Alliance Data Systems Corp Valuation – March 2019 #ADS

Company Profile (excerpt from Reuters): Alliance Data Systems Corporation, incorporated on February 23, 1995, is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty Group B.V. (BrandLoyalty); Epsilon, which provides end-to-end, integrated direct marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs. Its client base is diversified across a range of end-markets, including financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications, insurance and healthcare.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADS – March 2019

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 $9,070,607,376 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.15 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
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 232.37% Pass
6. Moderate PEmg Ratio PEmg < 20 10.89 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.97 Pass
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 2.15 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.80 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 $15.71
MG Growth Estimate 15.00%
MG Value $604.68
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $227.74
MG Value based on 0% Growth $133.50
Market Implied Growth Rate 1.19%
Current Price $171.03
% of Intrinsic Value 28.28%

Alliance Data Systems Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all value 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 $7.77 in 2015 to an estimated $15.71 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.19% 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 above the price.

At the time of valuation, further research into Alliance Data Systems Corporation revealed the company was trading above its Graham Number of $138.66. The company pays a dividend of $2.28 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 10.89, which was below the industry average of 32.74, 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 $-61.7.

Alliance Data Systems Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$61.70
Graham Number $138.66
PEmg 10.89
Current Ratio 2.15
PB Ratio 3.97
Current Dividend $2.28
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 3

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 12/1/2018
Total Current Assets $24,711,700,000
Total Current Liabilities $11,484,000,000
Long-Term Debt $10,527,500,000
Total Assets $30,387,700,000
Intangible Assets $4,380,700,000
Total Liabilities $28,055,600,000
Shares Outstanding (Diluted Average) 54,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $19.96
Dec2018 $17.49
Dec2017 $14.10
Dec2016 $7.34
Dec2015 $8.85
Dec2014 $7.87
Dec2013 $7.42
Dec2012 $6.58
Dec2011 $5.45
Dec2010 $3.48
Dec2009 $2.49
Dec2008 $2.80
Dec2007 $2.03
Dec2006 $2.32
Dec2005 $1.64
Dec2004 $1.22
Dec2003 $0.84
Dec2002 $0.31
Dec2001 -$0.21
Dec2000 -$0.60
Dec1999 -$0.70

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $15.71
Dec2018 $12.76
Dec2017 $9.97
Dec2016 $7.81
Dec2015 $7.77
Dec2014 $6.88
Dec2013 $5.95
Dec2012 $4.86
Dec2011 $3.75
Dec2010 $2.81
Dec2009 $2.40
Dec2008 $2.24
Dec2007 $1.84
Dec2006 $1.59
Dec2005 $1.07
Dec2004 $0.62
Dec2003 $0.19

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – January 2019
Most Undervalued Stocks of the S&P 500 – August 2018
5 Undervalued Stocks for Value Investors with a High Beta – July 2018
Alliance Data Systems Corp Valuation – May 2018 $ADS
14 Best Stocks for Value Investors This Week – 2/11/17

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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.

Autodesk Inc Valuation – February 2019 $ADSK

Company Profile (excerpt from Reuters): Autodesk, Inc. (Autodesk), incorporated on May 10, 1994, is a design software and services company, offering customers productive business solutions through technology products and services. The Company serves customers in the architecture, engineering and construction; product design and manufacturing, and digital media and entertainment industries. The Company’s segments include Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E). The Company’s software products enable its customers to experience their ideas before they are real by allowing them to imagine, design and create the ideas and to visualize, simulate and analyze performance early in the design process by creating digital prototypes. The Company’s product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building products with digital engineering solutions. The Company’s product offerings include AutoCAD, AutoCAD LT, Industry Collections, 3ds Max, Maya, Revit, Inventor, AutoCAD Civil 3D, CAM Solutions, Fusion 360, BIM 360 and Shotgun.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADSK – February 2019

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 $33,313,459,123 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 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 -330.80% Fail
6. Moderate PEmg Ratio PEmg < 20 -103.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -98.46 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.01 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.47
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$21.38
MG Value based on 0% Growth -$12.53
Market Implied Growth Rate -55.84%
Current Price $152.17
% of Intrinsic Value N/A

Autodesk, 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 or growth 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 earnings stability or growth over the last five years, 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $0.82 in 2015 to an estimated $-1.47 for 2019. This level of negative earnings does not support a positive valuation.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 Autodesk, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -103.19, which was below the industry average of 56.55, 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 $-11.52.

