Air Products & Chemicals Inc Valuation – January 2019 $APD

Company Profile (excerpt from Reuters): Air Products and Chemicals, Inc., incorporated on May 25, 1961, is an industrial gases company. The Company’s Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company operates through five segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, and Corporate and other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APD – January 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 $34,708,500,605 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.17 Pass
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 80.14% Pass
6. Moderate PEmg Ratio PEmg < 20 19.76 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.13 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 2.17 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.22 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 $8.00
MG Growth Estimate 7.96%
MG Value $195.30
Opinion Fairly Valued
MG Grade A-
MG Value based on 3% Growth $115.98
MG Value based on 0% Growth $67.99
Market Implied Growth Rate 5.63%
Current Price $158.09
% of Intrinsic Value 80.95%

Air Products & Chemicals, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $5.23 in 2015 to an estimated $8 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 5.63% 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 Air Products & Chemicals, Inc. revealed the company was trading above its Graham Number of $94.7. The company pays a dividend of $4.25 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.76, which was below the industry average of 20.47, 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 $-13.21.

Air Products & Chemicals, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.21
Graham Number $94.70
PEmg 19.76
Current Ratio 2.17
PB Ratio 3.13
Current Dividend $4.25
Dividend Yield 2.69%
Number of Consecutive Years of Dividend Growth 20

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 9/1/2018
Total Current Assets $5,082,200,000
Total Current Liabilities $2,338,300,000
Long-Term Debt $3,351,700,000
Total Assets $19,178,300,000
Intangible Assets $1,227,400,000
Total Liabilities $8,002,000,000
Shares Outstanding (Diluted Average) 221,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.05
Sep2018 $6.78
Sep2017 $13.65
Sep2016 $2.89
Sep2015 $5.88
Sep2014 $4.61
Sep2013 $4.68
Sep2012 $5.44
Sep2011 $5.63
Sep2010 $4.74
Sep2009 $2.96
Sep2008 $4.15
Sep2007 $4.64
Sep2006 $3.18
Sep2005 $0.03
Sep2004 $0.03
Sep2003 $1.78
Sep2002 $2.36
Sep2001 $2.12
Sep2000 $0.57
Sep1999 $2.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.00
Sep2018 $7.57
Sep2017 $7.42
Sep2016 $4.44
Sep2015 $5.23
Sep2014 $4.94
Sep2013 $4.97
Sep2012 $4.93
Sep2011 $4.60
Sep2010 $4.03
Sep2009 $3.45
Sep2008 $3.26
Sep2007 $2.52
Sep2006 $1.47
Sep2005 $0.83
Sep2004 $1.28
Sep2003 $1.86

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
Air Products & Chemicals Inc Valuation – March 2018 $APD
Air Products & Chemicals Inc Valuation – January 2017 $APD

Other ModernGraham posts about related companies

LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG
Innospec Inc Valuation – April 2018 $IOSP
Innophos Holdings Inc Valuation – March 2018 $IPHS
Olin Corp Valuation – March 2018 $OLN
A Schulman Inc Valuation – March 2018 $SHLM
FMC Corp Valuation – March 2018 $FMC

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.

Air Products & Chemicals Inc Valuation – March 2018 $APD

Company Profile (obtained from Marketwatch): Air Products & Chemicals, Inc. engages in the manufacture and distribution of atmospheric gases. It operates through the following segments: Industrial Gases-Americas; Industrial Gases-EMEA (Europe, Middle East, and Africa); Industrial Gases-Asia; Industrial Gases-Global; Materials Technologies; and Corporate and Other. The Industrial Gases segment, which covers Americas, EMEA, Asia, and Global markets, produces atmospheric gases such as oxygen, nitrogen, argon, and rare gases; process gases such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas, and specialty gases; and equipment for the production and processing of gases such as air separation units and non-cryogenic generators. The Materials Technologies segment comprises of performance, and electronic materials. The Corporate and Other segment includes liquefied natural gas, and helium container businesses. The company was founded by Leonard Parker Pool on September 30, 1940 and is headquartered in Allentown, PA.

APD Chart

APD data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APD – March 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 $36,559,974,167 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.92 Pass
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 76.97% Pass
6. Moderate PEmg Ratio PEmg < 20 21.81 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.60 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 2.92 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.97 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 $7.66
MG Growth Estimate 8.26%
MG Value $191.64
Opinion Fairly Valued
MG Grade B+
MG Value based on 3% Growth $111.06
MG Value based on 0% Growth $65.10
Market Implied Growth Rate 6.66%
Current Price $167.08
% of Intrinsic Value 87.18%

Air Products & Chemicals, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with 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 Fairly Valued after growing its EPSmg (normalized earnings) from $4.94 in 2014 to an estimated $7.66 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.66% 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 Air Products & Chemicals, Inc. revealed the company was trading above its Graham Number of $85.6. The company pays a dividend of $3.71 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.81, which was below the industry average of 31.55, 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 $-11.97.

