valuation – February 2017 $STZ
Brown-Forman Corporation – February 2017 $BF.B
Boston Beer Company Inc Valuation – Initial Coverage $SAM
Constellation Brands Inc Valuation – August 2016 $STZ
Reynolds American Inc Valuation – July 2016 $RAI
Philip Morris International Inc Valuation – June 2016 $PM
Altria Group Inc Valuation – June 2016 $MO
Constellation Brands Inc Valuation – January 2016 Update $STZ
Molson Coors Brewing Co. Valuation – November 2015 Update $TAP

Disclaimer:

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

Windstream Holdings Inc Valuation – March 2017 $WIN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Windstream Holdings Inc (WIN) fares in the ModernGraham valuation model.

WIN Chart

WIN data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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

ModernGraham Valuation of WIN – March 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,124,365,900 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -136.86% Fail
6. Moderate PEmg Ratio PEmg < 20 -4.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.22 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 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -12.51 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$1.40
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$20.36
MG Value based on 0% Growth -$11.93
Market Implied Growth Rate -6.35%
Current Price $5.89
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.48 in 2013 to an estimated $-1.4 for 2017. 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 Windstream Holdings, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.6 per share, for a yield of 10.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -4.2, which was below the industry average of 68.5, 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 $-115.53.

Windstream Holdings, 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) -$115.53
Graham Number $0.00
PEmg -4.20
Current Ratio 0.69
PB Ratio 3.22
Current Dividend $0.60
Dividend Yield 10.19%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $866,900,000
Total Current Liabilities $1,254,600,000
Long-Term Debt $4,848,700,000
Total Assets $11,770,000,000
Intangible Assets $5,534,100,000
Total Liabilities $11,600,000,000
Shares Outstanding (Diluted Average) 92,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.37
Dec2016 -$4.11
Dec2015 $0.24
Dec2014 -$0.45
Dec2013 $2.41
Dec2012 $1.72
Dec2011 $1.92
Dec2010 $3.96
Dec2009 $4.64
Dec2008 $5.62
Dec2007 $11.64
Dec2006 $7.50
Dec2005 $5.58
Dec2004 $5.76
Dec2003 $4.38
Dec2002 $1.02
Dec2001 -$4.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.40
Dec2016 -$0.96
Dec2015 $0.80
Dec2014 $1.36
Dec2013 $2.48
Dec2012 $2.87
Dec2011 $4.15
Dec2010 $5.73
Dec2009 $6.74
Dec2008 $7.61
Dec2007 $8.06
Dec2006 $5.79
Dec2005 $4.10
Dec2004 $2.68
Dec2003 $0.81
Dec2002 -$0.89
Dec2001 -$1.54

Recommended Reading:

Other ModernGraham posts about the company

Windstream Holdings Inc Valuation – August 2016 $WIN
Windstream Holdings Analysis – 2015 Update $WIN
16 Companies in the Spotlight This Week – 5/24/14
Windstream Holdings Inc. 2014 Annual Valuation $WIN

Other ModernGraham posts about related companies

Windstream Holdings Inc Valuation – August 2016 $WIN
Verizon Communications Inc Valuation – July 2016 $VZ
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

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.

Molson Coors Brewing Co Valuation – Initial Coverage $TAP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Molson Coors Brewing Co (TAP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Molson Coors Brewing Company (MCBC) is a holding company that operates as a brewer. The Company has a portfolio of brands, including Carling, Coors Light, Molson Canadian and Staropramen, as well as craft and specialty beers, such as Blue Moon, Creemore Springs, Cobra and Doom Bar. The Company operates through four segments: Molson Coors Canada (MCC or Canada segment); MillerCoors LLC (MillerCoors or U.S. segment); Molson Coors Europe (Europe segment), and Molson Coors International (MCI). Its Canada segment consists of production, marketing and sales of its brands, including core brands Coors Light and the Molson brand family, as well as Carling, Coors Banquet, Rickard’s and other owned and licensed brands in Canada. Its United States segment holds interest in MillerCoors, its joint venture with SABMiller for the United States operations. Its MCI segment includes Latin America, Asia, Europe and Australia.

