Business Support Stocks

CoreLogic Inc Valuation – July 2018 $CLGX

Company Profile (excerpt from Reuters): CoreLogic, Inc., incorporated on October 13, 2009, is a provider of property information, analytics and data-enabled services. The Company provides detailed coverage of property, mortgages and other encumbrances, property risk and replacement cost, consumer credit, tenancy, location, hazard risk and related performance information. The Company’s segments include Property Intelligence (PI), Risk Management and Work Flow (RMW), and Corporate. The Company offers its clients a national database of public, contributory and data covering real property and mortgage information, judgments and liens, building and replacement costs, parcel and geospatial data, criminal background records, eviction information, non-prime lending records, credit information and tax information, among other data types. As of December 31, 2016, the Company’s databases included over 904 million historical property transactions, over 100 million mortgage applications and property-specific data covering approximately 99% of the United States residential properties, as well as commercial locations, totaling over 150 million records.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLGX – July 2018

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 $4,380,104,929 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 502.33% Pass
6. Moderate PEmg Ratio PEmg < 20 28.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.94 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 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.43 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.69
MG Growth Estimate 15.00%
MG Value $65.07
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $24.51
MG Value based on 0% Growth $14.37
Market Implied Growth Rate 10.24%
Current Price $48.99
% of Intrinsic Value 75.29%

Corelogic Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.65 in 2014 to an estimated $1.69 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 10.24% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Corelogic Inc revealed the company was trading above its Graham Number of $24.89. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 28.99, which was below the industry average of 33.22, 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 $-33.02.

Corelogic Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$33.02
Graham Number $24.89
PEmg 28.99
Current Ratio 0.69
PB Ratio 3.94
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $410,026,000
Total Current Liabilities $596,507,000
Long-Term Debt $1,759,050,000
Total Assets $4,156,833,000
Intangible Assets $3,136,398,000
Total Liabilities $3,132,594,000
Shares Outstanding (Diluted Average) 82,440,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.21
Dec2017 $1.78
Dec2016 $1.19
Dec2015 $1.41
Dec2014 $0.79
Dec2013 $1.11
Dec2012 $1.08
Dec2011 -$0.69
Dec2010 -$0.51
Dec2009 $2.06
Dec2008 -$0.28
Dec2007 -$0.03
Dec2006 $2.92
Dec2005 $4.92
Dec2004 $3.80
Dec2003 $5.22
Dec2002 $2.92
Dec2001 $2.27
Dec2000 $1.24
Dec1999 $0.50
Dec1998 $3.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.69
Dec2017 $1.37
Dec2016 $1.15
Dec2015 $1.00
Dec2014 $0.65
Dec2013 $0.59
Dec2012 $0.33
Dec2011 $0.01
Dec2010 $0.51
Dec2009 $1.32
Dec2008 $1.39
Dec2007 $2.61
Dec2006 $3.94
Dec2005 $4.24
Dec2004 $3.63
Dec2003 $3.17
Dec2002 $2.11

Recommended Reading:

Other ModernGraham posts about the company

Corelogic Inc Valuation – Initial Coverage $CLGX

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Disclaimer:

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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