cheap drugs antibioticsonlinerx.com

Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH

Company Profile (excerpt from Reuters): Zimmer Biomet Holdings, Inc., incorporated on January 12, 2001, is engaged in designing, manufacturing and marketing of orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; office-based technologies; spine, craniomaxillofacial and thoracic products; dental implants, and related surgical products. The Company’s products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. The Company manages its operations through three geographic operating segments: the Americas, consisting principally of the United States and other North, Central and South American markets; EMEA, consisting principally of Europe and the Middle East and African markets, and Asia Pacific, consisting primarily of Japan and other Asian and Pacific markets. The Company’s product category segments include Americas Spine, Office Based Technologies, Craniomaxillofacial and Thoracic (CMF), and Dental.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ZBH – 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 $21,078,879,093 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.89 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 46.03% Pass
6. Moderate PEmg Ratio PEmg < 20 22.41 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.74 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 1.89 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.05 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 $4.61
MG Growth Estimate 1.45%
MG Value $52.60
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $66.86
MG Value based on 0% Growth $39.20
Market Implied Growth Rate 6.96%
Current Price $103.34
% of Intrinsic Value 196.46%

Zimmer Biomet Holdings Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg ratio. 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 Overvalued after growing its EPSmg (normalized earnings) from $4.2 in 2014 to an estimated $4.61 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.96% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Zimmer Biomet Holdings Inc revealed the company was trading above its Graham Number of $77.93. The company pays a dividend of $0.96 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 22.41, which was below the industry average of 52.7, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-42.09.

Zimmer Biomet Holdings Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$42.09
Graham Number $77.93
PEmg 22.41
Current Ratio 1.89
PB Ratio 1.74
Current Dividend $0.96
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 2

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 $4,513,300,000
Total Current Liabilities $2,391,200,000
Long-Term Debt $8,597,400,000
Total Assets $25,382,000,000
Intangible Assets $18,421,000,000
Total Liabilities $13,159,000,000
Shares Outstanding (Diluted Average) 205,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.66
Dec2017 $8.90
Dec2016 $1.51
Dec2015 $0.77
Dec2014 $4.20
Dec2013 $4.54
Dec2012 $4.29
Dec2011 $4.03
Dec2010 $2.97
Dec2009 $3.32
Dec2008 $3.72
Dec2007 $3.26
Dec2006 $3.40
Dec2005 $2.93
Dec2004 $2.19
Dec2003 $1.64
Dec2002 $1.31
Dec2001 $0.77
Dec2000 $0.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.61
Dec2017 $4.39
Dec2016 $2.44
Dec2015 $3.13
Dec2014 $4.20
Dec2013 $4.08
Dec2012 $3.79
Dec2011 $3.51
Dec2010 $3.28
Dec2009 $3.40
Dec2008 $3.33
Dec2007 $2.98
Dec2006 $2.66
Dec2005 $2.11
Dec2004 $1.59
Dec2003 $1.17
Dec2002 $0.82

Recommended Reading:

Other ModernGraham posts about the company

Zimmer Biomet Holdings Inc Valuation – March 2018 $ZBH
Zimmer Biomet Holdings Inc Valuation – June 2016 $ZBH
Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

Other ModernGraham posts about related companies

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

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.

Zimmer Biomet Holdings Inc Valuation – March 2018 $ZBH

Company Profile (obtained from Marketwatch): Zimmer Biomet Holdings, Inc. designs, manufactures and markets orthopaedic reconstructive products, sports medicine, extremities and trauma products; craniomaxillofacial and thoracic products; dental implants; and related surgical products. The company operates through three geographical segments: America, Europe and Asia Pacific. The Americas segment comprises principally of the U.S. and includes other North, Central and South American markets. The Europe segment comprises principally of Europe and includes the Middle East and African markets. The Asia Pacific segment comprises primarily of Japan and includes other Asian and Pacific markets. Its products and solutions help treat patients suffering from disorders of, or injuries to, bones, joints or supporting soft tissues. Zimmer Biomet Holdings was founded by Justin O. Zimmer in 1927 and is headquartered in Warsaw, IN.

ZBH Chart

ZBH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ZBH – 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 $24,470,897,660 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 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 73.55% Pass
6. Moderate PEmg Ratio PEmg < 20 21.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 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 1.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.96 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 $5.56
MG Growth Estimate 4.83%
MG Value $100.95
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $80.59
MG Value based on 0% Growth $47.24
Market Implied Growth Rate 6.62%
Current Price $120.86
% of Intrinsic Value 119.73%

Zimmer Biomet 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 low current ratio, 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 $4.2 in 2014 to an estimated $5.56 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.62% 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 below the price.