Autodesk, 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) -$11.52
Graham Number $0.00
PEmg -103.19
Current Ratio 0.80
PB Ratio -98.46
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 10/1/2018
Total Current Assets $1,590,000,000
Total Current Liabilities $1,985,500,000
Long-Term Debt $1,587,800,000
Total Assets $3,774,400,000
Intangible Assets $1,694,700,000
Total Liabilities $4,112,700,000
Shares Outstanding (Diluted Average) 218,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.28
Jan2018 -$2.58
Jan2017 -$2.61
Jan2016 -$1.46
Jan2015 $0.35
Jan2014 $1.00
Jan2013 $1.07
Jan2012 $1.22
Jan2011 $0.90
Jan2010 $0.25
Jan2009 $0.80
Jan2008 $1.47
Jan2007 $1.19
Jan2006 $1.35
Jan2005 $0.90
Jan2004 $0.52
Jan2003 $0.14
Jan2002 $0.40
Jan2001 $0.40
Jan2000 $0.04
Jan1999 $0.41

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.47
Jan2018 -$1.73
Jan2017 -$0.98
Jan2016 $0.03
Jan2015 $0.82
Jan2014 $1.00
Jan2013 $0.95
Jan2012 $0.90
Jan2011 $0.80
Jan2010 $0.84
Jan2009 $1.14
Jan2008 $1.23
Jan2007 $1.02
Jan2006 $0.84
Jan2005 $0.55
Jan2004 $0.35
Jan2003 $0.27

Recommended Reading:

Other ModernGraham posts about the company

Autodesk Inc Valuation – April 2018 $ADSK
Autodesk Inc Valuation – December 2016 $ADSK
5 Speculative and Overvalued Companies to Avoid – August 2015
Autodesk Inc. Analysis – August 2015 Update $ADSK
47 Companies in the Spotlight This Week – 5/16/15

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Citrix Systems Inc Valuation – January 2019 $CTXS
Microsoft Corporation Valuation – November 2018 $MSFT
Cisco Systems Inc Valuation – November 2018 $CSCO
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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.

Dun & Bradstreet Corp Valuation – July 2018 $DNB

Company Profile (excerpt from Reuters): The Dun & Bradstreet Corporation, incorporated on April 25, 2000, is the source of commercial data, analytics and insight on businesses. The Company operates through two segments: Americas, which consists of its operations in the United States and Canada, and Non-Americas, which consists of its operations in the United Kingdom, Greater China, India and its European and Asia Pacific Worldwide Networks. As of December 31, 2016, the Company’s commercial database contained approximately 265 million business records. It transforms commercial data into insight, which is the foundation of its global solutions that customers rely on to make critical business decisions. The Company provides Risk Management Solutions and Sales and Marketing Solutions.

Downloadable PDF version of this valuation:

ModernGraham Valuation of DNB – 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 $4,727,102,017 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.52 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
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 -9.91% Fail
6. Moderate PEmg Ratio PEmg < 20 23.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -5.60 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 0.52 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.97 Fail
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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.43
MG Growth Estimate -2.91%
MG Value $14.58
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $78.67
MG Value based on 0% Growth $46.12
Market Implied Growth Rate 7.26%
Current Price $124.88
% of Intrinsic Value 856.75%

Dun & Bradstreet Corp 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 growth over the last ten years, 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 earnings growth over the last five years. 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $6.73 in 2014 to an estimated $5.43 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.26% 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 Dun & Bradstreet Corp revealed the company was trading above its Graham Number of $0. The company pays a dividend of $2.01 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 23.02, 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 $-61.97.

Dun & Bradstreet Corp 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) -$61.97
Graham Number $0.00
PEmg 23.02
Current Ratio 0.52
PB Ratio -5.60
Current Dividend $2.01
Dividend Yield 1.61%
Number of Consecutive Years of Dividend Growth 11

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 3/1/2018
Total Current Assets $463,700,000
Total Current Liabilities $899,000,000
Long-Term Debt $1,293,900,000
Total Assets $1,943,300,000
Intangible Assets $1,228,000,000
Total Liabilities $2,775,100,000
Shares Outstanding (Diluted Average) 37,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.20
Dec2017 $3.79
Dec2016 $2.65
Dec2015 $4.64
Dec2014 $7.99
Dec2013 $6.54
Dec2012 $6.43
Dec2011 $5.28
Dec2010 $4.98
Dec2009 $5.99
Dec2008 $5.58
Dec2007 $4.99
Dec2006 $3.70
Dec2005 $3.19
Dec2004 $2.90
Dec2003 $2.30
Dec2002 $1.87
Dec2001 $1.84
Dec2000 $2.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.43
Dec2017 $4.40
Dec2016 $5.02
Dec2015 $6.19
Dec2014 $6.73
Dec2013 $6.01
Dec2012 $5.72
Dec2011 $5.36
Dec2010 $5.29
Dec2009 $5.19
Dec2008 $4.55
Dec2007 $3.83
Dec2006 $3.10
Dec2005 $2.67
Dec2004 $2.37
Dec2003 $1.97
Dec2002 $1.61

Recommended Reading:

Other ModernGraham posts about the company

Dun & Bradstreet Corp Valuation – January 2017 $DNB
Dun & Bradstreet Corp. Analysis – September 2015 Update $DNB
10 Companies in the Spotlight This Week – 7/12/14

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Alliance Data Systems Corp Valuation – May 2018 $ADS
Whirlpool Corporation Valuation – April 2018 $WHR
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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.

Alliance Data Systems Corp Valuation – May 2018 $ADS

Company Profile (excerpt from Reuters): Alliance Data Systems Corporation, incorporated on February 23, 1995, is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty Group B.V. (BrandLoyalty); Epsilon, which provides end-to-end, integrated direct marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs. Its client base is diversified across a range of end-markets, including financial services, specialty retail, grocery and drugstore chains, petroleum retail, automotive, hospitality and travel, telecommunications, insurance and healthcare.

