Cimarex Energy Co Valuation – January 2019 $XEC

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEC – January 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,962,019,156 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -20.71% Fail
6. Moderate PEmg Ratio PEmg < 20 -107.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.26 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.56 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$9.79
MG Value based on 0% Growth -$5.74
Market Implied Growth Rate -58.16%
Current Price $72.81
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.81 in 2014 to an estimated $-0.68 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cimarex Energy Co revealed the company was trading above its Graham Number of $62.01. The company pays a dividend of $0.32 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was -107.81, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-14.54.

Cimarex Energy Co scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$14.54
Graham Number $62.01
PEmg -107.81
Current Ratio 1.69
PB Ratio 2.26
Current Dividend $0.32
Dividend Yield 0.44%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,427,715,000
Total Current Liabilities $845,345,000
Long-Term Debt $1,488,147,000
Total Assets $5,818,435,000
Intangible Assets $620,232,000
Total Liabilities $2,792,613,000
Shares Outstanding (Diluted Average) 93,867,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

Other ModernGraham posts about the company

Cimarex Energy Co Valuation – Initial Coverage $XEC

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

Disclaimer:

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

Cimarex Energy Co Valuation – Initial Coverage $XEC

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

XEC Chart

XEC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XEC – 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 $8,879,268,868 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.38 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 -33.78% Fail
6. Moderate PEmg Ratio PEmg < 20 -87.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.40 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 1.38 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.81 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 -$1.07
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$15.50
MG Value based on 0% Growth -$9.08
Market Implied Growth Rate -47.86%
Current Price $93.21
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.81 in 2014 to an estimated $-1.07 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cimarex Energy Co revealed the company was trading above its Graham Number of $55.95. The company pays a dividend of $0.32 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was -87.22, which was below the industry average of 104.43, 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 $-16.43.

Cimarex Energy Co scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.43
Graham Number $55.95
PEmg -87.22
Current Ratio 1.38
PB Ratio 3.40
Current Dividend $0.32
Dividend Yield 0.34%
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 $935,635,000
Total Current Liabilities $679,574,000
Long-Term Debt $1,486,920,000
Total Assets $5,042,639,000
Intangible Assets $620,232,000
Total Liabilities $2,474,361,000
Shares Outstanding (Diluted Average) 93,641,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.17
Dec2017 $5.19
Dec2016 -$4.38
Dec2015 -$27.75
Dec2014 $6.00
Dec2013 $6.47
Dec2012 $4.07
Dec2011 $6.15
Dec2010 $6.70
Dec2009 -$3.82
Dec2008 -$11.22
Dec2007 $4.09
Dec2006 $4.11
Dec2005 $4.90
Dec2004 $3.59
Dec2003 $2.22
Dec2002 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.07
Dec2017 -$3.76
Dec2016 -$6.53
Dec2015 -$5.40
Dec2014 $5.81
Dec2013 $5.11
Dec2012 $3.08
Dec2011 $1.85
Dec2010 -$0.21
Dec2009 -$2.57
Dec2008 -$0.93
Dec2007 $4.07
Dec2006 $3.78
Dec2005 $3.21
Dec2004 $2.05
Dec2003 $1.09
Dec2002 $0.44

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

EQT Corporation Valuation – March 2018 $EQT
Helmerich & Payne Inc Valuation – March 2018 $HP
Chesapeake Energy Corp Valuation – March 2018 $CHK
Williams Companies Inc Valuation – March 2018 $WMB
Exxon Mobil Corp Valuation – February 2018 $XOM
Chevron Corp Valuation – February 2018 $CVX
Seven Generations Energy Ltd Valuation – Initial Coverage $TSE:VII
Pioneer Natural Resources Valuation – September 2017 $PXD
Gulfport Energy Corp Valuation – Initial Coverage $GPOR
Schlumberger Limited Valuation – July 2017 $SLB

Disclaimer:

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

TechnipFMC PLC Valuation – February 2019 $FTI

Company Profile (excerpt from Reuters): TechnipFMC plc is engaged in the business of oil and gas projects, technologies, systems and services. The Company offers a portfolio of solutions for production and transformation of oil and gas. The Company’s integrated offerings range from individual products and services to integrated solutions with a single interface to ensure execution. The Company provides services across three distinct segments: subsea, onshore/offshore, and surface projects. The Company’s Subsea products include trees, manifolds, controls, templates, flowline systems, umbilicals, flexibles and subsea processing. The Company’s Subsea projects include front end to decommissioning; field architecture, integrated design, and engineering, procurement, construction and installation. The Company’s Subsea services include drilling; installation, completion, and life of field; asset management; well intervention and inspection maintenance and repair (IMR), and remotely operated underwater vehicles (ROVs) and manipulator systems.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FTI – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,238,581,459 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.33 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -68.38% Fail
6. Moderate PEmg Ratio PEmg < 20 18.06 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.81 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.33 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.40 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.25
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.16
MG Value based on 0% Growth $10.65
Market Implied Growth Rate 4.78%
Current Price $22.62
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.5 in 2014 to an estimated $1.25 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.78% 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 below the price.

At the time of valuation, further research into TechnipFMC PLC revealed the company was trading above its Graham Number of $21.74. The company pays a dividend of $0.13 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 18.06, which was below the industry average of 43.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.95.

TechnipFMC PLC scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.95
Graham Number $21.74
PEmg 18.06
Current Ratio 1.33
PB Ratio 0.81
Current Dividend $0.13
Dividend Yield 0.57%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $11,563,200,000
Total Current Liabilities $8,702,800,000
Long-Term Debt $4,017,100,000
Total Assets $26,660,000,000
Intangible Assets $10,226,500,000
Total Liabilities $13,835,700,000
Shares Outstanding (Diluted Average) 459,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.73
Dec2017 $0.24
Dec2016 $3.16
Dec2015 $0.13
Dec2014 $4.44
Dec2013 $6.46
Dec2012 $5.99
Dec2011 $5.72
Dec2010 $5.07
Dec2009 $2.28
Dec2008 $5.92
Dec2007 $1.75
Dec2006 $2.48
Dec2005 $1.13
Dec2004 $1.37
Dec2003 -$0.26
Dec2002 -$0.30
Dec2001 $6.03
Dec2000 $12.07
Dec1999 $10.82
Dec1998 $51.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.25
Dec2017 $1.97
Dec2016 $3.24
Dec2015 $3.70
Dec2014 $5.50
Dec2013 $5.72
Dec2012 $5.23
Dec2011 $4.62
Dec2010 $3.88
Dec2009 $3.09
Dec2008 $3.18
Dec2007 $1.64
Dec2006 $1.35
Dec2005 $1.05
Dec2004 $1.93
Dec2003 $3.37
Dec2002 $8.79

Recommended Reading:

Other ModernGraham posts about the company

TechnipFMC PLC Valuation – April 2018 $FTI
FMC Technologies Inc Valuation – August 2016 $FTI
FMC Technologies Inc Valuation – March 2016 $FTI
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016
12 Best Stocks For Value Investors This Week – 11/14/15

Other ModernGraham posts about related companies

Marathon Petroleum Corp Valuation – February 2019 $MPC
Baker Hughes, a GE Co Valuation – February 2019 $BHGE
EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP
Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL
ONEOK Inc Valuation – January 2019 $OKE
Marathon Oil Corp Valuation – January 2019 $MRO
HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES

Disclaimer:

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

Marathon Petroleum Corp Valuation – February 2019 $MPC

Company Profile (excerpt from Reuters): Marathon Petroleum Corporation, incorporated on November 9, 2009, is engaged in petroleum product refining, marketing, retail and transportation businesses in the United States and the east of the Mississippi. The Company’s segments include Refining & Marketing, Speedway, and Midstream.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MPC – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $43,458,170,026 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.65 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 206.78% Pass
6. Moderate PEmg Ratio PEmg < 20 13.82 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.51 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 1.65 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.95 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 $4.55
MG Growth Estimate 2.78%
MG Value $64.03
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $66.01
MG Value based on 0% Growth $38.70
Market Implied Growth Rate 2.66%
Current Price $62.91
% of Intrinsic Value 98.25%

Marathon Petroleum Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.84 in 2014 to an estimated $4.55 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 2.66% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Marathon Petroleum Corp revealed the company was trading above its Graham Number of $50.91. The company pays a dividend of $1.52 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.82, which was below the industry average of 43.92, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-39.75.

