Glance at the Dow and a Summary of Each Component’s Valuation – July 2014

photo (7)As one of the features of Premium Membership, I take a look each month at the Dow Jones Industrial Average, listing out each individual component in an easy to read table, and calculate a value for the index that is based on the ModernGraham valuation model’s estimates for intrinsic values for each component.  This “Glance at the Dow” is also included in a regular post on the blog once each month, and will continue to be included in each month’s ModernGraham Stocks & Screens, which is released to premium subscribers on the fourth Wednesday of every month.  I hope this is useful to all my subscribers, as another tool for evaluating Mr. Market’s current prices.

Readers may find a screen of some of the best components of the Dow by reviewing 5 Undervalued Dow Companies to Research, and may find it useful to review the history of this screen.

^DJI Chart

^DJI data by YCharts

At the time of writing, the Dow Jones Industrial Average (DJIA) was at 17,060.68. The ModernGraham Valuation of the DJIA was 18,536.32. As a result, the DJIA was trading at 92.04% of its estimated value. This figure is within the ModernGraham margin of error, and therefore it appears the DJIA is presently fairly valued.  To see the individual valuation articles, please click on the company name in the table below.

Ticker  Company Name with Link to Valuation Investor Type Latest Valuation Date ModernGraham Valuation Current Price Price as a percent of Value Price/EPSmg
AXP American Express Company E 4/22/2014 $140.89 $94.45 67.04% 20.40
BA The Boeing Company E 5/17/2014 $174.12 $129.10 74.14% 21.34
CAT Caterpillar Inc. S 4/29/2014 $182.55 $109.85 60.18% 16.82
CSCO Cisco Systems, Inc. D 5/1/2014 $31.26 $25.67 82.12% 15.75
CVX Chevron Corporation D 5/26/2014 $195.92 $129.26 65.98% 11.57
DD E I Du Pont De Nemours And Co E 5/6/2014 $57.38 $64.58 112.55% 18.77
DIS The Walt Disney Company S 11/19/2013 $71.18 $86.15 121.03% 28.62
GE General Electric Company D 6/2/2014 $13.04 $26.61 204.06% 18.23
GS Goldman Sachs Group Inc S 11/6/2013 $23.03 $169.17 734.56% 12.24
HD The Home Depot, Inc. S 11/6/2013 $68.76 $79.86 116.14% 27.83
IBM International Business Machines Corp. S 11/8/2013 $381.67 $188.49 49.39% 13.80
INTC Intel Corporation D 5/18/2014 $49.00 $31.71 64.71% 16.18
JNJ Johnson & Johnson E 5/25/2014 $52.20 $103.28 197.85% 21.65
JPM JPMorgan Chase & Co. D 5/23/2014 $129.21 $58.27 45.10% 12.27
KO The Coca-Cola Company S 3/2/2014 $47.57 $42.10 88.50% 21.48
MCD McDonald’s Corporation S 11/11/2013 $142.46 $100.30 70.41% 19.25
MMM 3M Co E 4/20/2014 $101.21 $145.06 143.33% 23.51
MRK Merck & Co., Inc. S 11/12/2013 $0.00 $57.91 N/A 27.98
MSFT Microsoft Corporation D 5/5/2014 $50.20 $42.45 84.56% 17.19
NKE Nike Inc E 5/10/2014 $61.95 $78.03 125.96% 30.24
PFE Pfizer Inc. D 6/8/2014 $33.89 $30.41 89.73% 18.54
PG The Procter & Gamble Company S 2/11/2014 $44.92 $81.26 180.90% 28.82
T AT&T Inc. S 10/28/2013 $12.00 $36.24 302.00% 19.28
TRV Travelers Companies Inc D 5/14/2014 $110.60 $95.95 86.75% 12.81
UNH UnitedHealth Group Inc. D 5/15/2014 $132.16 $83.90 63.48% 16.01
UTX United Technologies Corporation S 11/15/2013 $89.99 $114.84 127.61% 20.33
V Visa Inc E 5/16/2014 $248.12 $221.78 89.38% 34.44
VZ Verizon Communications Inc. S 3/4/2014 $13.83 $50.71 366.67% 28.33
WMT Wal-Mart Stores, Inc. S 11/19/2013 $101.49 $76.84 75.71% 16.14
XOM Exxon Mobil Corporation S 6/3/2014 $125.80 $102.39 81.39% 12.99

Disclaimer:  The author held a long position in DIS and HD at the time of publication.


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3 responses to “Glance at the Dow and a Summary of Each Component’s Valuation – July 2014”

  1. Thomas Avatar
    Thomas

    So Mr. Graham – What SHOULD the Dow be @ right now??

    You know – weighted using the Modern Graham number?

    Just curious…. Thanks for the GREAT Content!!

    1. Thomas Avatar
      Thomas

      I meant with all Values re-calculated so that they are in line with price targets – much the same way Apple split to get considered for the DOW….

      1. Benjamin Clark Avatar

        Thomas,

        First, a clarification – I am not Mr. Graham, but my work is based on modernizing Benjamin Graham’s methods.

        As for where the Dow should be, there is no way to really know given the nature of the market. However, the MG Valuation of the Dow, based on the MG Values for each component, comes out to 18,536.32. Since the Dow’s value is currently within the safety margin, it seems to be fairly valued.

        -Ben

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