ADS Chart

ADS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADS – May 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 $11,540,981,778 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.14 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
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 279.51% Pass
6. Moderate PEmg Ratio PEmg < 20 14.72 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.83 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 2.14 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.91 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 $14.23
MG Growth Estimate 15.00%
MG Value $547.96
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $206.37
MG Value based on 0% Growth $120.98
Market Implied Growth Rate 3.11%
Current Price $209.45
% of Intrinsic Value 38.22%

Alliance Data Systems Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB 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 Undervalued after growing its EPSmg (normalized earnings) from $6.88 in 2014 to an estimated $14.23 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.11% 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 above the price.

At the time of valuation, further research into Alliance Data Systems Corporation revealed the company was trading above its Graham Number of $128.46. The company pays a dividend of $2.08 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 14.72, which was below the industry average of 33.86, 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 $-70.39.

Alliance Data Systems Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$70.39
Graham Number $128.46
PEmg 14.72
Current Ratio 2.14
PB Ratio 5.83
Current Dividend $2.08
Dividend Yield 0.99%
Number of Consecutive Years of Dividend Growth 2

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 3/1/2018
Total Current Assets $23,470,500,000
Total Current Liabilities $10,985,500,000
Long-Term Debt $11,362,100,000
Total Assets $29,392,900,000
Intangible Assets $4,630,400,000
Total Liabilities $27,391,500,000
Shares Outstanding (Diluted Average) 55,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $21.90
Dec2017 $14.10
Dec2016 $7.34
Dec2015 $8.85
Dec2014 $7.87
Dec2013 $7.42
Dec2012 $6.58
Dec2011 $5.45
Dec2010 $3.48
Dec2009 $2.49
Dec2008 $2.80
Dec2007 $2.03
Dec2006 $2.32
Dec2005 $1.64
Dec2004 $1.22
Dec2003 $0.84
Dec2002 $0.31
Dec2001 -$0.21
Dec2000 -$0.60
Dec1999 -$0.70
Dec1998 -$0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $14.23
Dec2017 $9.97
Dec2016 $7.81
Dec2015 $7.77
Dec2014 $6.88
Dec2013 $5.95
Dec2012 $4.86
Dec2011 $3.75
Dec2010 $2.81
Dec2009 $2.40
Dec2008 $2.24
Dec2007 $1.84
Dec2006 $1.59
Dec2005 $1.07
Dec2004 $0.62
Dec2003 $0.19
Dec2002 -$0.19

Recommended Reading:

Other ModernGraham posts about the company

14 Best Stocks for Value Investors This Week – 2/11/17
Alliance Data Systems Corp Valuation – February 2017 $ADS
Alliance Data Systems Corporation Analysis – October 2015 Update $ADS
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Alliance Data Systems Annual Stock Valuation – 2014 $ADS

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IHS Markit Ltd Valuation – Initial Coverage April 2018 $INFO
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Iron Mountain Inc Valuation – April 2018 $IRM
Cintas Corp Valuation – April 2018 $CTAS
Xerox Corp Valuation – March 2018 $XRX
Avery Dennison Corp Valuation – March 2018 $AVY
Ecolab Inc Valuation – March 2018 $ECL

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.

Autodesk Inc Valuation – April 2018 $ADSK

Company Profile (excerpt from Reuters): Autodesk, Inc. (Autodesk), incorporated on May 10, 1994, is a design software and services company, offering customers productive business solutions through technology products and services. The Company serves customers in the architecture, engineering and construction; product design and manufacturing, and digital media and entertainment industries. The Company’s segments include Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E). The Company’s software products enable its customers to experience their ideas before they are real by allowing them to imagine, design and create the ideas and to visualize, simulate and analyze performance early in the design process by creating digital prototypes. The Company’s product development and manufacturing software provides manufacturers in automotive, transportation, industrial machinery, consumer products and building products with digital engineering solutions. The Company’s product offerings include AutoCAD, AutoCAD LT, Industry Collections, 3ds Max, Maya, Revit, Inventor, AutoCAD Civil 3D, CAM Solutions, Fusion 360, BIM 360 and Shotgun.

ADSK Chart

ADSK data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADSK – April 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 $26,967,913,552 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.88 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 -285.23% Fail
6. Moderate PEmg Ratio PEmg < 20 -112.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -107.53 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 0.88 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.47 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.11
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$16.16
MG Value based on 0% Growth -$9.47
Market Implied Growth Rate -60.66%
Current Price $125.75
% of Intrinsic Value N/A

Autodesk, 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 or growth 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 earnings stability or growth over the last five years, 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $0.82 in 2015 to an estimated $-1.11 for 2019. This level of negative earnings does not support a positive valuation.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 Autodesk, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -112.81, which was below the industry average of 49.59, 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 $-11.38.