TAP Chart

TAP data by YCharts

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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. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

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

ModernGraham Valuation of TAP – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $22,238,569,323 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 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 76.88% Pass
6. Moderate PEmg Ratio PEmg < 20 18.77 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.90 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 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.53 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $5.41
MG Growth Estimate 10.65%
MG Value $161.24
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $78.47
MG Value based on 0% Growth $46.00
Market Implied Growth Rate 5.14%
Current Price $101.59
% of Intrinsic Value 63.01%

Molson Coors Brewing Co 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 $3.17 in 2013 to an estimated $5.41 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.14% 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 Molson Coors Brewing Co revealed the company was trading above its Graham Number of $84.34. The company pays a dividend of $1.64 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 18.77, which was below the industry average of 28.57, 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 $-73.82.

Molson Coors Brewing Co performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$73.82
Graham Number $84.34
PEmg 18.77
Current Ratio 0.69
PB Ratio 1.90
Current Dividend $1.64
Dividend Yield 1.61%
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 12/1/2016
Total Current Assets $2,169,600,000
Total Current Liabilities $3,157,500,000
Long-Term Debt $11,387,700,000
Total Assets $29,341,500,000
Intangible Assets $22,282,000,000
Total Liabilities $17,922,800,000
Shares Outstanding (Diluted Average) 213,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.95
Dec2016 $9.26
Dec2015 $1.93
Dec2014 $2.76
Dec2013 $3.08
Dec2012 $2.44
Dec2011 $3.63
Dec2010 $3.78
Dec2009 $3.87
Dec2008 $2.04
Dec2007 $2.71
Dec2006 $2.08
Dec2005 $0.84
Dec2004 $2.60
Dec2003 $2.39
Dec2002 $2.21
Dec2001 $1.66
Dec2000 $1.47
Dec1999 $1.23
Dec1998 $0.91
Dec1997 $1.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.41
Dec2016 $4.73
Dec2015 $2.56
Dec2014 $2.97
Dec2013 $3.17
Dec2012 $3.19
Dec2011 $3.44
Dec2010 $3.20
Dec2009 $2.71
Dec2008 $2.10
Dec2007 $2.13
Dec2006 $1.90
Dec2005 $1.85
Dec2004 $2.26
Dec2003 $1.99
Dec2002 $1.70
Dec2001 $1.38

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – November 2015
Molson Coors Brewing Co. Valuation – November 2015 Update $TAP
30 Companies in the Spotlight This Week – 11/15/14
Molson Coors Brewing Company Annual Valuation – 2014 $TAP
19 Companies in the Spotlight This Week – 8/9/14

Other ModernGraham posts about related companies

Constellation Brands Inc Valuation – February 2017 $STZ
Brown-Forman Corporation – February 2017 $BF.B
Boston Beer Company Inc Valuation – Initial Coverage $SAM
Constellation Brands Inc Valuation – August 2016 $STZ
Reynolds American Inc Valuation – July 2016 $RAI
Philip Morris International Inc Valuation – June 2016 $PM
Altria Group Inc Valuation – June 2016 $MO
Constellation Brands Inc Valuation – January 2016 Update $STZ
Molson Coors Brewing Co. Valuation – November 2015 Update $TAP
Brown-Forman Corporation Analysis – September 2015 Update $BF/B

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.

The Winter 2017 Issue of the A-List Report

I am excited to announce the next issue of the ModernGraham A-List Report is available!  Each quarter I release a new report listing all of the companies in the MG Universe which currently receive a MG Grade of A- or better.

How to Get this Report

There are two ways to get a copy of this report.  If you are currently an advanced level premium member, you can just log in to the website and find the report in the Subscriber Content.  If you are currently a basic level premium member and want to upgrade your membership, please email me at ben@moderngraham.com.

An advanced level premium membership starts at only $13.33/month and gets a bunch more great content, but if you just want to buy the report and miss out on all of the other great premium content on ModernGraham, then click this button:

PURCHASE NOW

What’s Inside?