At the time of valuation, further research into Zimmer Biomet Holdings Inc revealed the company was trading above its Graham Number of $98.9. The company pays a dividend of $0.96 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 21.75, which was below the industry average of 43.8, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-47.61.

Zimmer Biomet 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) -$47.61
Graham Number $98.90
PEmg 21.75
Current Ratio 1.50
PB Ratio 2.10
Current Dividend $0.96
Dividend Yield 0.79%
Number of Consecutive Years of Dividend Growth 2

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 $4,515,300,000
Total Current Liabilities $3,020,200,000
Long-Term Debt $8,917,500,000
Total Assets $25,964,500,000
Intangible Assets $19,021,800,000
Total Liabilities $14,228,700,000
Shares Outstanding (Diluted Average) 204,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.50
Dec2017 $8.90
Dec2016 $1.51
Dec2015 $0.77
Dec2014 $4.20
Dec2013 $4.54
Dec2012 $4.29
Dec2011 $4.03
Dec2010 $2.97
Dec2009 $3.32
Dec2008 $3.72
Dec2007 $3.26
Dec2006 $3.40
Dec2005 $2.93
Dec2004 $2.19
Dec2003 $1.64
Dec2002 $1.31
Dec2001 $0.77
Dec2000 $0.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.56
Dec2017 $4.39
Dec2016 $2.44
Dec2015 $3.13
Dec2014 $4.20
Dec2013 $4.08
Dec2012 $3.79
Dec2011 $3.51
Dec2010 $3.28
Dec2009 $3.40
Dec2008 $3.33
Dec2007 $2.98
Dec2006 $2.66
Dec2005 $2.11
Dec2004 $1.59
Dec2003 $1.17
Dec2002 $0.82

Recommended Reading:

Other ModernGraham posts about the company

Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

Other ModernGraham posts about related companies

Henry Schein Inc Valuation – March 2018 $HSIC
Medtronic PLC Valuation – March 2018 $MDT
UnitedHealth Group Inc Valuation – February 2018 $UNH
VCA Inc Valuation – Initial Coverage $WOOF
Universal Health Services Inc Valuation – August 2017 $UHS
Telefex Inc Valuation – Initial Coverage $TFX
BIO-TECHNE Corp Valuation – Initial Coverage $TECH
LifePoint Health Inc Valuation – Initial Coverage $LPNT
Psychemedics Corp Valuation – April 2017 $PMD
Community Health Systems Valuation – Initial Coverage $CYH

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.

Zimmer Biomet Holdings Inc Valuation – June 2016 $ZBH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 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 Zimmer Biomet Holdings Inc (ZBH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Zimmer Biomet Holdings, Inc., formerly Zimmer Holdings, Inc., is engaged designing, manufacturing and marketing orthopaedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants, and related surgical products. The Company’s products and solutions helps treat patients suffering from disorders of, or injuries to, bones, joints, or supporting soft tissues. The Company manages its operations through three geographic operating segments: the Americas, consists of the United States and includes other North, Central and South American markets; EMEA, consists of Europe and includes the Middle East and African markets, and Asia Pacific, consists of Japan and includes other Asian and Pacific markets. Its four product category segments include Americas Spine, Bone Healing Craniomaxillofacial and Thoracic, and Dental.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of ZBH – June 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 $23,683,841,548 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.36 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 24.85% Fail
6. Moderate PEmg Ratio PEmg < 20 26.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.49 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.12 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

ZBH value chart June 2016

EPSmg $4.55
MG Growth Estimate 3.02%
MG Value $66.24
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $66.02
MG Value based on 0% Growth $38.70
Market Implied Growth Rate 8.84%
Current Price $119.23
% of Intrinsic Value 179.98%

Zimmer Biomet Holdings Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, the poor dividend history, and the high PEmg ratio. 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 Overvalued after growing its EPSmg (normalized earnings) from $3.79 in 2012 to an estimated $4.55 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.84% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Zimmer Biomet Holdings Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

ZBH charts June 2016

Net Current Asset Value (NCAV) -$57.21
Graham Number $92.86
PEmg 26.19
Current Ratio 3.36
PB Ratio 2.49
Current Dividend $0.90
Dividend Yield 0.75%
Number of Consecutive Years of Dividend Growth 1

