Allstate Corporation Valuation – May 2016 $ALL

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 Allstate Corporation (ALL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Allstate Corporation is a holding company for Allstate Insurance Company. The Company and its subsidiaries, including Allstate Insurance Company, Allstate Life Insurance Company and other subsidiaries (collectively, Allstate) are engaged in the property-liability insurance and life insurance business. Allstate operates in four business segments: Allstate Protection, Discontinued Lines and Coverages, Allstate Financial, and Corporate and Other. In Allstate Protection segment, it sells private passenger auto, homeowners and other property-liability insurance products through agencies and directly through contact centers and the Internet. Its Discontinued Lines and Coverages segment involves long-tail losses, such as those related to asbestos and environmental claims. Its Allstate Financial segment sells life insurance and voluntary accident and health insurance products. Its Corporate and Other segment consists of holding company activities and certain non-insurance operations.


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.


Downloadable PDF version of this valuation:

ModernGraham Valuation of ALL – May 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $24,952,696,453 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 147.13% Pass
5. Moderate PEmg Ratio PEmg < 20 13.54 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.26 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

ALL value chart May 2016

EPSmg $4.95
MG Growth Estimate 15.00%
MG Value $190.73
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $71.83
MG Value based on 0% Growth $42.11
Market Implied Growth Rate 2.52%
Current Price $67.10
% of Intrinsic Value 35.18%

Allstate Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. The Enterprising Investor has no initial concerns. 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 $2.31 in 2012 to an estimated $4.95 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.52% 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 above the price.

Allstate Corp performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

ALL charts May 2016

Graham Number $68.45
PEmg 13.54
PB Ratio 1.26
Current Dividend $1.23
Dividend Yield 1.83%
Number of Consecutive Years of Dividend Growth 6


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
Long-term Debt $5,108,000,000
Total Assets $105,947,000,000
Intangible Assets $1,219,000,000
Total Liabilities $85,607,000,000
Shares Outstanding (Diluted Average) 382,900,000

Earnings Per Share History

Next Fiscal Year Estimate $4.20
12/1/2015 $5.05
12/1/2014 $6.27
12/1/2013 $4.81
12/1/2012 $4.68
12/1/2011 $1.51
12/1/2010 $1.71
12/1/2009 $1.58
12/1/2008 -$3.07
12/1/2007 $7.77
12/1/2006 $7.84
12/1/2005 $2.64
12/1/2004 $4.54
12/1/2003 $3.83
12/1/2002 $1.60
12/1/2001 $1.60
12/1/2000 $2.95
12/1/1999 $3.38
12/1/1998 $3.94
12/1/1997 $3.56
12/1/1996 $2.32

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.95
12/1/2015 $5.04
12/1/2014 $4.62
12/1/2013 $3.49
12/1/2012 $2.31
12/1/2011 $1.38
12/1/2010 $1.94
12/1/2009 $2.48
12/1/2008 $3.27
12/1/2007 $6.07
12/1/2006 $4.84
12/1/2005 $3.18
12/1/2004 $3.26
12/1/2003 $2.64
12/1/2002 $2.26
12/1/2001 $2.76
12/1/2000 $3.30

Recommended Reading:

Other ModernGraham posts about the company

10 Best Stocks For Value Investors This Week – 10/31/15
Allstate Corporation Valuation – October 2015 Update $ALL
The Best Companies of the Insurance Industry – October 2015
The 16 Best Stocks For Value Investors This Week – 8/1/15
Allstate Corporation Analysis – July 2015 Update $ALL

Other ModernGraham posts about related companies

Unum Group Valuation – March 2016 $UNM
Principal Financial Group Inc Valuation – March 2016 $PFG
Assurant Inc Valuation – February 2016 $AIZ
American International Group Inc Stock Valuation – February 2016 $AIG
Chubb Ltd Stock Valuation – February 2016 $CB
Humana Inc Stock Valuation – February 2016 $HUM
Prudential Financial Inc Valuation – February 2016 $PRU
Anthem Inc Valuation – February 2016 $ANTM
American Financial Group Inc Valuation – February 2016 $AFG
Aflac Inc Valuation – February 2016 $AFL


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.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.