Air Products & Chemicals, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.97
Graham Number $85.60
PEmg 21.81
Current Ratio 2.92
PB Ratio 3.60
Current Dividend $3.71
Dividend Yield 2.22%
Number of Consecutive Years of Dividend Growth 20

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 12/1/2017
Total Current Assets $5,355,500,000
Total Current Liabilities $1,831,600,000
Long-Term Debt $3,414,900,000
Total Assets $18,208,800,000
Intangible Assets $1,219,900,000
Total Liabilities $7,993,500,000
Shares Outstanding (Diluted Average) 220,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.05
Sep2017 $13.65
Sep2016 $2.89
Sep2015 $5.88
Sep2014 $4.61
Sep2013 $4.68
Sep2012 $5.44
Sep2011 $5.63
Sep2010 $4.74
Sep2009 $2.96
Sep2008 $4.15
Sep2007 $4.64
Sep2006 $3.18
Sep2005 $0.03
Sep2004 $0.03
Sep2003 $1.78
Sep2002 $2.36
Sep2001 $2.12
Sep2000 $0.57
Sep1999 $2.09
Sep1998 $2.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.66
Sep2017 $7.42
Sep2016 $4.44
Sep2015 $5.23
Sep2014 $4.94
Sep2013 $4.97
Sep2012 $4.93
Sep2011 $4.60
Sep2010 $4.03
Sep2009 $3.45
Sep2008 $3.26
Sep2007 $2.52
Sep2006 $1.47
Sep2005 $0.83
Sep2004 $1.28
Sep2003 $1.86
Sep2002 $1.91

Recommended Reading:

Other ModernGraham posts about the company

Air Products & Chemicals Inc Valuation – February 2016 $APD
5 Speculative and Overvalued Companies to Avoid – December 2014
27 Companies in the Spotlight This Week – 12/20/14
Air Products & Chemicals Inc. Annual Valuation – 2014 $APD

Other ModernGraham posts about related companies

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Eastman Chemical Co Valuation – March 2018 $EMN
LyondellBasell Industries NV Valuation – March 2018 $LYB
DowDuPont Inc Valuation – February 2018 $DWDP
Green Plains Inc Valuation – Initial Coverage $GPRE
PolyOne Corp Valuation – Initial Coverage $POL
Ingevity Corp Valuation – Initial Coverage $NGVT

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.

Air Products & Chemicals Inc Valuation – January 2017 $APD

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 Air Products & Chemicals Inc (APD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Air Products and Chemicals, Inc. is an industrial gases company. The Company’s Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company operates through seven segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, Materials Technologies, Energy-from-Waste, and Corporate and other. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company’s Materials Technologies business serves the semiconductor, polyurethanes, cleaning and coatings, and adhesives industries. The Company manufactures and distributes products in two lines of business: Industrial Gases and Materials Technologies.

APD Chart

APD 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.

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[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of APD – 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 $30,844,455,553 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.31 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 26.75% Fail
6. Moderate PEmg Ratio PEmg < 20 28.57 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.37 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 1.31 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.76 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 $4.96
MG Growth Estimate -0.03%
MG Value $41.85
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $71.87
MG Value based on 0% Growth $42.13
Market Implied Growth Rate 10.03%
Current Price $141.59
% of Intrinsic Value 338.31%

Air Products & Chemicals, 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 growth over the last ten years, 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 $4.97 in 2013 to an estimated $4.96 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.03% 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 Air Products & Chemicals, Inc. revealed the company was trading above its Graham Number of $67.68. The company pays a dividend of $3.39 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 28.57, which was above the industry average of 22.46. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.5.

Air Products & Chemicals, 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) -$30.50
Graham Number $67.68
PEmg 28.57
Current Ratio 1.31
PB Ratio 4.37
Current Dividend $3.39
Dividend Yield 2.39%
Number of Consecutive Years of Dividend Growth 20

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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 9/1/2016
Total Current Assets $4,317,300,000
Total Current Liabilities $3,283,300,000
Long-Term Debt $4,918,100,000
Total Assets $18,055,300,000
Intangible Assets $1,638,200,000
Total Liabilities $10,975,700,000
Shares Outstanding (Diluted Average) 218,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.25
Sep2016 $2.89
Sep2015 $5.88
Sep2014 $4.61
Sep2013 $4.68
Sep2012 $5.44
Sep2011 $5.63
Sep2010 $4.74
Sep2009 $2.96
Sep2008 $4.15
Sep2007 $4.64
Sep2006 $3.18
Sep2005 $0.03
Sep2004 $0.03
Sep2003 $1.78
Sep2002 $2.36
Sep2001 $2.12
Sep2000 $0.57
Sep1999 $2.09
Sep1998 $2.48
Sep1997 $1.91

