Banks Stocks

CVB Financial Corp Valuation – September 2018 $CVBF

Company Profile (excerpt from Reuters): CVB Financial Corp. (CVB), incorporated on April 27, 1981, is the bank holding company for Citizens Business Bank (the Bank). The Bank operates through two segments: Business Financial and Commercial Banking Centers (Centers), and Other Operations. The Company’s all administrative and other smaller operating departments are combined into the Other segment. As of August 10, 2018, the Bank operated through 67 banking centers and three trust office locations serving the Inland Empire, Los Angeles County, Orange County, San Diego County, Ventura County, Santa Barbara County, and the Central Valley area of California. Its trust offices are located in Ontario, Newport Beach and Pasadena. These offices serve as sales offices for the Bank’s wealth management, trust and investment products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CVBF – September 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,635,094,908 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
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 49.48% Pass
5. Moderate PEmg Ratio PEmg < 20 24.95 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.43 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 $0.96
MG Growth Estimate 1.71%
MG Value $11.41
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $13.88
MG Value based on 0% Growth $8.14
Market Implied Growth Rate 8.23%
Current Price $23.89
% of Intrinsic Value 209.33%

CVB Financial Corp. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg ratio. 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 $0.86 in 2014 to an estimated $0.96 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.23% 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 below the price.

At the time of valuation, further research into CVB Financial Corp. revealed the company was trading above its Graham Number of $14.63. The company pays a dividend of $0.54 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 24.95, which was above the industry average of 19.22.

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

Stage 3: Information for Further Research

Graham Number $14.63
PEmg 24.95
PB Ratio 2.43
Dividend Yield 2.26%
TTM Dividend $0.54
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 6/1/2018
Long-Term Debt & Capital Lease Obligation $25,774,000
Total Assets $8,093,863,000
Intangible Assets $122,743,000
Total Liabilities $7,010,446,000
Shares Outstanding (Diluted Average) 110,355,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.98
Dec2017 $0.95
Dec2016 $0.94
Dec2015 $0.93
Dec2014 $0.98
Dec2013 $0.91
Dec2012 $0.74
Dec2011 $0.77
Dec2010 $0.59
Dec2009 $0.56
Dec2008 $0.75
Dec2007 $0.72
Dec2006 $0.83
Dec2005 $0.83
Dec2004 $0.73
Dec2003 $0.63
Dec2002 $0.59
Dec2001 $0.48
Dec2000 $0.42
Dec1999 $0.32
Dec1998 $0.29

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.96
Dec2017 $0.94
Dec2016 $0.93
Dec2015 $0.90
Dec2014 $0.86
Dec2013 $0.77
Dec2012 $0.69
Dec2011 $0.67
Dec2010 $0.65
Dec2009 $0.70
Dec2008 $0.77
Dec2007 $0.77
Dec2006 $0.77
Dec2005 $0.71
Dec2004 $0.62
Dec2003 $0.54
Dec2002 $0.47

Recommended Reading:

Other ModernGraham posts about the company

CVB Financial Corp Valuation – Initial Coverage $CVBF

Other ModernGraham posts about related companies

Customers Bancorp Inc Valuation – September 2018 $CUBI
Sterling Bancorp Valuation – August 2018 $STL
S&T Bancorp Inc Valuation – August 2018 $STBA
Central Pacific Financial Corp Valuation – August 2018 $CPF
Synovus Financial Corp Valuation – August 2018 $SNV
Columbia Banking System Inc Valuation – August 2018 $COLB
Canadian Imperial Bank of Commerce Valuation – July 2018 $TSE:CM
ServisFirst Bancshares Inc Valuation – July 2018 $SFBS
Cullen/Frost Bankers Inc Valuation – July 2018 $CFR
Signature Bank Valuation – July 2018 $SBNY

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.

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.

Back To Top