Allstate Corp Valuation – November 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 Stocks for Using A Benjamin Graham Value Investing Strategy – August 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 Corp (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.

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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. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:


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 $26,609,813,538 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 141.18% Pass
5. Moderate PEmg Ratio PEmg < 20 14.89 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.29 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


EPSmg $4.84
MG Growth Estimate 15.00%
MG Value $186.24
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $70.14
MG Value based on 0% Growth $41.12
Market Implied Growth Rate 3.19%
Current Price $72.02
% of Intrinsic Value 38.67%

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 $4.84 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.19% 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.

At the time of valuation, further research into Allstate Corp revealed the company was trading above its Graham Number of $67.21. The company pays a dividend of $1.29 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 14.89, which was below the industry average of 16.56, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research


Graham Number $67.21
PEmg 14.89
PB Ratio 1.29
Dividend Yield 1.79%
TTM Dividend $1.29
Number of Consecutive Years of Dividend Growth 6


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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $5,110,000,000
Total Assets $108,537,000,000
Intangible Assets $1,219,000,000
Total Liabilities $87,603,000,000
Shares Outstanding (Diluted Average) 375,900,000

Earnings Per Share History

Next Fiscal Year Estimate $3.85
Dec2015 $5.05
Dec2014 $6.27
Dec2013 $4.81
Dec2012 $4.68
Dec2011 $1.50
Dec2010 $1.71
Dec2009 $1.58
Dec2008 -$3.06
Dec2007 $7.77
Dec2006 $7.84
Dec2005 $2.64
Dec2004 $4.54
Dec2003 $3.83
Dec2002 $1.60
Dec2001 $1.60
Dec2000 $2.95
Dec1999 $3.38
Dec1998 $3.94
Dec1997 $3.56
Dec1996 $2.32

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.84
Dec2015 $5.04
Dec2014 $4.62
Dec2013 $3.48
Dec2012 $2.31
Dec2011 $1.38
Dec2010 $1.94
Dec2009 $2.49
Dec2008 $3.27
Dec2007 $6.07
Dec2006 $4.84
Dec2005 $3.18
Dec2004 $3.26
Dec2003 $2.64
Dec2002 $2.26
Dec2001 $2.76
Dec2000 $3.30

Recommended Reading:

Other ModernGraham posts about the company

Allstate Corporation Valuation – May 2016 $ALL
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

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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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