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $5,082,000,000
Total Current Liabilities $1,514,600,000
Long-Term Debt $11,117,400,000
Total Assets $26,297,300,000
Intangible Assets $18,617,100,000
Total Liabilities $16,637,600,000
Shares Outstanding (Diluted Average) 202,000,000

Earnings Per Share History

Next Fiscal Year Estimate $7.90
Dec2015 $0.77
Dec2014 $4.19
Dec2013 $4.43
Dec2012 $4.29
Dec2011 $4.03
Dec2010 $2.97
Dec2009 $3.32
Dec2008 $3.72
Dec2007 $3.26
Dec2006 $3.40
Dec2005 $2.93
Dec2004 $2.19
Dec2003 $1.64
Dec2002 $1.31
Dec2001 $0.77
Dec2000 $0.91

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.55
Dec2015 $3.10
Dec2014 $4.17
Dec2013 $4.04
Dec2012 $3.79
Dec2011 $3.51
Dec2010 $3.28
Dec2009 $3.40
Dec2008 $3.33
Dec2007 $2.98
Dec2006 $2.66
Dec2005 $2.11
Dec2004 $1.59
Dec2003 $1.17
Dec2002 $0.82
Dec2001 $0.50
Dec2000 $0.30

Recommended Reading:

Other ModernGraham posts about the company

Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

Other ModernGraham posts about related companies

Waters Corporation Valuation – May 2016 $WAT
Align Technology Inc Valuation – May 2016 $ALGN
C.R. Bard Inc Stock Valuation – February 2016 $BCR
Psychemedics Corp Stock Valuation – February 2016 $PMD
Patterson Companies Inc Stock Valuation – February 2016 $PDCO
Edwards Lifesciences Corp Valuation – February 2016 $EW
Baxter International Inc Valuation – February 2016 $BAX
Cerner Corporation Valuation – February 2016 Update $CERN
Henry Schein Inc Valuation – February 2016 Update $HSIC
Medtronic PLC Valuation – January 2016 Update $MDT

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.

Zimmer Biomet Holdings Inc. Analysis – September 2015 Update $ZBH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Zimmer Biomet Holdings Inc. (ZBH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Zimmer Biomet Holdings, Inc., formerly Zimmer Holdings, Inc. is a musculoskeletal healthcare company. The Company designs, manufactures and markets orthopedic reconstructive products; sports medicine, biologics, extremities and trauma products; spine, bone healing, craniomaxillofacial and thoracic products; dental implants, and related surgical products. The Company manages its operations through three geographic segments: the Americas, comprising principally of the United States and includes other North, Central and South American markets; Europe, comprising principally of Europe and includes the Middle East and African markets; and Asia Pacific, comprising primarily of Japan and includes other Asian and Pacific markets. The Company markets and sells products through three channels: direct to healthcare institutions, such as hospitals or direct channel accounts; through stocking distributors and healthcare dealers, and directly to dental practices and dental laboratories.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of ZBH – September 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,437,644,277 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.12 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 17.24% Fail
6. Moderate PEmg Ratio PEmg < 20 23.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.63 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.12 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.56 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

ZBH value Chart September 2015

EPSmg $4.03
MG Growth Estimate 2.20%
MG Value $51.93
Opinion Overvalued
MG Value based on 3% Growth $58.40
MG Value based on 0% Growth $34.23
Market Implied Growth Rate 7.62%
Current Price $95.58
% of Intrinsic Value 184.04%

Zimmer Biomet Holdings qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned by the short dividend history, the insufficient earnings growth over the last ten years, and the high PEmg ratio, while the Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $3.51 in 2011 to an estimated $4.03 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 7.62% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

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

Stage 3: Information for Further Research

ZBH Charts September 2015

Net Current Asset Value (NCAV) -$59.70
Graham Number $68.89
PEmg 23.72
Current Ratio 3.12
PB Ratio 1.63
Dividend Yield 0.92%
Number of Consecutive Years of Dividend Growth 4

 

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

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $6,751,500,000
Total Current Liabilities $2,163,100,000
Long-Term Debt $11,749,800,000
Total Assets $27,204,000,000
Intangible Assets $17,672,200,000
Total Liabilities $17,079,900,000
Shares Outstanding (Diluted Average) 173,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.55
Dec14 $4.19
Dec13 $4.43
Dec12 $4.29
Dec11 $4.03
Dec10 $2.97
Dec09 $3.32
Dec08 $3.72
Dec07 $3.26
Dec06 $3.40
Dec05 $2.93
Dec04 $2.19
Dec03 $1.64
Dec02 $1.31
Dec01 $0.77
Dec00 $0.91