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.96
Sep2016 $4.44
Sep2015 $5.23
Sep2014 $4.94
Sep2013 $4.97
Sep2012 $4.93
Sep2011 $4.60
Sep2010 $4.03
Sep2009 $3.45
Sep2008 $3.26
Sep2007 $2.52
Sep2006 $1.47
Sep2005 $0.83
Sep2004 $1.28
Sep2003 $1.86
Sep2002 $1.91
Sep2001 $1.73

Recommended Reading:

Other ModernGraham posts about the company

Air Products & Chemicals Inc Valuation – February 2016 $APD
5 Speculative and Overvalued Companies to Avoid – December 2014
27 Companies in the Spotlight This Week – 12/20/14
Air Products & Chemicals Inc. Annual Valuation – 2014 $APD

Other ModernGraham posts about related companies

A Schulman Inc Valuation – Initial Coverage $SHLM
Innophos Holdings Inc Valuation – Initial Coverage $IPHS
Innospec Inc Valuation – Initial Coverage $IOSP
Chemtrade Logistics Income Fund Valuation – Initial Coverage $TSE:CHE.UN
Albemarle Corporation Valuation – August 2016 $ALB
Air Products & Chemicals Inc Valuation – August 2016 $APD
Ashland Inc Valuation – July 2016 $ASH
FMC Corporation Valuation – July 2016 $FMC
Eastman Chemical Company Valuation – July 2016 $EMN
Dow Chemical Co Valuation – July 2016 $DOW

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.

Air Products & Chemicals Inc Valuation – August 2016 $APD

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 Companies Benjamin Graham Would Invest In Today - July 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 Air Products & Chemicals Inc (APD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Air Products and Chemicals, Inc. is an industrial gases company. The Company’s Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company operates through seven segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, Materials Technologies, Energy-from-Waste, and Corporate and other. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company’s Materials Technologies business serves the semiconductor, polyurethanes, cleaning and coatings, and adhesives industries. The Company manufactures and distributes products in two lines of business: Industrial Gases and Materials Technologies.

APD Chart

APD 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. Here is a free sample valuation pdf, and 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 APD – August 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 $33,521,097,991 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.92 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 14.98% Fail
6. Moderate PEmg Ratio PEmg < 20 34.14 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.75 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 0.92 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -14.01 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

APD value chart August 2016

EPSmg $4.48
MG Growth Estimate -1.37%
MG Value $25.82
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $65.01
MG Value based on 0% Growth $38.11
Market Implied Growth Rate 12.82%
Current Price $153.03
% of Intrinsic Value 592.61%

Air Products & Chemicals, 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 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 $4.93 in 2012 to an estimated $4.48 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.82% 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 Air Products & Chemicals, Inc. revealed the company was trading above its Graham Number of $47.02. The company pays a dividend of $3.34 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 34.13, which was above the industry average of 18.73. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.48.

Air Products & Chemicals, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

APD charts August 2016

Net Current Asset Value (NCAV) -$30.48
Graham Number $47.02
PEmg 34.13
Current Ratio 0.92
PB Ratio 4.75
Current Dividend $3.34
Dividend Yield 2.18%
Number of Consecutive Years of Dividend Growth 20

[/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 6/1/2016
Total Current Assets $3,378,800,000
Total Current Liabilities $3,658,900,000
Long-Term Debt $3,925,600,000
Total Assets $17,083,500,000
Intangible Assets $1,626,400,000
Total Liabilities $10,038,100,000
Shares Outstanding (Diluted Average) 218,500,000

Earnings Per Share History

Next Fiscal Year Estimate $3.02
Sep2015 $5.88
Sep2014 $4.61
Sep2013 $4.68
Sep2012 $5.44
Sep2011 $5.63
Sep2010 $4.74
Sep2009 $2.96
Sep2008 $4.15
Sep2007 $4.64
Sep2006 $3.18
Sep2005 $0.03
Sep2004 $0.03
Sep2003 $1.78
Sep2002 $2.36
Sep2001 $2.12
Sep2000 $0.57
Sep1999 $2.09
Sep1998 $2.48
Sep1997 $1.91
Sep1996 $1.83

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.48
Sep2015 $5.23
Sep2014 $4.94
Sep2013 $4.97
Sep2012 $4.93
Sep2011 $4.60
Sep2010 $4.03
Sep2009 $3.45
Sep2008 $3.26
Sep2007 $2.52
Sep2006 $1.47
Sep2005 $0.83
Sep2004 $1.28
Sep2003 $1.86
Sep2002 $1.91
Sep2001 $1.73
Sep2000 $1.62

Recommended Reading:

Other ModernGraham posts about the company

Air Products & Chemicals Inc Valuation – February 2016 $APD
5 Speculative and Overvalued Companies to Avoid – December 2014
27 Companies in the Spotlight This Week – 12/20/14
Air Products & Chemicals Inc. Annual Valuation – 2014 $APD
5 Speculative and Overvalued Companies to Avoid – December 2014

Other ModernGraham posts about related companies

Ashland Inc Valuation – July 2016 $ASH
FMC Corporation Valuation – July 2016 $FMC
Eastman Chemical Company Valuation – July 2016 $EMN
Dow Chemical Co Valuation – July 2016 $DOW
Olin Corporation Valuation – June 2016 $OLN
LyondellBasell Industries Valuation – June 2016 $LYB
Praxair Inc Valuation – June 2016 $PX
Albemarle Corp Valuation – February 2016 $ALB
Airgas Inc Stock Valuation – February 2016 $ARG
Air Products & Chemicals Inc Valuation – February 2016 $APD

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.

Air Products & Chemicals Inc Valuation – February 2016 $APD

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 Companies Benjamin Graham Would Invest In Today – February 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 Air Products & Chemicals (APD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Air Products and Chemicals, Inc. (Air Products) serves energy, electronics, chemicals, steel, and manufacturing customers with a portfolio of products, services, and solutions that include atmospheric gases, process and specialty gases, performance materials, equipment, and services. The Company operates in four business segments: Merchant Gases, Tonnage Gases, Electronics and Performance Materials, and Equipment and Energy. Merchant Gases sells atmospheric gases, such as oxygen, nitrogen, and argon, process gases, medical and specialty gases, and certain services and equipment. Tonnage Gases provides hydrogen, carbon monoxide, nitrogen, oxygen, and synthesis gas. Electronics and Performance Materials provide the electronics industry with specialty gases. Equipment and Energy designs and manufactures cryogenic equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction (LNG), and helium distribution.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of APD

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 $28,080,319,780 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 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 51.83% Pass
6. Moderate PEmg Ratio PEmg < 20 22.06 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.92 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.36 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

APD value chart February 2016

EPSmg $5.93
MG Growth Estimate 3.02%
MG Value $86.15
Opinion Overvalued
MG Value based on 3% Growth $85.94
MG Value based on 0% Growth $50.38
Market Implied Growth Rate 6.78%
Current Price $130.75
% of Intrinsic Value 151.77%

Air Products & Chemicals Inc does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios.  The Enterprising Investor is concerned by the level of debt relative to the current assets.  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 overvalued after growing its EPSmg (normalized earnings) from $4.93 in 2012 to an estimated $5.93 for 2016.  This level of earnings growth does not support the market’s implied estimate of 6.78% 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.

Stage 3: Information for Further Research

APD charts February 2016

Net Current Asset Value (NCAV) -$33.45
Graham Number $74.61
PEmg 22.06
Current Ratio 0.80
PB Ratio 3.92
Dividend Yield 2.45%
Number of Consecutive Years of Dividend Growth 20

 

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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 Sep2015
Total Current Assets $2,910,800,000
Total Current Liabilities $3,648,100,000
Long-Term Debt $3,949,100,000
Total Assets $17,438,100,000
Intangible Assets $1,639,600,000
Total Liabilities $10,189,100,000
Shares Outstanding (Diluted Average) 217,600,000

Earnings Per Share History

Next Fiscal Year Estimate $7.35
Sep2015 $5.88
Sep2014 $4.61
Sep2013 $4.68
Sep2012 $5.44
Sep2011 $5.63
Sep2010 $4.74
Sep2009 $2.96
Sep2008 $4.15
Sep2007 $4.64
Sep2006 $3.18
Sep2005 $0.03
Sep2004 $0.03
Sep2003 $1.78
Sep2002 $2.36
Sep2001 $2.12
Sep2000 $0.57
Sep1999 $2.09
Sep1998 $2.48
Sep1997 $1.91
Sep1996 $1.83

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $5.93
Sep2015 $5.23
Sep2014 $4.94
Sep2013 $4.97
Sep2012 $4.93
Sep2011 $4.60
Sep2010 $4.03
Sep2009 $3.45
Sep2008 $3.26
Sep2007 $2.52
Sep2006 $1.47
Sep2005 $0.83
Sep2004 $1.28
Sep2003 $1.86
Sep2002 $1.91
Sep2001 $1.73
Sep2000 $1.62

Recommended Reading:

Other ModernGraham posts about the company

5 Speculative and Overvalued Companies to Avoid – December 2014

Other ModernGraham posts about related companies

FMC Corporation Valuation – January 2016 Update $FMC
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Ashland Inc Valuation – January 2016 Update $ASH
LyondellBasell Industries Valuation – November 2015 Update $LYB
Albemarle Corporation Valuation – November 2015 Update $ALB
Dow Chemical Company Analysis – October 2015 Update $DOW
Sigma-Aldrich Corporation Analysis – September 2015 Update $SIAL
FMC Corporation Analysis – September 2015 Update $FMC
Eastman Chemical Company Analysis – September 2015 Update $EMN
Ashland Inc. Analysis – Initial Coverage $ASH

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.