Marathon Petroleum Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$39.75
Graham Number $50.91
PEmg 13.82
Current Ratio 1.65
PB Ratio 1.51
Current Dividend $1.52
Dividend Yield 2.42%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $15,873,000,000
Total Current Liabilities $9,634,000,000
Long-Term Debt $18,423,000,000
Total Assets $53,031,000,000
Intangible Assets $3,713,000,000
Total Liabilities $34,000,000,000
Shares Outstanding (Diluted Average) 456,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.99
Dec2017 $6.70
Dec2016 $2.21
Dec2015 $5.26
Dec2014 $4.39
Dec2013 $3.32
Dec2012 $4.95
Dec2011 $3.34
Dec2010 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.55
Dec2017 $4.68
Dec2016 $3.79
Dec2015 $4.47
Dec2014 $3.84
Dec2013 $3.21
Dec2012 $2.71
Dec2011 $1.34
Dec2010 $0.29

Recommended Reading:

Other ModernGraham posts about the company

Marathon Petroleum Corp Valuation – April 2018 $MPC
10 Best Dividend Paying Stocks for the Enterprising Investor – December 2016
10 Best Dividend Paying Stocks for the Enterprising Investor – September 2016
7 Best Undervalued Stocks of the Week – 9/3/16
Marathon Petroleum Corp Valuation – August 2016 $MPC

Other ModernGraham posts about related companies

EOG Resources Inc Valuation – February 2019 $EOG
ConocoPhillips Valuation – February 2019 $COP
Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL
ONEOK Inc Valuation – January 2019 $OKE
Marathon Oil Corp Valuation – January 2019 $MRO
HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES
Cimarex Energy Co Valuation – January 2019 $XEC
EQT Corp Valuation – January 2019 $EQT

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.

Baker Hughes, a GE Co Valuation – February 2019 $BHGE

Company Profile (excerpt from Reuters): Baker Hughes, a GE Company, incorporated on October 28, 2016, is an oil and gas company. The Company is a provider of integrated oilfield products, services and digital solutions. The Company’s products and services include upstream, midstream, downstream, industrial and digital. The Company’s upstream, which includes evaluation, drilling, completions and production. Midstream enables the power and compression efficiency for LNG and pipeline and storage. Downstream is build reliability and safety into process operations that includes refining and petrochemical and fertilizer solutions. In addition downstream offers process chemical, water treatment, turbo machinery, condition monitoring, process services and flow and process technologies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BHGE – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $25,573,144,062 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.66 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 346666566.67% Pass
6. Moderate PEmg Ratio PEmg < 20 398.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.78 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.66 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.06 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.06
MG Growth Estimate 15.00%
MG Value $2.39
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $0.90
MG Value based on 0% Growth $0.53
Market Implied Growth Rate 195.10%
Current Price $24.72
% of Intrinsic Value 1035.61%

Baker Hughes A GE Co is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor is only concerned with the lack of earnings stability over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0 in 2015 to an estimated $0.06 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 195.1% 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 Baker Hughes A GE Co revealed the company was trading above its Graham Number of $23.33. The company pays a dividend of $0.72 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 398.71, which was above the industry average of 43.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-2.23.

Baker Hughes A GE 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) -$2.23
Graham Number $23.33
PEmg 398.71
Current Ratio 1.66
PB Ratio 0.78
Current Dividend $0.72
Dividend Yield 2.91%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $14,971,000,000
Total Current Liabilities $9,020,000,000
Long-Term Debt $6,285,000,000
Total Assets $52,439,000,000
Intangible Assets $26,436,000,000
Total Liabilities $17,426,000,000
Shares Outstanding (Diluted Average) 1,099,932,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.76
Dec2018 $0.45
Dec2017 -$0.17
Dec2016 -$2.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.06
Dec2018 -$0.31
Dec2017 -$0.61
Dec2016 -$0.69

Recommended Reading:

Other ModernGraham posts about the company

Baker Hughes, a GE Co Valuation – April 2018 $BHGE

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EOG Resources Inc Valuation – February 2019 $EOG
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Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL
ONEOK Inc Valuation – January 2019 $OKE
Marathon Oil Corp Valuation – January 2019 $MRO
HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES
Cimarex Energy Co Valuation – January 2019 $XEC
EQT Corp Valuation – January 2019 $EQT

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.