Autodesk, 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) -$11.38
Graham Number $0.00
PEmg -112.81
Current Ratio 0.88
PB Ratio -107.53
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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 1/1/2018
Total Current Assets $1,877,900,000
Total Current Liabilities $2,123,200,000
Long-Term Debt $1,586,000,000
Total Assets $4,113,600,000
Intangible Assets $1,675,400,000
Total Liabilities $4,369,600,000
Shares Outstanding (Diluted Average) 218,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.80
Jan2018 -$2.58
Jan2017 -$2.61
Jan2016 -$1.46
Jan2015 $0.35
Jan2014 $1.00
Jan2013 $1.07
Jan2012 $1.22
Jan2011 $0.90
Jan2010 $0.25
Jan2009 $0.80
Jan2008 $1.47
Jan2007 $1.19
Jan2006 $1.35
Jan2005 $0.90
Jan2004 $0.52
Jan2003 $0.14
Jan2002 $0.40
Jan2001 $0.40
Jan2000 $0.04
Jan1999 $0.41

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.11
Jan2018 -$1.73
Jan2017 -$0.98
Jan2016 $0.03
Jan2015 $0.82
Jan2014 $1.00
Jan2013 $0.95
Jan2012 $0.90
Jan2011 $0.80
Jan2010 $0.84
Jan2009 $1.14
Jan2008 $1.23
Jan2007 $1.02
Jan2006 $0.84
Jan2005 $0.55
Jan2004 $0.35
Jan2003 $0.27

Recommended Reading:

Other ModernGraham posts about the company

Autodesk Inc Valuation – December 2016 $ADSK
5 Speculative and Overvalued Companies to Avoid – August 2015
Autodesk Inc. Analysis – August 2015 Update $ADSK
47 Companies in the Spotlight This Week – 5/16/15
Autodesk Inc. Quarterly Valuation – May 2015 $ADSK

Other ModernGraham posts about related companies

F5 Networks Inc Valuation – April 2018 $FFIV
Cadence Design Systems Inc Valuation – Initial Coverage $CDNS
Oracle Corporation Valuation – March 2018 $ORCL
CA Inc Valuation – March 2018 $CA
Red Hat Inc Valuation – March 2018 $RHT
Alphabet Inc Valuation – March 2018 $GOOGL
Ansys Inc Valuation – March 2018 $ANSS
Citrix Systems Inc Valuation – February 2018 $CTXS
Microsoft Corp Valuation – February 2018 $MSFT
Cisco Systems Inc Valuation – February 2018 $CSCO

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.

Alliance Data Systems Corp Valuation – February 2017 $ADS

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 – January 2017.  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 Alliance Data Systems Corp (ADS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Alliance Data Systems Corporation is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a range of industries. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services, and private label and co-brand retail credit card programs. The Company operates through three segments: LoyaltyOne, which provides coalition and short-term loyalty programs through the Company’s Canadian AIR MILES Reward Program and BrandLoyalty; Epsilon, which provides end-to-end, integrated marketing solutions, and Card Services, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs.

ADS Chart

ADS data by YCharts

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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.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADS – February 2017

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 $13,048,490,992 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.92 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
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 289.85% Pass
6. Moderate PEmg Ratio PEmg < 20 20.24 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.97 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 1.92 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.47 Fail
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 $11.27
MG Growth Estimate 13.42%
MG Value $398.43
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $163.43
MG Value based on 0% Growth $95.81
Market Implied Growth Rate 5.87%
Current Price $228.14
% of Intrinsic Value 57.26%

Alliance Data Systems Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. 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 $5.95 in 2013 to an estimated $11.27 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.87% 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 above the price.

At the time of valuation, further research into Alliance Data Systems Corporation revealed the company was trading above its Graham Number of $107.83. The company pays a dividend of $0.52 per share, for a yield of 0.2% Its PEmg (price over earnings per share – ModernGraham) was 20.24, which was below the industry average of 21.9, 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 $-103.34.

Alliance Data Systems Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$103.34
Graham Number $107.83
PEmg 20.24
Current Ratio 1.92
PB Ratio 7.97
Current Dividend $0.52
Dividend Yield 0.23%
Number of Consecutive Years of Dividend Growth 2

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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 12/1/2016
Total Current Assets $17,872,400,000
Total Current Liabilities $9,323,400,000
Long-Term Debt $12,556,800,000
Total Assets $25,514,100,000
Intangible Assets $4,804,000,000
Total Liabilities $23,855,900,000
Shares Outstanding (Diluted Average) 57,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $18.00
Dec2016 $7.34
Dec2015 $8.85
Dec2014 $7.87
Dec2013 $7.42
Dec2012 $6.58
Dec2011 $5.45
Dec2010 $3.48
Dec2009 $2.49
Dec2008 $2.80
Dec2007 $2.03
Dec2006 $2.32
Dec2005 $1.64
Dec2004 $1.22
Dec2003 $0.84
Dec2002 $0.31
Dec2001 -$0.21
Dec2000 -$0.60
Dec1999 -$0.70
Dec1998 -$0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $11.27
Dec2016 $7.81
Dec2015 $7.77
Dec2014 $6.88
Dec2013 $5.95
Dec2012 $4.86
Dec2011 $3.75
Dec2010 $2.81
Dec2009 $2.40
Dec2008 $2.24
Dec2007 $1.84
Dec2006 $1.59
Dec2005 $1.07
Dec2004 $0.62
Dec2003 $0.19
Dec2002 -$0.19
Dec2001 -$0.43

