Linear Technology Corporation Quarterly Stock Valuation – September 2014 $LLTC
Linear Technology Corp is suitable for the Enterprising Investor but not the Defensive Investor. The Defensive Investor is concerned with the level of earnings growth over the last ten years as well as the high PEmg and PB ratios. The Enterprising Investor has no initial concerns as the company passes all of the investor type’s requirements. As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company and comparing it to other opportunities through a review of ModernGraham’s valuation of Analog Devices Inc. (ADI).  From a valuation side of things, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.52 in 2010 to an estimated $1.87 for 2014. This level of demonstrated growth does not support the market’s implied estimate of 7.81% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.
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