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.03
Dec14 $4.17
Dec13 $4.04
Dec12 $3.79
Dec11 $3.51
Dec10 $3.28
Dec09 $3.40
Dec08 $3.33
Dec07 $2.98
Dec06 $2.66
Dec05 $2.11
Dec04 $1.59
Dec03 $1.17
Dec02 $0.82
Dec01 $0.50
Dec00 $0.30

Recommended Reading:

Other ModernGraham posts about the company

Zimmer Holdings Analysis – June 2015 Update $ZMH
18 Companies in the Spotlight This Week – 3/21/15
Zimmer Holdings Inc. Quarterly Valuation – March 2015 $ZMH
26 Companies in the Spotlight This Week – 12/13/14
Zimmer Holdings Inc. Quarterly Valuation – December 2014 $ZMH

Other ModernGraham posts about related companies

Waters Corporation Analysis – September 2015 Update $WAT
Patterson Companies Inc. Analysis – September 2015 Update $PDCO
Edwards Lifesciences Corporation Analysis – September 2015 Update $EW
Baxter International Inc. Analysis – September 2015 Update $BAX
Cerner Corporation Analysis – September 2015 Update $CERN
Boston Scientific Inc. Analysis – September 2015 Update $BSX
Intuitive Surgical Inc. Analysis – September 2015 Update $ISRG
Dentsply International Inc. Analysis – August 2015 Update $XRAY
Becton Dickinson & Company Analysis – August 2015 Update $BDX
Align Technology Analysis – Initial Coverage $ALGN

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.

Stryker Corp Valuation – February 2019 $SYK

Company Profile (excerpt from Reuters): Stryker Corporation (Stryker), incorporated on February 20, 1946, is a medical technology company. The Company offers a range of medical technologies, including orthopedic, medical and surgical, and neurotechnology and spine products. The Company’s segments include Orthopaedics; MedSurg; Neurotechnology and Spine, and Corporate and Other. The Orthopaedics segment includes reconstructive (hip and knee) and trauma implant systems and other related products. The Company’s MedSurg segment consists of instruments, endoscopy, medical and sustainability products. The Neurotechnology and Spine segment includes neurovascular products, spinal implant systems and other related products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SYK – 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 $68,070,990,264 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.02 Pass
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 99.40% Pass
6. Moderate PEmg Ratio PEmg < 20 28.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.92 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.02 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.72 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 $6.52
MG Growth Estimate 15.00%
MG Value $250.97
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $94.52
MG Value based on 0% Growth $55.41
Market Implied Growth Rate 9.76%
Current Price $182.66
% of Intrinsic Value 72.78%

Stryker Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. 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 Undervalued after growing its EPSmg (normalized earnings) from $2.83 in 2015 to an estimated $6.52 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.76% 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 Stryker Corporation revealed the company was trading above its Graham Number of $75.02. The company pays a dividend of $1.93 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 28.02, which was below the industry average of 51.18, 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 $-15.17.

Stryker Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$15.17
Graham Number $75.02
PEmg 28.02
Current Ratio 2.02
PB Ratio 5.92
Current Dividend $1.93
Dividend Yield 1.06%
Number of Consecutive Years of Dividend Growth 9

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $9,733,000,000
Total Current Liabilities $4,807,000,000
Long-Term Debt $8,486,000,000
Total Assets $27,229,000,000
Intangible Assets $12,726,000,000
Total Liabilities $15,499,000,000
Shares Outstanding (Diluted Average) 380,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.98
Dec2018 $9.34
Dec2017 $2.68
Dec2016 $4.35
Dec2015 $3.78
Dec2014 $1.34
Dec2013 $2.63
Dec2012 $3.39
Dec2011 $3.45
Dec2010 $3.19
Dec2009 $2.77
Dec2008 $2.78
Dec2007 $2.44
Dec2006 $1.89
Dec2005 $1.57
Dec2004 $1.08
Dec2003 $1.07
Dec2002 $0.81
Dec2001 $0.67
Dec2000 $0.55
Dec1999 $0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.52
Dec2018 $5.29
Dec2017 $3.16
Dec2016 $3.30
Dec2015 $2.83
Dec2014 $2.50
Dec2013 $3.08
Dec2012 $3.24
Dec2011 $3.09
Dec2010 $2.81
Dec2009 $2.51
Dec2008 $2.24
Dec2007 $1.85
Dec2006 $1.46
Dec2005 $1.18
Dec2004 $0.93
Dec2003 $0.78