This Quarterly Report Shows The 14 Top Rated Companies.  The average company listed on previous editions has beat the Dow Jones Industrial Average by 20% and the S&P 500 by 23% during the company’s tenure on the A-List.

  • Table showing for each company:
    • Ticker
    • Name
    • Link to latest MG Valuation
    • Current MG Grade
    • Investor Type
    • MG Value
    • Recent Price
    • Price as a Percent of MG Value
    • Price / Earnings Per Share – ModernGraham (PEmg Ratio)
    • Graham Number
    • Price as a Percent of Graham Number
    • Net Current Asset Value
    • Price as a Percent of Net Current Asset Value
    • Dividend Yield
    • Number of consecutive years of dividend growth

Testimonials About ModernGraham

Beautiful clean posts, great format, well written commentary and straighttorward graphics. Ben, you really have built a great site and resource for value investing.

With so much talk about stocks being overvalued, I’m glad to find someone that helps with the legwork of determining value investments. When the downturn occurs I feel confident ill be better prepared than most. I purchased your March screens and am looking forward to April. Thanks.

Excellent modernizing application of Graham’s life work. Thank you!

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Alexander & Baldwin Inc Valuation – December 2016 $ALEX

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 Alexander & Baldwin Inc (ALEX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Alexander & Baldwin, Inc. (A&B) is engaged in real estate development, real estate leasing, materials and construction, and agribusiness. The Company operates in four segments: Real Estate Development and Sales, Real Estate Leasing, Materials and Construction, and Agribusiness. Real estate activities are conducted through A&B Properties, Inc. and other subsidiaries of A&B. The Real Estate Development and Sales segment is engaged in program of land stewardship, planning, entitlement, development, real estate investment, and sale of land and commercial and residential properties. The Real Estate Leasing segment owns, operates and manages a portfolio of over 60 retail, office and industrial properties in Hawaii and on the Mainland. The Materials and Construction segment performs asphalt paving as prime contractor and subcontractor. The Agribusiness segment consists of sugar plantation on the island of Maui, operated by its Hawaiian Commercial & Sugar Company (HC&S) division.

ALEX Chart

ALEX data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ALEX – 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 $2,164,146,772 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 92.59% Pass
6. Moderate PEmg Ratio PEmg < 20 71.60 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.80 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.20 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $0.62
MG Growth Estimate 0.71%
MG Value $6.16
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $9.01
MG Value based on 0% Growth $5.28
Market Implied Growth Rate 31.55%
Current Price $44.49
% of Intrinsic Value 722.13%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.59 in 2012 to an estimated $0.62 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 31.55% 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 Alexander & Baldwin Inc revealed the company was trading above its Graham Number of $12.7. The company pays a dividend of $0.24 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 71.6, which was above the industry average of 28.49. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.72.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.72
Graham Number $12.70
PEmg 71.60
Current Ratio 0.80
PB Ratio 1.80
Current Dividend $0.24
Dividend Yield 0.54%
Number of Consecutive Years of Dividend Growth 4

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $144,600,000
Total Current Liabilities $181,500,000
Long-Term Debt $523,900,000
Total Assets $2,224,200,000
Intangible Assets $158,100,000
Total Liabilities $1,013,100,000
Shares Outstanding (Diluted Average) 49,000,000

Earnings Per Share History

Next Fiscal Year Estimate $0.29
Dec2015 $0.54
Dec2014 $1.25
Dec2013 $0.76
Dec2012 $0.44
Dec2011 $0.55
Dec2010 $0.78
Dec2009 $1.08

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.62
Dec2015 $0.76
Dec2014 $0.83
Dec2013 $0.66
Dec2012 $0.59
Dec2011 $0.61
Dec2010 $0.55
Dec2009 $0.36

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – August 2015
Alexander & Baldwin Inc Analysis – Initial Coverage $ALEX

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Sherwin-Williams Co Valuation – July 2016 $SHW
Cummins Inc Valuation – July 2016 $CMI

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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