CIRCOR International Inc Valuation – Initial Coverage $CIR

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 – December 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 CIRCOR International Inc (CIR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): CIRCOR International, Inc. (CIRCOR) designs, manufactures and markets engineered products and sub-systems, which are used in the oil and gas, power generation, aerospace, defense and other industrial markets. The Company operates through two segments: CIRCOR Energy (Energy), and CIRCOR Aerospace & Defense (Aerospace & Defense). Its Energy segment provides engineered integrated flow control solutions, valves and services in the oil and gas, and power generation industries. Its Energy segment offers products in the service sector, which includes applications, such as process control, cryogenic, steam power generation systems and process systems. Its Aerospace & Defense segment focuses on areas of actuation systems and fluid control systems and services. Its Aerospace & Defense sub-systems, components and products are used in various commercial and military aircraft, including single and twin-aisle air transport, business and regional jets, and military transports and fighters.

CIR Chart

CIR data by YCharts

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. 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:

ModernGraham Valuation of CIR – December 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 $1,060,815,853 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.24 Pass
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 -605.56% Fail
6. Moderate PEmg Ratio PEmg < 20 41.25 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.59 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 3.24 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.36 Pass
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 $1.57
MG Growth Estimate 6.37%
MG Value $33.40
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $22.80
MG Value based on 0% Growth $13.37
Market Implied Growth Rate 16.38%
Current Price $64.88
% of Intrinsic Value 194.27%

CIRCOR International, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. 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 Overvalued after growing its EPSmg (normalized earnings) from $1.1 in 2012 to an estimated $1.57 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.38% 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 CIRCOR International, Inc. revealed the company was trading above its Graham Number of $25.39. The company pays a dividend of $0.15 per share, for a yield of 0.2% Its PEmg (price over earnings per share – ModernGraham) was 41.25, which was below the industry average of 69.19, 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 $7.72.

CIRCOR International, 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) $7.72
Graham Number $25.39
PEmg 41.25
Current Ratio 3.24
PB Ratio 2.59
Current Dividend $0.15
Dividend Yield 0.23%
Number of Consecutive Years of Dividend Growth 1


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 9/1/2016
Total Current Assets $368,522,000
Total Current Liabilities $113,792,000
Long-Term Debt $92,400,000
Total Assets $656,665,000
Intangible Assets $158,120,000
Total Liabilities $240,067,000
Shares Outstanding (Diluted Average) 16,629,000

Earnings Per Share History

Next Fiscal Year Estimate $1.13
Dec2015 $0.58
Dec2014 $2.84
Dec2013 $2.67
Dec2012 $1.76
Dec2011 $2.10
Dec2010 $0.73
Dec2009 $0.34
Dec2008 -$3.51
Dec2007 $2.27
Dec2006 $1.80
Dec2005 $1.27
Dec2004 $0.74
Dec2003 $1.14
Dec2002 $1.00
Dec2001 $1.04
Dec2000 $0.78
Jun1999 $0.88

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.57
Dec2015 $1.86
Dec2014 $2.34
Dec2013 $1.90
Dec2012 $1.10
Dec2011 $0.65
Dec2010 $0.05
Dec2009 -$0.04
Dec2008 $0.01
Dec2007 $1.67
Dec2006 $1.31
Dec2005 $1.05
Dec2004 $0.94
Dec2003 $1.02
Dec2002 $0.88
Dec2001 $0.73
Dec2000 $0.49

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

Canadian Energy Services & Technology Corp Valuation – Initial Coverage $CEU
WPX Energy Inc Valuation – September 2016 $WPX
Newfield Exploration Co Valuation – December 2016 $NFX
World Fuel Services Corp Valuation – Initial Coverage $INT
Shawcor Ltd Valuation – Initial Coverage $TSE:SCL
Imperial Oil Limited Valuation – Initial Coverage $IMO
Phillips 66 Valuation – August 2016 $PSX
FMC Technologies Inc Valuation – August 2016 $FTI
Marathon Petroleum Corp Valuation – August 2016 $MPC
Magellan Midstream Partners LP Valuation – August 2016 $MMP


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.