Recommended Reading:

Other ModernGraham posts about the company

Stryker Corp Valuation – April 2018 $SYK
Stryker Corporation Valuation – August 2016 $SYK
Stryker Corporation Valuation – January 2016 Update $SYK
Stryker Corporation Analysis – October 2015 Update $SYK
Stryker Corporation Analysis – July 2015 Update $SYK

Other ModernGraham posts about related companies

Abiomed Inc Valuation – February 2019 $ABMD
Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR
Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH

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.

Align Technology Inc Valuation – February 2019 $ALGN

Company Profile (excerpt from Reuters): Align Technology, Inc., incorporated on April 3, 1997, designs, manufactures and markets a system of clear aligner therapy, intra-oral scanners and computer-aided design/computer-aided manufacturing (CAD/CAM) digital services used in dentistry, orthodontics and dental records storage. The Company operates through two segments: Clear Aligner segment and Scanner and Services (Scanner) segment. The Clear Aligner segment consists of its Invisalign System, which includes Invisalign Full, Teen and Assist (Comprehensive Products), Express/Lite (Non-Comprehensive Products) and Vivera Retainers, along with its training and ancillary products for treating malocclusion (Non-Case). The Scanner segment consists of intra-oral scanning systems and other services available with the intra-oral scanners that provide digital alternatives to the traditional cast models. The Scanner segment includes its iTero scanner and OrthoCAD services. iTero scanner is used by dental professionals, and labs and services for restorative and orthodontic digital procedures, as well as Invisalign digital impression submission.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALGN – 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 $19,185,761,689 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.88 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 391.57% Pass
6. Moderate PEmg Ratio PEmg < 20 63.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 15.50 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 1.88 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.80
MG Growth Estimate 15.00%
MG Value $146.43
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $55.15
MG Value based on 0% Growth $32.33
Market Implied Growth Rate 27.29%
Current Price $239.94
% of Intrinsic Value 163.86%

Align Technology, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.37 in 2015 to an estimated $3.8 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 27.29% 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 Align Technology, Inc. revealed the company was trading above its Graham Number of $39.78. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 63.09, which was above the industry average of 51.18. Finally, the company was trading above its Net Current Asset Value (NCAV) of $6.21.

Align Technology, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $6.21
Graham Number $39.78
PEmg 63.09
Current Ratio 1.88
PB Ratio 15.50
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,302,479,000
Total Current Liabilities $692,073,000
Long-Term Debt $0
Total Assets $2,052,458,000
Intangible Assets $81,949,000
Total Liabilities $799,567,000
Shares Outstanding (Diluted Average) 80,943,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.49
Dec2018 $4.92
Dec2017 $2.83
Dec2016 $2.33
Dec2015 $1.77
Dec2014 $1.77
Dec2013 $0.78
Dec2012 $0.71
Dec2011 $0.83
Dec2010 $0.95
Dec2009 -$0.45
Dec2008 $1.18
Dec2007 $0.50
Dec2006 -$0.55
Dec2005 $0.02
Dec2004 $0.14
Dec2003 -$0.35
Dec2002 -$1.52
Dec2001 -$2.61
Dec2000 -$25.64
Dec1999 -$3.65

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.80
Dec2018 $3.21
Dec2017 $2.21
Dec2016 $1.75
Dec2015 $1.37
Dec2014 $1.11
Dec2013 $0.71
Dec2012 $0.67
Dec2011 $0.63
Dec2010 $0.46
Dec2009 $0.19
Dec2008 $0.43
Dec2007 $0.02
Dec2006 -$0.30
Dec2005 -$0.40
Dec2004 -$2.41
Dec2003 -$4.71

Recommended Reading:

Other ModernGraham posts about the company

Align Technology Inc Valuation – April 2018 $ALGN
Align Technology Inc Valuation – August 2016 $ALGN
Align Technology Inc Valuation – May 2016 $ALGN
Align Technology Inc. Valuation – November 2015 Update $ALGN
Align Technology Analysis – Initial Coverage $ALGN

Other ModernGraham posts about related companies

Abiomed Inc Valuation – February 2019 $ABMD
Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR
Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH

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.