EOG Resources Inc Valuation – February 2019 $EOG

Company Profile (excerpt from Reuters): EOG Resources, Inc. (EOG), incorporated on June 12, 1985, together with its subsidiaries, explores for, develops, produces and markets crude oil and natural gas in major producing basins in the United States, The Republic of Trinidad and Tobago (Trinidad), the United Kingdom, The People’s Republic of China (China), Canada and, from time to time, select other international areas. The Company’s operations are all crude oil and natural gas exploration and production related. As of December 31, 2016, the Company’s total estimated net proved reserves were 2,147 million barrels of oil equivalent (MMBoe), of which 1178 million barrels (MMBbl) were crude oil and condensate reserves, 416 MMBbl were natural gas liquids (NGLs) reserves and 3318 billion cubic feet, or 553 MMBoe were natural gas reserves.

Downloadable PDF version of this valuation:

ModernGraham Valuation of EOG – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $55,966,430,117 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.09 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 126.67% Pass
6. Moderate PEmg Ratio PEmg < 20 52.95 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.03 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.09 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 13.20 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 $1.82
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $26.43
MG Value based on 0% Growth $15.49
Market Implied Growth Rate 22.22%
Current Price $96.51
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.35 in 2014 to an estimated $1.82 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 22.22% 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 EOG Resources Inc revealed the company was trading above its Graham Number of $58.15. The company pays a dividend of $0.67 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 52.95, which was above the industry average of 43.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.68.

EOG Resources 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) -$17.68
Graham Number $58.15
PEmg 52.95
Current Ratio 1.09
PB Ratio 3.03
Current Dividend $0.67
Dividend Yield 0.69%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $4,817,092,000
Total Current Liabilities $4,425,147,000
Long-Term Debt $5,171,949,000
Total Assets $33,637,736,000
Intangible Assets $0
Total Liabilities $15,099,266,000
Shares Outstanding (Diluted Average) 581,559,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.34
Dec2017 $4.46
Dec2016 -$1.98
Dec2015 -$8.29
Dec2014 $5.32
Dec2013 $4.02
Dec2012 $1.05
Dec2011 $2.05
Dec2010 $0.32
Dec2009 $1.09
Dec2008 $4.86
Dec2007 $2.19
Dec2006 $2.62
Dec2005 $2.57
Dec2004 $1.29
Dec2003 $0.90
Dec2002 $0.16
Dec2001 $0.83
Dec2000 $0.81
Dec1999 $1.00
Dec1998 $0.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.82
Dec2017 $0.28
Dec2016 -$1.20
Dec2015 -$0.26
Dec2014 $3.35
Dec2013 $2.14
Dec2012 $1.43
Dec2011 $1.78
Dec2010 $1.83
Dec2009 $2.62
Dec2008 $3.15
Dec2007 $2.17
Dec2006 $1.95
Dec2005 $1.46
Dec2004 $0.87
Dec2003 $0.68
Dec2002 $0.58

Recommended Reading:

Other ModernGraham posts about the company

EOG Resources Inc Valuation – April 2018 $EOG
EOG Resources Inc Valuation – July 2016 $EOG
EOG Resources Analysis – 2015 Annual Update $EOG
15 Companies in the Spotlight This Week – 5/31/14
EOG Resources Inc. 2014 Annual Valuation $EOG

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Devon Energy Corp Valuation – January 2019 $DVN
Noble Energy Inc Valuation – January 2019 $NBL
ONEOK Inc Valuation – January 2019 $OKE
Marathon Oil Corp Valuation – January 2019 $MRO
HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES
Cimarex Energy Co Valuation – January 2019 $XEC
EQT Corp Valuation – January 2019 $EQT
Helmerich & Payne Inc Valuation – January 2019 $HP

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.