Recommended Reading:

Other ModernGraham posts about the company

Alliance Data Systems Corporation Analysis – October 2015 Update $ADS
14 Companies in the Spotlight This Week – 10/11/14
Alliance Data Systems Annual Stock Valuation – 2014 $ADS
10 Companies in the Spotlight This Week – 7/12/14
14 Companies in the Spotlight This Week – 4/12/14

Other ModernGraham posts about related companies

John Wiley & Sons Inc Valuation – Initial Coverage $JW.A
Dun & Bradstreet Corp Valuation – January 2017 $DNB
Apollo Education Group Inc Valuation – January 2017 $APOL
Accenture PLC Valuation – December 2016 $ACN
Automatic Data Processing Valuation – November 2016 $ADP
United Rentals Inc Valuation – August 2016 $URI
Robert Half International Inc Valuation – August 2016 $RHI
Accenture PLC Valuation – August 2016 $ACN
Fiserv Inc Valuation – August 2016 $FISV
Cintas Corporation Valuation – July 2016 $CTAS

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.

Dun & Bradstreet Corp Valuation – January 2017 $DNB

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 – January 2017.  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 Dun & Bradstreet Corp (DNB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Dun & Bradstreet Corporation is the source of commercial data, analytics and insight on businesses. The Company operates through two segments: Americas, which consists of its operations in the United States, Canada and Latin America, and Non-Americas, which consists of its operations in the United Kingdom, the Netherlands, Belgium, Greater China and India. The Company’s commercial database contains approximately 250 million business records. It transforms commercial data into valuable insight, which is the foundation of its global solutions that customers rely on to make critical business decisions. The Company provides Risk Management Solutions, and Sales and Marketing Solutions. The Company provides DNBi and D&B Credit that are subscription based online applications, which offers customers real time access to its complete and up-to-date global information, comprehensive monitoring and portfolio analysis.

DNB Chart

DNB data by YCharts

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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.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of DNB – January 2017

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 $4,597,150,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
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 -2.66% Fail
6. Moderate PEmg Ratio PEmg < 20 23.30 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -4.23 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 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.46 Fail
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 Fail

Stage 2: Determination of Intrinsic Value

EPSmg $5.30
MG Growth Estimate -1.10%
MG Value $33.40
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $76.84
MG Value based on 0% Growth $45.04
Market Implied Growth Rate 7.40%
Current Price $123.48
% of Intrinsic Value 369.66%

Dun & Bradstreet Corp 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 growth over the last ten years, 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 earnings growth over the last five years. 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $5.72 in 2012 to an estimated $5.3 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.4% 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 Dun & Bradstreet Corp revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.91 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 23.3, which was above the industry average of 21.9. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-63.37.

Dun & Bradstreet Corp scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$63.37
Graham Number $0.00
PEmg 23.30
Current Ratio 0.83
PB Ratio -4.23
Current Dividend $1.91
Dividend Yield 1.55%
Number of Consecutive Years of Dividend Growth 10

[/not-level-free]

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 $764,800,000
Total Current Liabilities $916,500,000
Long-Term Debt $1,586,400,000
Total Assets $2,016,900,000
Intangible Assets $1,076,800,000
Total Liabilities $3,084,300,000
Shares Outstanding (Diluted Average) 36,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.49
Dec2015 $4.64
Dec2014 $7.99
Dec2013 $6.54
Dec2012 $6.43
Dec2011 $5.28
Dec2010 $4.98
Dec2009 $5.99
Dec2008 $5.58
Dec2007 $4.99
Dec2006 $3.70
Dec2005 $3.19
Dec2004 $2.90
Dec2003 $2.30
Dec2002 $1.87
Dec2001 $1.84
Dec2000 $2.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.30
Dec2015 $6.19
Dec2014 $6.73
Dec2013 $6.01
Dec2012 $5.72
Dec2011 $5.36
Dec2010 $5.29
Dec2009 $5.19
Dec2008 $4.55
Dec2007 $3.83
Dec2006 $3.10
Dec2005 $2.67
Dec2004 $2.37
Dec2003 $1.97
Dec2002 $1.61
Dec2001 $1.28
Dec2000 $0.83

Recommended Reading:

Other ModernGraham posts about the company

Dun & Bradstreet Corp. Analysis – September 2015 Update $DNB
10 Companies in the Spotlight This Week – 7/12/14

Other ModernGraham posts about related companies

Accenture PLC Valuation – December 2016 $ACN
Automatic Data Processing Valuation – November 2016 $ADP
United Rentals Inc Valuation – August 2016 $URI
Robert Half International Inc Valuation – August 2016 $RHI
Accenture PLC Valuation – August 2016 $ACN
Fiserv Inc Valuation – August 2016 $FISV
Cintas Corporation Valuation – July 2016 $CTAS
Pitney Bowes Inc Valuation – July 2016 $PBI
Xerox Corp Valuation – June 2016 $XRX
Avery Dennison Corp Valuation – June 2016 $AVY

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.