Air Products & Chemicals Inc. Annual Valuation – 2014 $APD

Air_Products_&_Chemicals_logo

Air Products & Chemicals does not qualify for either the Defensive Investor or the Enterprising Investor. The Defensive Investor is concerned with the low current ratio, and high PEmg and PB ratios. The Enterprising Investor takes issue with the level of debt relative to the current assets. As a result, any purchase of the company is made with a speculative nature behind it. That said, any speculator interested in pursuing the company should still proceed to the next part of the analysis, which is a determination of the company’s intrinsic value.

With regard to that intrinsic value, the company has grown its EPSmg (normalized earnings) from $4.03 in 2010 to only an estimated $4.94 for 2014. This level of demonstrated growth does not support the market’s implied estimate for earnings growth of 10.13% over the next 7-10 years. In fact, actual growth has been closer to 4.51% in recent years. The ModernGraham valuation model therefore returns an estimate of intrinsic value below the current price, indicating the company is overvalued at the present time.

Read the full valuation on Seeking Alpha!

APD Chart

APD data by YCharts

Disclaimer:  The author did not hold a position in Air Products and Chemicals Inc. (APD) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

DowDuPont Inc Valuation – April 2019 #DWDP

Company Profile (excerpt from Reuters): Robert Half International Inc. is engaged in providing specialized staffing and risk consulting services. The Company provides staffing and risk consulting services through the divisions: Accountemps, Robert Half Finance & Accounting, OfficeTeam, Robert Half Technology, Robert Half Management Resources, Robert Half Legal, The Creative Group and Protiviti. The Company operates through three segments: temporary and consultant staffing, permanent placement staffing, and risk consulting and internal audit services. The temporary and consultant segment provides specialized staffing in the accounting and finance, administrative and office, information technology, legal, advertising, marketing and Web design fields. The permanent placement segment provides full-time personnel in the accounting, finance, administrative and office, and information technology fields. The risk consulting segment provides business and technology risk consulting and internal audit services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DWDP – April 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 $85,135,304,027 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.01 Pass
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 -8.50% Fail
6. Moderate PEmg Ratio PEmg < 20 18.84 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.90 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 2.01 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.51 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 $2.01
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $29.16
MG Value based on 0% Growth $17.10
Market Implied Growth Rate 5.17%
Current Price $37.90
% of Intrinsic Value N/A

DowDuPont Inc qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. 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 Overvalued after seeing its EPSmg (normalized earnings) decline from $3.78 in 2015 to an estimated $2.01 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.17% 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 DowDuPont Inc revealed the company was trading above its Graham Number of $37.88. The company pays a dividend of $1.52 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.84, which was below the industry average of 23.27, 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 $-18.43.

DowDuPont Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.43
Graham Number $37.88
PEmg 18.84
Current Ratio 2.01
PB Ratio 0.90
Current Dividend $1.52
Dividend Yield 4.01%
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 12/1/2018
Total Current Assets $49,603,000,000
Total Current Liabilities $24,715,000,000
Long-Term Debt $37,662,000,000
Total Assets $188,030,000,000
Intangible Assets $89,997,000,000
Total Liabilities $91,851,000,000
Shares Outstanding (Diluted Average) 2,292,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.53
Dec2018 $1.65
Dec2017 $0.91
Dec2016 $3.52
Dec2015 $6.15
Dec2014 $2.87
Dec2013 $3.68
Dec2012 $0.70
Dec2011 $2.05
Dec2010 $1.72
Dec2009 $0.32
Dec2008 $0.62
Dec2007 $2.99
Dec2006 $3.82
Dec2005 $4.62
Dec2004 $2.93
Dec2003 $1.87
Dec2002 -$0.37
Dec2001 -$0.43
Dec2000 $2.22
Dec1999 $0.66

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.01
Dec2018 $2.51
Dec2017 $3.10
Dec2016 $3.92
Dec2015 $3.78
Dec2014 $2.47
Dec2013 $2.07
Dec2012 $1.21
Dec2011 $1.49
Dec2010 $1.44
Dec2009 $1.69
Dec2008 $2.58
Dec2007 $3.45
Dec2006 $3.32
Dec2005 $2.62
Dec2004 $1.49
Dec2003 $0.78

Recommended Reading:

Other ModernGraham posts about the company

DowDuPont Inc Valuation – November 2018 $DWDP
DowDuPont Inc Valuation – February 2018 $DWDP

Other ModernGraham posts about related companies

Linde PLC Valuation – April 2019 #LIN
PPG Industries Inc Valuation – February 2019 $PPG
Celanese Corporation Valuation – February 2019 $CE
Ecolab Inc Valuation – January 2019 $ECL
FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP

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.