ConocoPhillips Valuation – February 2019 $COP

Company Profile (excerpt from Reuters): ConocoPhillips, incorporated on November 16, 2001, is an independent exploration and production (E&P) company. The Company explores for, produces, transports and markets crude oil, bitumen, natural gas, liquefied natural gas (LNG) and natural gas liquids. The Company operates through six segments: Alaska, Lower 48, Canada, Europe and North Africa, Asia Pacific and Middle East, and Other International. As of December 31, 2016, its operations were in the United States, Norway, the United Kingdom, Canada, Australia, Timor-Leste, Indonesia, China, Malaysia, Qatar and Libya. Its portfolio includes North American unconventional assets and oil sands assets in Canada; conventional assets in North America, Europe, Asia and Australia; LNG developments, and an inventory of conventional and unconventional exploration prospects. The Company’s subsidiaries include ConocoPhillips Company, ConocoPhillips Canada Funding Company I and Burlington Resources, Inc.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COP – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $78,819,282,328 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.99 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 -98.62% Fail
6. Moderate PEmg Ratio PEmg < 20 167.12 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.53 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 1.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.04 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.41
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $6.01
MG Value based on 0% Growth $3.52
Market Implied Growth Rate 79.31%
Current Price $69.30
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $6.85 in 2014 to an estimated $0.41 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 79.31% 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 ConocoPhillips revealed the company was trading above its Graham Number of $47.64. The company pays a dividend of $1.06 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 167.12, which was above the industry average of 43.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.26.

ConocoPhillips 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) -$20.26
Graham Number $47.64
PEmg 167.12
Current Ratio 1.99
PB Ratio 2.53
Current Dividend $1.06
Dividend Yield 1.53%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $14,723,000,000
Total Current Liabilities $7,401,000,000
Long-Term Debt $14,902,000,000
Total Assets $70,556,000,000
Intangible Assets $0
Total Liabilities $38,477,000,000
Shares Outstanding (Diluted Average) 1,172,694,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.88
Dec2017 -$0.70
Dec2016 -$2.91
Dec2015 -$3.58
Dec2014 $5.51
Dec2013 $7.38
Dec2012 $6.72
Dec2011 $8.97
Dec2010 $7.62
Dec2009 $2.94
Dec2008 -$10.73
Dec2007 $7.22
Dec2006 $9.66
Dec2005 $9.55
Dec2004 $5.80
Dec2003 $3.46
Dec2002 -$0.31
Dec2001 $2.82
Dec2000 $3.63
Dec1999 $1.20
Dec1998 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.41
Dec2017 -$0.50
Dec2016 $0.61
Dec2015 $3.25
Dec2014 $6.85
Dec2013 $7.26
Dec2012 $5.83
Dec2011 $4.66
Dec2010 $2.78
Dec2009 $1.49
Dec2008 $1.94
Dec2007 $7.90
Dec2006 $7.37
Dec2005 $5.57
Dec2004 $3.41
Dec2003 $2.20
Dec2002 $1.56

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ConocoPhillips Valuation – April 2018 $COP
ConocoPhillips Valuation – July 2016 $COP
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Conoco Phillips Annual Valuation – 2015 $COP
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HollyFrontier Corp Valuation – January 2019 $HFC
Hess Corp Valuation – January 2019 $HES
Cimarex Energy Co Valuation – January 2019 $XEC
EQT Corp Valuation – January 2019 $EQT
Helmerich & Payne Inc Valuation – January 2019 $HP
Williams Companies Inc Valuation – January 2019 $WMB

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.

Marriott International Inc Valuation – January 2019 $MAR

Company Profile (excerpt from Reuters): Marriott International, Inc. (Marriott International), incorporated on September 19, 1997, is a lodging company. As of December 31, 2017, the Company operated, franchised, or licensed 6,520 properties across the world, with 1,257,666 rooms. Marriott International operates in three business segments: North American Full-Service, North American Limited-Service and International. Its North American Full-Service segment includes its Luxury and Premium brands (JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Marriott Hotels, Westin, Renaissance Hotels, Le Meridien, Autograph Collection Hotels, Delta Hotels, Gaylord Hotels, and Tribute Portfolio) located in the United States and Canada. Its North American Limited-Service segment includes Select brands (Courtyard, Residence Inn, Fairfield Inn & Suites, SpringHill Suites, Four Points, TownePlace Suites, Aloft Hotels, AC Hotels by Marriott, Element Hotels, and Moxy Hotels) located in the United States and Canada. Its International segment includes JW Marriott, The Ritz-Carlton, W Hotels, The Luxury Collection, St. Regis, EDITION, Bulgari Hotels & Resorts, Marriott Hotels, Westin, Renaissance Hotels, Le Meridien, Autograph Collection Hotels, Marriott Executive Apartments, Tribute Portfolio, Courtyard, Residence Inn, Fairfield Inn & Suites, Four Points, Aloft Hotels, AC Hotels by Marriott, Protea Hotels, Element Hotels, and Moxy Hotels located outside the United States and Canada. It also operates, markets, and develops residential properties and provides services to home/condominium owner associations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAR – 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 $37,827,905,491 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.46 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 1363.29% Pass
6. Moderate PEmg Ratio PEmg < 20 28.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 16.73 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 0.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.68 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 $3.85
MG Growth Estimate 15.00%
MG Value $148.23
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $55.83
MG Value based on 0% Growth $32.73
Market Implied Growth Rate 10.15%
Current Price $110.89
% of Intrinsic Value 74.81%