Quest Diagnostics Inc Valuation – February 2019 $DGX

Company Profile (excerpt from Reuters): Quest Diagnostics Incorporated, incorporated on September 20, 1996, is a provider of diagnostic information services. The Company operates through two businesses: Diagnostic Information Services and Diagnostic Solutions. The Diagnostic Information Services business develops and delivers diagnostic testing information and services, providing insights that empower and enable a range of customers, including patients, clinicians, hospitals, integrated delivery networks (IDNs), health plans, employers and accountable care organizations (ACOs). Its Diagnostic Solutions group includes its risk assessment services business, which offers solutions for insurers, and its healthcare information technology businesses, which offers solutions for healthcare providers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DGX – 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 $11,921,276,764 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.15 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 44.56% Pass
6. Moderate PEmg Ratio PEmg < 20 16.98 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 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 1.15 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 15.86 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 $5.16
MG Growth Estimate 3.88%
MG Value $83.87
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $74.80
MG Value based on 0% Growth $43.85
Market Implied Growth Rate 4.24%
Current Price $87.61
% of Intrinsic Value 104.46%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $4.1 in 2014 to an estimated $5.16 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.24% 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 Quest Diagnostics Inc revealed the company was trading above its Graham Number of $68.13. The company pays a dividend of $1.35 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 16.98, which was below the industry average of 51.18, 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 $-28.91.

Quest Diagnostics Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.91
Graham Number $68.13
PEmg 16.98
Current Ratio 1.15
PB Ratio 2.27
Current Dividend $1.35
Dividend Yield 1.54%
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 $1,603,000,000
Total Current Liabilities $1,389,000,000
Long-Term Debt $3,394,000,000
Total Assets $10,986,000,000
Intangible Assets $7,615,000,000
Total Liabilities $5,621,000,000
Shares Outstanding (Diluted Average) 139,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.66
Dec2017 $5.50
Dec2016 $4.51
Dec2015 $4.87
Dec2014 $3.81
Dec2013 $5.54
Dec2012 $3.46
Dec2011 $2.92
Dec2010 $4.05
Dec2009 $3.87
Dec2008 $2.97
Dec2007 $1.74
Dec2006 $2.94
Dec2005 $2.66
Dec2004 $2.35
Dec2003 $2.02
Dec2002 $1.62
Dec2001 $0.83
Dec2000 $0.54
Dec1999 -$0.03
Dec1998 $0.22

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.16
Dec2017 $4.89
Dec2016 $4.53
Dec2015 $4.40
Dec2014 $4.10
Dec2013 $4.15
Dec2012 $3.46
Dec2011 $3.34
Dec2010 $3.40
Dec2009 $3.00
Dec2008 $2.55
Dec2007 $2.34
Dec2006 $2.54
Dec2005 $2.19
Dec2004 $1.79
Dec2003 $1.34
Dec2002 $0.88

Recommended Reading:

Other ModernGraham posts about the company

Quest Diagnostics Inc Valuation – April 2018 $DGX
7 Best Stocks For Value Investors This Week – 7/30/16
Quest Diagnostics Inc Valuation – July 2016 $DGX
18 Best Stocks For Value Investors This Week – 1/30/16
Quest Diagnostics Inc Valuation – January 2016 Update $DGX

Other ModernGraham posts about related companies

Abiomed Inc Valuation – February 2019 $ABMD
Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR
Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH

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.

AmerisourceBergen Corp Valuation – February 2019 $ABC

Company Profile (excerpt from Reuters): AmerisourceBergen Corporation, incorporated on March 16, 2001, is a pharmaceutical sourcing and distribution services company. The Company’s segments include Pharmaceutical Distribution and Other. The Company provides services to healthcare providers, and pharmaceutical and biotech manufacturers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ABC – 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 $18,168,516,235 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.94 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 107.14% Pass
6. Moderate PEmg Ratio PEmg < 20 16.20 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.87 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 0.94 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.22 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 $5.30
MG Growth Estimate 15.00%
MG Value $204.05
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $76.85
MG Value based on 0% Growth $45.05
Market Implied Growth Rate 3.85%
Current Price $85.84
% of Intrinsic Value 42.07%

AmerisourceBergen 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 over the last ten years, and the high PB ratio. 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 $1.01 in 2015 to an estimated $5.3 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.85% 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 AmerisourceBergen Corp. revealed the company was trading above its Graham Number of $44.49. The company pays a dividend of $1.52 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 16.2, which was below the industry average of 51.18, 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 $-39.87.