Linde PLC Valuation – April 2019 #LIN

Company Profile (excerpt from Reuters): Linde plc, incorporated on April 18, 2017, is an industrial gases and engineering company that operates through its subsidiaries. The Company provides atmospheric gases (oxygen, nitrogen, argon and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases and acetylene). It designs, engineers and builds equipment that produces industrial gases primarily for internal use. It also offers gaseous medication and related medical products and devices for patients and medical staff. The Company serves the customers in various industries, including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LIN – April 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 $100,601,281,539 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 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 26.09% Fail
6. Moderate PEmg Ratio PEmg < 20 32.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.99 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 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.92 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 $5.70
MG Growth Estimate 0.33%
MG Value $52.23
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $82.69
MG Value based on 0% Growth $48.47
Market Implied Growth Rate 11.94%
Current Price $184.62
% of Intrinsic Value 353.45%

Linde PLC 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. 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 growing its EPSmg (normalized earnings) from $5.58 in 2014 to an estimated $5.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.94% 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 Linde PLC revealed the company was trading above its Graham Number of $58.47. The company pays a dividend of $3.15 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 32.37, which was above the industry average of 23.27. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-34.09.

Linde PLC 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) -$34.09
Graham Number $58.47
PEmg 32.37
Current Ratio 0.86
PB Ratio 7.99
Current Dividend $3.15
Dividend Yield 1.71%
Number of Consecutive Years of Dividend Growth 20

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 9/1/2018
Total Current Assets $3,305,000,000
Total Current Liabilities $3,860,000,000
Long-Term Debt $6,615,000,000
Total Assets $19,979,000,000
Intangible Assets $3,714,000,000
Total Liabilities $13,244,000,000
Shares Outstanding (Diluted Average) 291,513,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.24
Dec2017 $4.32
Dec2016 $5.21
Dec2015 $5.35
Dec2014 $5.73
Dec2013 $5.87
Dec2012 $5.61
Dec2011 $5.45
Dec2010 $3.84
Dec2009 $4.01
Dec2008 $3.80
Dec2007 $3.62
Dec2006 $3.00
Dec2005 $2.20
Dec2004 $2.10
Dec2003 $1.77
Dec2002 $1.24
Dec2001 $1.31
Dec2000 $1.13
Dec1999 $1.33
Dec1998 $1.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.70
Dec2017 $5.05
Dec2016 $5.47
Dec2015 $5.60
Dec2014 $5.58
Dec2013 $5.32
Dec2012 $4.88
Dec2011 $4.39
Dec2010 $3.79
Dec2009 $3.62
Dec2008 $3.27
Dec2007 $2.84
Dec2006 $2.33
Dec2005 $1.90
Dec2004 $1.67
Dec2003 $1.42
Dec2002 $1.25

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

PPG Industries Inc Valuation – February 2019 $PPG
Celanese Corporation Valuation – February 2019 $CE
Ecolab Inc Valuation – January 2019 $ECL
FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN

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.

PPG Industries Inc Valuation – February 2019 $PPG

Company Profile (excerpt from Reuters): PPG Industries, Inc., incorporated on August 24, 1883, manufactures and distributes a range of coatings and specialty materials. The Company has two segments: Performance Coatings and Industrial Coatings. The Company’s geographical segments include the United States, Canada, Western Europe, Latin America, Central and Eastern Europe, the Middle East, Africa and Asia Pacific. The Company’s brands include PPG, GLIDDEN, COMEX, OLYMPIC, DULUX (in Canada), SIKKENS, PPG PITTSBURGH PAINTS, MULCO, FLOOD, LIQUID NAILS, SICO, CIL, RENNER, TAUBMANS, WHITE KNIGHT, BRISTOL, HOMAX, SIGMA, HISTOR, SEIGNEURIE, GUITTET, PEINTURES GAUTHIER, RIPOLIN, JOHNSTONE’S, LEYLAND, PRIMALEX, DEKORAL, TRILAK, PROMINENT PAINTS, GORI and BONDEX.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PPG – 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 $26,373,508,919 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.36 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 102.28% Pass
6. Moderate PEmg Ratio PEmg < 20 20.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.66 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 1.36 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.75 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 $5.51
MG Growth Estimate -2.43%
MG Value $20.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $79.90
MG Value based on 0% Growth $46.84
Market Implied Growth Rate 5.90%
Current Price $111.80
% of Intrinsic Value 558.89%

PPG Industries, 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, 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 $6.58 in 2015 to an estimated $5.51 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.9% 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 PPG Industries, Inc. revealed the company was trading above its Graham Number of $51.51. The company pays a dividend of $1.86 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 20.29, which was below the industry average of 22.8, 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 $-22.2.