Marriott International 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 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 $1.88 in 2014 to an estimated $3.85 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 10.15% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Marriott International Inc revealed the company was trading above its Graham Number of $35.23. The company pays a dividend of $1.29 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 28.8, which was below the industry average of 29.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-53.35.

Marriott International 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) -$53.35
Graham Number $35.23
PEmg 28.80
Current Ratio 0.46
PB Ratio 16.73
Current Dividend $1.29
Dividend Yield 1.16%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,803,000,000
Total Current Liabilities $6,051,000,000
Long-Term Debt $8,710,000,000
Total Assets $23,833,000,000
Intangible Assets $17,470,000,000
Total Liabilities $21,509,000,000
Shares Outstanding (Diluted Average) 350,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.31
Dec2017 $3.61
Dec2016 $2.64
Dec2015 $3.15
Dec2014 $2.54
Dec2013 $2.00
Dec2012 $1.72
Dec2011 $0.55
Dec2010 $1.21
Dec2009 -$0.97
Dec2008 $0.98
Dec2007 $1.73
Dec2006 $1.40
Dec2005 $1.43
Dec2004 $1.23
Dec2003 $1.01
Dec2002 $0.54
Dec2001 $0.46
Dec2000 $0.93
Dec1999 $0.74
Dec1998 $0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.85
Dec2017 $3.01
Dec2016 $2.61
Dec2015 $2.39
Dec2014 $1.88
Dec2013 $1.33
Dec2012 $0.90
Dec2011 $0.56
Dec2010 $0.66
Dec2009 $0.57
Dec2008 $1.34
Dec2007 $1.47
Dec2006 $1.26
Dec2005 $1.11
Dec2004 $0.91
Dec2003 $0.75
Dec2002 $0.64

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Other ModernGraham posts about the company

Marriott International Inc Valuation – March 2018 $MAR
Marriott International Inc Valuation – July 2016 $MAR
24 Companies in the Spotlight This Week – 3/28/15
Marriott International Inc. Annual Valuation – 2015 $MAR
17 Companies in the Spotlight This Week – 3/22/14

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Wyndham Worldwide Corp Valuation – January 2017 $WYN
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Carnival Corp Valuation – July 2016 $CCL
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Starwood Hotels & Resorts Worldwide Inc. Analysis – July 2015 Update $HOT

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.

Devon Energy Corp Valuation – January 2019 $DVN

Company Profile (excerpt from Reuters): Devon Energy Corporation, incorporated on May 18, 1999, is an independent energy company. The Company’s segments include U.S. and Canada. The Company’s U.S. and Canada segments are primarily engaged in oil and gas exploration and production activities. The Company is engaged primarily in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). The Company’s operations are concentrated in various North American onshore areas in the United States and Canada.