AmerisourceBergen 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) -$39.87
Graham Number $44.49
PEmg 16.20
Current Ratio 0.94
PB Ratio 5.87
Current Dividend $1.52
Dividend Yield 1.77%
Number of Consecutive Years of Dividend Growth 13

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $27,476,207,000
Total Current Liabilities $29,351,737,000
Long-Term Debt $4,165,400,000
Total Assets $39,267,823,000
Intangible Assets $9,622,245,000
Total Liabilities $36,103,090,000
Shares Outstanding (Diluted Average) 216,360,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.49
Sep2018 $7.53
Sep2017 $1.64
Sep2016 $6.32
Sep2015 -$0.63
Sep2014 $1.16
Sep2013 $1.84
Sep2012 $2.80
Sep2011 $2.54
Sep2010 $2.22
Sep2009 $1.66
Sep2008 $0.77
Sep2007 $1.25
Sep2006 $1.13
Sep2005 $0.62
Sep2004 $1.02
Sep2003 $0.98
Sep2002 $0.79
Sep2001 $0.53
Sep2000 $0.48
Sep1999 $0.33

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.30
Sep2018 $4.20
Sep2017 $2.38
Sep2016 $2.60
Sep2015 $1.01
Sep2014 $1.92
Sep2013 $2.27
Sep2012 $2.33
Sep2011 $1.96
Sep2010 $1.58
Sep2009 $1.20
Sep2008 $0.97
Sep2007 $1.04
Sep2006 $0.93
Sep2005 $0.81
Sep2004 $0.86
Sep2003 $0.73

Recommended Reading:

Other ModernGraham posts about the company

AmerisourceBergen Corp Valuation – April 2018 $ABC
AmerisourceBergen Corp Valuation – July 2016 $ABC
27 Companies in the Spotlight This Week – 4/4/15
AmerisourceBergen Corporation Annual Valuation – 2015 $ABC
14 Companies in the Spotlight This Week – 4/5/14

Other ModernGraham posts about related companies

Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR
Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH
Luminex Corp Valuation – October 2018 $LMNX

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.

Abiomed Inc Valuation – February 2019 $ABMD

Company Profile (excerpt from Reuters): ABIOMED, Inc., incorporated on June 4, 1987, is a provider of temporary percutaneous mechanical circulatory support devices. The Company offers care to heart failure patients. The Company operates in the segment of the research, development and sale of medical devices to assist or replace the pumping function of the failing heart. The Company develops, manufactures and markets products that are designed to enable the heart to rest, heal and recover by improving blood flow to the coronary arteries and end-organs and/or temporarily performing the pumping function of the heart. The Company’s product portfolio includes the Impella 2.5, Impella CP, Impella RP, Impella LD, Impella 5.0 and AB5000. Its products are used in the cardiac catheterization lab (cath lab), by interventional cardiologists, the electrophysiology lab, the hybrid lab and in the heart surgery suite by heart surgeons.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ABMD – 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 $15,717,581,534 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.76 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -1053.75% Fail
6. Moderate PEmg Ratio PEmg < 20 138.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 18.45 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 6.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.51
MG Growth Estimate 15.00%
MG Value $96.79
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $36.45
MG Value based on 0% Growth $21.37
Market Implied Growth Rate 65.13%
Current Price $348.83
% of Intrinsic Value 360.40%

ABIOMED, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.99 in 2015 to an estimated $2.51 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 65.13% 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 ABIOMED, Inc. revealed the company was trading above its Graham Number of $37.44. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 138.75, which was above the industry average of 51.18. Finally, the company was trading above its Net Current Asset Value (NCAV) of $11.62.

ABIOMED, 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) $11.62
Graham Number $37.44
PEmg 138.75
Current Ratio 6.76
PB Ratio 18.45
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $628,728,000
Total Current Liabilities $92,980,000
Long-Term Debt $0
Total Assets $957,116,000
Intangible Assets $48,776,000
Total Liabilities $105,586,000
Shares Outstanding (Diluted Average) 45,040,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.01
Mar2018 $2.45
Mar2017 $1.17
Mar2016 $0.85
Mar2015 $2.65
Mar2014 $0.18
Mar2013 $0.37
Mar2012 $0.04
Mar2011 -$0.32
Mar2010 -$0.52
Mar2009 -$0.91
Mar2008 -$1.26
Mar2007 -$1.03
Mar2006 -$1.15
Mar2005 -$0.11
Mar2004 -$0.45
Mar2003 -$0.87
Mar2002 -$1.02
Mar2001 -$0.94
Mar2000 -$0.60
Mar1999 -$0.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.51
Mar2018 $1.66
Mar2017 $1.20
Mar2016 $1.08
Mar2015 $0.99
Mar2014 $0.09
Mar2013 -$0.06
Mar2012 -$0.38
Mar2011 -$0.66
Mar2010 -$0.88
Mar2009 -$1.01
Mar2008 -$0.97
Mar2007 -$0.79
Mar2006 -$0.69
Mar2005 -$0.53
Mar2004 -$0.75
Mar2003 -$0.86