PPG Industries, 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) -$22.20
Graham Number $51.51
PEmg 20.29
Current Ratio 1.36
PB Ratio 5.66
Current Dividend $1.86
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 20

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 $5,961,000,000
Total Current Liabilities $4,373,000,000
Long-Term Debt $4,365,000,000
Total Assets $16,015,000,000
Intangible Assets $6,042,000,000
Total Liabilities $11,283,000,000
Shares Outstanding (Diluted Average) 239,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.11
Dec2018 $5.47
Dec2017 $6.18
Dec2016 $3.27
Dec2015 $5.14
Dec2014 $7.52
Dec2013 $11.13
Dec2012 $3.03
Dec2011 $3.44
Dec2010 $2.32
Dec2009 $1.02
Dec2008 $1.63
Dec2007 $2.52
Dec2006 $2.14
Dec2005 $1.75
Dec2004 $1.98
Dec2003 $1.45
Dec2002 -$0.21
Dec2001 $1.15
Dec2000 $1.79
Dec1999 $1.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.51
Dec2018 $5.31
Dec2017 $5.70
Dec2016 $5.65
Dec2015 $6.58
Dec2014 $6.69
Dec2013 $5.58
Dec2012 $2.63
Dec2011 $2.35
Dec2010 $1.85
Dec2009 $1.68
Dec2008 $2.00
Dec2007 $2.12
Dec2006 $1.75
Dec2005 $1.45
Dec2004 $1.27
Dec2003 $1.00

Recommended Reading:

Other ModernGraham posts about the company

PPG Industries Inc Valuation – May 2018 $PPG
PPG Industries Inc Valuation – January 2017 $PPG
5 Companies for Enterprising Investors Near 52 Week Lows – January 2017
Best Dividend Paying Stocks for Dividend Growth Investors – December 2016
5 Companies for Enterprising Investors Near 52 Week Lows – December 2016

Other ModernGraham posts about related companies

Celanese Corporation Valuation – February 2019 $CE
Ecolab Inc Valuation – January 2019 $ECL
FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG

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.

Best Dividend Paying Stocks for Dividend Growth Investors – February 2019

Dividend Growth Stocks

Dividend growth investing is a very popular approach which can fit within the ModernGraham methods.  This article will look at companies reviewed by ModernGraham which have grown their dividends annually for at least the last 20 years.  Out of over 800 companies covered by ModernGraham, only 70 have grown dividends annually for at least the last 20 years.

Defensive Investors are defined as investors who need to select only the companies that present the least amount of risk. Enterprising Investors, on the other hand, are able to select companies that present a moderate (though still low) amount of risk.

The Elite

The following companies have been rated as undervalued and suitable for either the Defensive Investor or the Enterprising Investor:

AFLAC Incorporated (AFL)

AFLAC Incorporated qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . 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 $3.03 in 2014 to an estimated $4.11 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into AFLAC Incorporated revealed the company was trading below its Graham Number of $53.04. The company pays a dividend of $0.87 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 10.93, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

AFLAC Incorporated fares extremely well in the ModernGraham grading system, scoring an A+.  (See the full valuation)

A. O. Smith Corp (AOS)

A. O. Smith Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with 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 Undervalued after growing its EPSmg (normalized earnings) from $1.05 in 2014 to an estimated $1.95 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.55% 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 A. O. Smith Corp revealed the company was trading above its Graham Number of $23.34. The company pays a dividend of $0.56 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 23.59, which was below the industry average of 23.62, 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 $1.92.

A. O. Smith Corp performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)

Cincinnati Financial Corporation (CINF)

Cincinnati Financial Corporation qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . 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 $2.69 in 2014 to an estimated $4.82 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.78% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Cincinnati Financial Corporation revealed the company was trading above its Graham Number of $76.19. The company pays a dividend of $2 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.06, which was below the industry average of 32.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Cincinnati Financial Corporation fares extremely well in the ModernGraham grading system, scoring an A.  (See the full valuation)

Carlisle Companies, Inc. (CSL)

Carlisle Companies, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. 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 $3.51 in 2014 to an estimated $6.51 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.54% 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 Carlisle Companies, Inc. revealed the company was trading above its Graham Number of $95.82. The company pays a dividend of $1.44 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 19.59, which was above the industry average of 18.51. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.61.

Carlisle Companies, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)

Leggett & Platt, Inc. (LEG)

Leggett & Platt, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. 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 $1.14 in 2014 to an estimated $2.35 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.06% 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 Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $23.11. The company pays a dividend of $1.42 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.62, which was above the industry average of 17.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.

Leggett & Platt, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.  (See the full valuation)

Lowe’s Companies, Inc. (LOW)

Lowe’s Companies, 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, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 Undervalued after growing its EPSmg (normalized earnings) from $2.1 in 2015 to an estimated $4.11 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.7% 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 Lowe’s Companies, Inc. revealed the company was trading above its Graham Number of $29. The company pays a dividend of $1.58 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 23.9, which was below the industry average of 25.61, 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 $-19.93.