Autodesk Inc Valuation – December 2016 $ADSK

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 Autodesk Inc (ADSK) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Autodesk, Inc. (Autodesk) is a design software and services company, offering customers productive business solutions through technology products and services. The Company serves customers in the architecture, engineering and construction; manufacturing, and digital media, consumer and entertainment industries. It operates in four segments: Architecture, Engineering and Construction (AEC), Platform Solutions and Emerging Business (PSEB), Manufacturing (MFG), and Media and Entertainment (M&E). The PSEB, AEC and MFG segments offer a range of services, including consulting, support and training. The M&E segment offers software products to professionals, post-production facilities and broadcasters for a range of applications. Its software products enable its customers to experience their ideas before they are real by allowing them to imagine, design and create their ideas and to visualize, simulate and analyze real-world performance in the design process by creating digital prototypes.

ADSK Chart

ADSK data by YCharts

[level-free]
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.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of ADSK – 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 $17,382,638,403 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 -232.54% Fail
6. Moderate PEmg Ratio PEmg < 20 -89.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 16.10 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 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.03 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$0.86
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$12.44
MG Value based on 0% Growth -$7.29
Market Implied Growth Rate -49.02%
Current Price $76.83
% of Intrinsic Value N/A

Autodesk, 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 or growth 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 earnings stability or growth over the last five years, 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $0.95 in 2013 to an estimated $-0.86 for 2017. This level of negative earnings does not support a positive valuation.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 Autodesk, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -89.55, which was below the industry average of 38.63, 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 $-6.46.

Autodesk, 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) -$6.46
Graham Number $0.00
PEmg -89.55
Current Ratio 1.46
PB Ratio 16.10
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

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 10/1/2016
Total Current Assets $2,332,100,000
Total Current Liabilities $1,597,600,000
Long-Term Debt $1,489,900,000
Total Assets $4,829,200,000
Intangible Assets $1,725,800,000
Total Liabilities $3,768,600,000
Shares Outstanding (Diluted Average) 222,300,000

Earnings Per Share History

Next Fiscal Year Estimate -$2.23
Jan2016 -$1.46
Jan2015 $0.35
Jan2014 $1.00
Jan2013 $1.07
Jan2012 $1.22
Jan2011 $0.90
Jan2010 $0.25
Jan2009 $0.80
Jan2008 $1.47
Jan2007 $1.19
Jan2006 $1.35
Jan2005 $0.90
Jan2004 $0.52
Jan2003 $0.14
Jan2002 $0.40
Jan2001 $0.40
Jan2000 $0.04
Jan1999 $0.41
Jan1998 $0.23
Jan1997 $0.22

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate -$0.86
Jan2016 $0.03
Jan2015 $0.82
Jan2014 $1.00
Jan2013 $0.95
Jan2012 $0.90
Jan2011 $0.80
Jan2010 $0.84
Jan2009 $1.14
Jan2008 $1.23
Jan2007 $1.02
Jan2006 $0.84
Jan2005 $0.55
Jan2004 $0.35
Jan2003 $0.27
Jan2002 $0.32
Jan2001 $0.27

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – August 2015
Autodesk Inc. Analysis – August 2015 Update $ADSK
47 Companies in the Spotlight This Week – 5/16/15
Autodesk Inc. Quarterly Valuation – May 2015 $ADSK
40 Companies in the Spotlight This Week – 2/21/15

Other ModernGraham posts about related companies

Adobe Systems Inc Valuation – August 2016 $ADBE
Microsoft Corporation Valuation – August 2016 $MSFT
Cisco Systems Inc Valuation – August 2016 $CSCO
Oracle Corporation Valuation – July 2016 $ORCL
CA Inc Valuation – July 2016 $CA
Red Hat Inc Valuation – June 2016 $RHT
Yahoo! Inc Valuation – June 2016 $YHOO
Alphabet Inc Valuation – June 2016 $GOOGL
Ansys Inc Valuation – June 2016 $ANSS
Citrix Systems Inc Valuation – May 2016 $CTXS

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.

Introducing the Enhanced Valuation Spreadsheet!

This month marks the start of the third volume of the ModernGraham Stocks & Screens publication.  Thank you to all members for helping to support my continued efforts on this site by being premium members.  To commemorate the occasion, I’ve created new premium content, the Enhanced Valuation Spreadsheet!  More on that in a little bit, but first – the January edition of Stocks & Screens is now available!  Get it here if you’re currently a premium member!

You may notice that I’ve also added two new screens to the list – Companies Trading Below Their Graham Number, and Dividend Growth Companies.  In addition, I’ve removed the mock portfolios from the PDF report for now, but do plan to continue them in a different format (and possibly add a couple of other mock portfolios to the site!).

Now, a little bit about both the Stocks & Screens publication and the Enhanced Valuation Spreadsheet:

Stocks & Screens

Stocks & ScreensBasic Premium Members get access to the Stocks & Screens publication.  Inside this monthly PDF report and spreadsheet is a listing of all the companies reviewed by ModernGraham (currently 552 different companies) in a handy table with some key figures, including dividend yield information.  It then proceeds to screen the companies regarding different topics.  This is a great tool for your research into value investing opportunities.