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

Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR
Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH
Luminex Corp Valuation – October 2018 $LMNX

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.

Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH

Company Profile (excerpt from Reuters): Laboratory Corporation of America Holdings, incorporated on March 8, 1994, is a life sciences company that is integrated in guiding patient care, providing clinical laboratory and end-to-end drug development services. The Company operates as a healthcare diagnostics company. The Company operates through two segments: LabCorp Diagnostics (LCD) and Covance Drug Development (CDD). The Company serves a range of customers, including managed care organizations (MCOs), biopharmaceutical companies, governmental agencies, physicians and other healthcare providers (such as physician assistants and nurse practitioners), hospitals and health systems, employers, patients and consumers, contract research organizations, food and nutritional companies and independent clinical laboratories.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LH – 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 $13,766,796,246 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.55 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 86.48% Pass
6. Moderate PEmg Ratio PEmg < 20 15.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.93 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 1.55 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.13 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.78
MG Growth Estimate 7.45%
MG Value $205.57
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $127.37
MG Value based on 0% Growth $74.66
Market Implied Growth Rate 3.52%
Current Price $136.50
% of Intrinsic Value 66.40%

Laboratory Corp. of America Holdings 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, poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.87 in 2014 to an estimated $8.78 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.52% 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 Laboratory Corp. of America Holdings revealed the company was trading above its Graham Number of $119.38. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 15.54, which was below the industry average of 52.7, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-59.78.

Laboratory Corp. of America Holdings receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$59.78
Graham Number $119.38
PEmg 15.54
Current Ratio 1.55
PB Ratio 1.93
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,274,300,000
Total Current Liabilities $2,106,200,000
Long-Term Debt $5,992,000,000
Total Assets $16,661,400,000
Intangible Assets $11,353,600,000
Total Liabilities $9,413,300,000
Shares Outstanding (Diluted Average) 102,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.45
Dec2017 $12.21
Dec2016 $7.02
Dec2015 $4.35
Dec2014 $5.91
Dec2013 $6.25
Dec2012 $5.99
Dec2011 $5.11
Dec2010 $5.29
Dec2009 $4.98
Dec2008 $4.16
Dec2007 $3.93
Dec2006 $3.24
Dec2005 $2.71
Dec2004 $2.45
Dec2003 $2.11
Dec2002 $1.77
Dec2001 $1.27
Dec2000 $0.81
Dec1999 $0.29
Dec1998 $0.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.78
Dec2017 $8.02
Dec2016 $5.91
Dec2015 $5.42
Dec2014 $5.87
Dec2013 $5.74
Dec2012 $5.36
Dec2011 $4.93
Dec2010 $4.66
Dec2009 $4.17
Dec2008 $3.61
Dec2007 $3.18
Dec2006 $2.69
Dec2005 $2.30
Dec2004 $1.96
Dec2003 $1.56
Dec2002 $1.16

Recommended Reading:

Other ModernGraham posts about the company

Laboratory Corporation of America Holdings Valuation – March 2018 $LH
Laboratory Corp of America Holdings Valuation – July 2016 $LH
47 Companies in the Spotlight This Week – 5/16/15
Laboratory Corporation of America Holdings Annual Valuation – 2015 $LH
15 Companies in the Spotlight This Week – 5/3/2014

Other ModernGraham posts about related companies

PerkinElmer Inc Valuation – January 2019 $PKI
Cardinal Health Inc Valuation – January 2019 $CAH
Varian Medical Systems Inc Valuation – January 2019 $VAR
Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH
Luminex Corp Valuation – October 2018 $LMNX
LHC Group Inc Valuation – September 2018 $LHCG
Chartwell Retirement Residences Valuation – August 2018 $TSE:CSH.UN

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.

Back To Top