Lowe’s Companies, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C+.  (See the full valuation)

People’s United Financial, Inc. (PBCT)

People’s United Financial, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . 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 $0.71 in 2014 to an estimated $1.04 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.89% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into People’s United Financial, Inc. revealed the company was trading below its Graham Number of $21.65. The company pays a dividend of $0.69 per share, for a yield of 4.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.28, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

People’s United Financial, Inc. fares extremely well in the ModernGraham grading system, scoring an A+.  (See the full valuation)

SEI Investments Company (SEIC)

SEI Investments Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.52 in 2014 to an estimated $2.47 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 7.97% 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 SEI Investments Company revealed the company was trading above its Graham Number of $25.4. The company pays a dividend of $0.58 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 24.43, which was above the industry average of 21.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.12.

SEI Investments Company performs fairly well in the ModernGraham grading system, scoring a B-.  (See the full valuation)

Tanger Factory Outlet Centers Inc. (SKT)

Tanger Factory Outlet Centers Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. 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 $0.76 in 2014 to an estimated $1.25 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.18% 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 Tanger Factory Outlet Centers Inc. revealed the company was trading above its Graham Number of $11.47. The company pays a dividend of $1.35 per share, for a yield of 5.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.86, which was below the industry average of 49.54, 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 $-17.97.

Tanger Factory Outlet Centers Inc. fares extremely well in the ModernGraham grading system, scoring an A.  (See the full valuation)

Stanley Black & Decker, Inc. (SWK)

Stanley Black & Decker, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $4.09 in 2014 to an estimated $7.32 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.97% 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 Stanley Black & Decker, Inc. revealed the company was trading above its Graham Number of $95.94. The company pays a dividend of $2.42 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 18.45, which was below the industry average of 28.31, 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 $-40.05.

Stanley Black & Decker, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

T. Rowe Price Group Inc (TROW)

T. Rowe Price Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.79 in 2014 to an estimated $5.76 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.15% 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 T. Rowe Price Group Inc revealed the company was trading above its Graham Number of $60.69. The company pays a dividend of $2.28 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 20.79, which was below the industry average of 22.96, 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 $3.21.

T. Rowe Price Group Inc performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

The Good

The following companies have been rated as fairly valued and suitable for either the Defensive Investor or the Enterprising Investor:

Air Products & Chemicals, Inc. (APD)

Air Products & Chemicals, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $5.23 in 2015 to an estimated $8 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 5.63% 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 Air Products & Chemicals, Inc. revealed the company was trading above its Graham Number of $94.7. The company pays a dividend of $4.25 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.76, which was below the industry average of 20.47, 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 $-13.21.

Air Products & Chemicals, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.  (See the full valuation)

Cullen/Frost Bankers, Inc. (CFR)

Cullen/Frost Bankers, Inc. 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.92 in 2014 to an estimated $5.42 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.25% 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.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $84.91. The company pays a dividend of $2.25 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 21.01, which was above the industry average of 20.05.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.  (See the full valuation)

Cintas Corporation (CTAS)

Cintas Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.94 in 2015 to an estimated $6.44 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.34% 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 Cintas Corporation revealed the company was trading above its Graham Number of $68.91. The company pays a dividend of $1.62 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 29.17, which was below the industry average of 29.23, 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 $-19.68.

Cintas Corporation performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

Expeditors International of Washington (EXPD)

Expeditors International of Washington is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.75 in 2014 to an estimated $2.73 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 8.27% 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 Expeditors International of Washington revealed the company was trading above its Graham Number of $28.87. The company pays a dividend of $0.84 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 25.05, which was above the industry average of 17.22. Finally, the company was trading above its Net Current Asset Value (NCAV) of $7.73.

Expeditors International of Washington performs fairly well in the ModernGraham grading system, scoring a B-.  (See the full valuation)

Hormel Foods Corp (HRL)

Hormel Foods Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.98 in 2014 to an estimated $1.6 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 7.21% 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 Hormel Foods Corp revealed the company was trading above its Graham Number of $19.56. The company pays a dividend of $0.68 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 22.92, which was below the industry average of 24.35, 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 $-1.27.

Hormel Foods Corp performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

Ross Stores, Inc. (ROST)

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.87 in 2015 to an estimated $3.36 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 8.18% 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 Ross Stores, Inc. revealed the company was trading above its Graham Number of $27.22. The company pays a dividend of $0.64 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 24.85, which was below the industry average of 25.4, 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 $1.55.

Ross Stores, Inc. performs fairly well in the ModernGraham grading system, scoring a B.  (See the full valuation)

Disclaimer: 

The author held a long position in People’s United Financial Inc but did not hold a position in any other 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 and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions.  Please also read our full disclaimer.

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