DVN Chart

DVN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DVN – 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 $12,435,391,749 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.48 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 -77.66% Fail
6. Moderate PEmg Ratio PEmg < 20 -10.16 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 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 1.48 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.78 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.61
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$37.89
MG Value based on 0% Growth -$22.21
Market Implied Growth Rate -9.33%
Current Price $26.56
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.37 in 2014 to an estimated $-2.61 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 Devon Energy Corp revealed the company was trading below its Graham Number of $39.63. The company pays a dividend of $0.24 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was -10.16, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.33.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.33
Graham Number $39.63
PEmg -10.16
Current Ratio 1.48
PB Ratio 1.46
Current Dividend $0.24
Dividend Yield 0.90%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $4,757,000,000
Total Current Liabilities $3,224,000,000
Long-Term Debt $5,791,000,000
Total Assets $20,172,000,000
Intangible Assets $841,000,000
Total Liabilities $11,274,000,000
Shares Outstanding (Diluted Average) 489,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.96
Dec2017 $1.70
Dec2016 -$2.09
Dec2015 -$31.72
Dec2014 $3.91
Dec2013 -$0.06
Dec2012 -$0.52
Dec2011 $11.25
Dec2010 $10.31
Dec2009 -$5.58
Dec2008 -$4.85
Dec2007 $8.00
Dec2006 $6.34
Dec2005 $6.26
Dec2004 $4.38
Dec2003 $4.04
Dec2002 $0.31
Dec2001 $0.36
Dec2000 $2.75
Dec1999 -$0.84
Dec1998 -$1.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.61
Dec2017 -$5.82
Dec2016 -$8.42
Dec2015 -$8.86
Dec2014 $3.37
Dec2013 $3.09
Dec2012 $3.82
Dec2011 $5.27
Dec2010 $2.47
Dec2009 -$0.29
Dec2008 $2.91
Dec2007 $6.46
Dec2006 $5.22
Dec2005 $4.13
Dec2004 $2.83
Dec2003 $1.81
Dec2002 $0.53

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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.

Noble Energy Inc Valuation – January 2019 $NBL

Company Profile (excerpt from Reuters): Noble Energy, Inc., incorporated on December 29, 1969, is an independent energy company. The Company is engaged in crude oil, natural gas and natural gas liquids (NGLs) exploration, development, production and acquisition. The Company’s segments include United States, including the onshore DJ Basin, Permian Basin and Eagle Ford Shale; Eastern Mediterranean, including offshore Israel and Cyprus; West Africa, including offshore Equatorial Guinea, Cameroon and Gabon; Other International and Corporate, including new ventures, such as offshore the Falkland Islands, Suriname and Newfoundland; and Midstream. The Company’s portfolio of assets is diversified through the United States and international projects and production mix among crude oil, natural gas and NGLs. Its business focuses on both the United States unconventional basins and certain global conventional basins.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NBL – 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 $10,521,992,216 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 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 -208.97% Fail
6. Moderate PEmg Ratio PEmg < 20 -18.33 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.93 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 0.81 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -16.07 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 -$1.20
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$17.35
MG Value based on 0% Growth -$10.17
Market Implied Growth Rate -13.41%
Current Price $21.93
% of Intrinsic Value N/A

Noble Energy, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg 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 $2.69 in 2014 to an estimated $-1.2 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 Noble Energy, Inc. revealed the company was trading below its Graham Number of $26.07. The company pays a dividend of $0.4 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was -18.33, which was below the industry average of 41.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-18.65.

Noble Energy, 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) -$18.65
Graham Number $26.07
PEmg -18.33
Current Ratio 0.81
PB Ratio 0.93
Current Dividend $0.40
Dividend Yield 1.82%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,727,000,000
Total Current Liabilities $2,124,000,000
Long-Term Debt $6,381,000,000
Total Assets $22,147,000,000
Intangible Assets $1,719,000,000
Total Liabilities $10,753,000,000
Shares Outstanding (Diluted Average) 484,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.48
Dec2017 -$2.38
Dec2016 -$2.32
Dec2015 -$6.07
Dec2014 $3.27
Dec2013 $2.69
Dec2012 $2.86
Dec2011 $1.27
Dec2010 $2.06
Dec2009 -$0.38
Dec2008 $3.79
Dec2007 $2.73
Dec2006 $1.90
Dec2005 $2.06
Dec2004 $1.39
Dec2003 $0.34
Dec2002 $0.04
Dec2001 $0.59
Dec2000 $0.86
Dec1999 $0.22
Dec1998 -$0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.20
Dec2017 -$2.01
Dec2016 -$1.19
Dec2015 -$0.15
Dec2014 $2.69
Dec2013 $2.16
Dec2012 $1.91
Dec2011 $1.58
Dec2010 $1.83
Dec2009 $1.82
Dec2008 $2.74
Dec2007 $2.03
Dec2006 $1.51
Dec2005 $1.17
Dec2004 $0.70
Dec2003 $0.37
Dec2002 $0.32

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Disclaimer:

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

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