You can also download the raw data in a monthly spreadsheet including each company’s rating regarding Defensive Investors, Enterprising Investors, or Speculative, the MG Value, the price as a percent of the MG Value, the PEmg ratio, the dividend yield, the beta, the current ratio, the Net Current Asset Value, the market-implied growth rate, consecutive years of dividend growth (not yet available for all companies covered), Graham Number (not yet available for all companies covered) and a link to the latest ModernGraham valuation!

Inside the PDF report, you will find screens for:

  • Undervalued Companies
  • Fairly Valued Companies
  • Lowest PEmg Ratio – Defensive Investor
  • Lowest PEmg Ratio – Enterprising Investor
  • Stocks Trading Closest to NCAV
  • Companies Trading Close to 52 Week High
  • Companies Trading Close to 52 Week Low
  • Companies With the Highest Beta
  • Companies With the Lowest Beta
  • Undervalued Companies with a High Dividend Yield
  • Companies Trading Below Their Graham Number
  • Dividend Growth Companies

In addition, you can review ModernGraham’s Glance at the Dow, a valuation of the Dow Jones Industrial Average as a whole and its individual components!

Preview the Stocks & Screens Content:

Download the September 2014 PDF or the September 2014 spreadsheet.

Enhanced Valuation Spreadsheet

Advanced Premium Members also get access to our Enhanced Valuation Spreadsheet, which is released weekly.  This spreadsheet outlines all of the most recent ModernGraham valuations, provides an overview of the market, gives an opportunity to create a “watch list”, summarizes the latest ModernGraham valuations, and provides a tool for evaluating companies not covered by ModernGraham using the ModernGraham formula.

Please note that this month is considered a beta period, where feedback on the tool is greatly appreciated!  If you have comments on what you would like to see in the spreadsheet, or if you become a member and have any trouble with the spreadsheet, let me know by email or commenting on this post.  For a limited time, the price to become an Advanced Premium Member is discounted.  Early adopters can lock in a subscription rate by signing up now and (hopefully, though not required to lock in the rate) providing me with feedback!

If you are already a premium member and would like to become an advanced premium member to gain access to the Enhanced Valuation Spreadsheet, please upgrade your subscription!

Here’s a sample of what you can find in the Enhanced Valuation Spreadsheet:

Market Overview

This page provides a summary of all of the companies reviewed by ModernGraham.

Enhanced Spreadsheet 1

Watch List

Enter tickers of companies covered by ModernGraham to generate an easy to read summary of those company valuations.

Enhanced Spreadsheet 2

MG Universe

See the key details of every individual valuation by ModernGraham.  The spreadsheet also includes sheets showing only the latest company valuations, the Dow Jones Industrial Average components, and the S&P 500 components.

Enhanced Spreadsheet 3

Valuation Calculator

If a company is not covered by ModernGraham, you now have the opportunity to input financial data and generate a ModernGraham valuation on your own.  All you need is basic balance sheet figures, and Earnings Per Share data, and let the spreadsheet do the rest!  *Note – this part of the spreadsheet “expires” weekly, in order to require you to verify your continued membership by downloading a new version of the spreadsheet.

Enhanced Spreadsheet 4

Also included in premium membership: Access to all individual ModernGraham valuations!

With a premium membership, you can access every ModernGraham valuation of over 550 companies.  The ModernGraham approach is three-fold, and the new design will highlight that fact.  This will enable you to conduct your research as efficiently as possible.  Stage 1 looks to determine if the company is suitable for either the Defensive Investor or the Enterprising Investor; Stage 2 presents ModernGraham’s calculation of intrinsic value and gives some brief comments; and, Stage 3 provides some data to assist with your further research.

The PDF Version

In addition, a PDF version of the entire valuation is included and can easily be printed for your quick reference.  This PDF has all of the information from the valuation, from the Stage 1 analysis to useful links for research purposes.  But don’t just listen to what it includes – take a look for yourself!  Here’s a free sample valuation!

The Data

ModernGraham has always utilized ten years worth of financial data when calculating the intrinsic value of a company.  Now, we download twenty years worth of data in order to provide you with more historical context.  This means that we can look back on the company to calculate the intrinsic value for up to fifteen years, giving you an opportunity to compare how the company’s price has moved in relation to the intrinsic value over time.

Purchasing Options:

There are two tiers of premium membership, each with different billing options.

Basic Membership – Stocks & Screens only!

Single Month – $9.99

Monthly Recurring – $7.99 – 20% off a single month’s price!

Annual Recurring – $74.99 – 22% off the monthly recurring price!

Advanced Membership – Stocks & Screens and the Enhanced Valuation Spreadsheet!

Single Month – $29.99 – only $19.99 for a limited time!  (NOTE:  This offer expired at the end of January 2016).

Monthly Recurring – $19.99 – only $14.99 for a limited time!  (NOTE:  This offer expired at the end of January 2016).

Annual Recurring – $159.99 – only $119.99 for a limited time!  (NOTE:  This offer expired at the end of January 2016).

To become a subscriber, follow these steps:

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With so much talk about stocks being overvalued, I’m glad to find someone that helps with the legwork of determining value investments. When the downturn occurs I feel confident ill be better prepared than most. I purchased your March screens and am looking forward to April. Thanks.

Excellent modernizing application of Graham’s life work. Thank you!

I just discovered your web site and find it intriguing. I inherited some div stocks 20 yrs ago and just recently decided to reallocate using “Seeking Alpha as ” as a tool and discovered a whole different world. And now with MG further frontiers seem to be unfolding. I’m looking forward to spending my mornings with MG and making my investments with sound tried and true, (and profitable) assistance.

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Invest with knowledge on your side. ModernGraham provides that.

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Since I’ve been using Modern Graham’s recommendations my portfolio is moving into the black! I thoroughly recommend this service as a way to improve buying choices in a volatile market.

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*As always, ModernGraham makes no recommendations for investments in specific situations.  Please consult a registered broker or investment advisor regarding your individual investment decisions.

Alliance Data Systems Corporation Analysis – October 2015 Update $ADS

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 Most Undervalued Companies for the Defensive Investor – September 2015.  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 Alliance Data Systems Corporation (ADS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Alliance Data Systems Corporation is a provider of data-driven marketing and loyalty solutions serving consumer-based businesses in a variety of industries. The Company operates through three segments: LoyaltyOne, which includes the Company’s Canadian AIR MILES Reward Program and BrandLoyalty; Epsilon, which provides direct marketing solutions, and Private Label Services and Credit, which provides risk management solutions, account origination, funding, transaction processing, customer care, collections and marketing services for the Company’s private label and co-brand retail credit card programs. The Company offers a portfolio of integrated outsourced marketing solutions, including customer loyalty programs, database marketing services, end-to-end marketing services, analytics and creative services, direct marketing services and private label and co-brand retail credit card programs.

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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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ADS – October 2015

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 $16,446,003,591 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.20 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
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 286.99% Pass
6. Moderate PEmg Ratio PEmg < 20 30.54 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.69 Fail
Score
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 2.20 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.13 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

ADS value Chart October 2015

EPSmg $8.95
MG Growth Estimate 15.00%
MG Value $344.58
Opinion Fairly Valued
MG Value based on 3% Growth $129.78
MG Value based on 0% Growth $76.08
Market Implied Growth Rate 11.02%
Current Price $273.30
% of Intrinsic Value 79.32%

Alliance Data Systems Corporation does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the lack of dividends, and the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the net current assets and the lack of dividends.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $3.75 in 2011 to an estimated $8.95 for 2015.  This level of demonstrated earnings growth supports the market’s implied estimate of 11.02% 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 within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Alliance Data Systems Corporation (ADS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

ADS Charts October 2015

Net Current Asset Value (NCAV) -$67.89
Graham Number $94.03
PEmg 30.54
Current Ratio 2.20
PB Ratio 8.69
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $13,357,110,000
Total Current Liabilities $6,073,751,000
Long-Term Debt $8,222,425,000
Total Assets $19,547,440,000
Intangible Assets $5,150,645,000
Total Liabilities $17,588,290,000
Shares Outstanding (Diluted Average) 62,325,000

Earnings Per Share History

Next Fiscal Year Estimate $12.38
Dec14 $7.87
Dec13 $7.42
Dec12 $6.58
Dec11 $5.45
Dec10 $3.48
Dec09 $2.49
Dec08 $2.80
Dec07 $2.03
Dec06 $2.32
Dec05 $1.64
Dec04 $1.22
Dec03 $0.84
Dec02 $0.31
Dec01 -$0.21
Dec00 -$0.60
Dec99 -$0.70
Dec98 -$0.43

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $8.95
Dec14 $6.88
Dec13 $5.95
Dec12 $4.86
Dec11 $3.75
Dec10 $2.81
Dec09 $2.40
Dec08 $2.24
Dec07 $1.84
Dec06 $1.59
Dec05 $1.07
Dec04 $0.62
Dec03 $0.19
Dec02 -$0.19
Dec01 -$0.43
Dec00 -$0.47
Dec99 -$0.35

Recommended Reading:

Other ModernGraham posts about the company

14 Companies in the Spotlight This Week – 10/11/14
Alliance Data Systems Annual Stock Valuation – 2014 $ADS
10 Companies in the Spotlight This Week – 7/12/14
14 Companies in the Spotlight This Week – 4/12/14
Alliance Data Systems (ADS) Quarterly Valuation – April 2014

Other ModernGraham posts about related companies

Automatic Data Processing Analysis – September 2015 Update $ADP
Accenture PLC Analysis – September 2015 Update $ACN
Dun & Bradstreet Corp. Analysis – September 2015 Update $DNB
Cintas Corporation Analysis – August 2015 Update $CTAS
Apollo Education Group Inc. Analysis – Initial Coverage $APOL
Paychex Inc. Analysis – August 2015 Update $PAYX
Robert Half International Inc. Analysis – August 2015 Update $RHI
United Rentals Inc. Analysis – Initial Coverage $URI
Automatic Data Processing Analysis – June 2015 Update $ADP
Accenture plc Analysis – June 2015 Update $ACN

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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