Cardinal Financial Corp Valuation – Initial Coverage $CFNL

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 – August 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 Cardinal Financial Corp (CFNL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cardinal Financial Corporation is a financial holding company. The Company owns Cardinal Bank (the Bank), a Virginia state-chartered community bank. The Bank operates in three business segments: commercial banking, mortgage banking and wealth management services. The commercial banking segment includes both commercial and consumer lending and provides customers such products as commercial loans, real estate loans, and other business financing and consumer loans. In addition, commercial banking segment provides customers with several choices of deposit products, including demand deposit accounts, savings accounts and certificates of deposit. The mortgage banking segment is engaged in the origination and acquisition of residential mortgages for sale into the secondary market. The wealth management services segment provides investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning and investment management.

CFNL Chart

CFNL 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.

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Downloadable PDF version of this valuation:

moderngraham-valuation-of-cfnl-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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,046,959,564 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 608.93% Pass
5. Moderate PEmg Ratio PEmg < 20 24.97 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.43 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

cfnl-value-chart-december-2016

EPSmg $1.30
MG Growth Estimate 6.09%
MG Value $26.98
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $18.92
MG Value based on 0% Growth $11.09
Market Implied Growth Rate 8.24%
Current Price $32.58
% of Intrinsic Value 120.77%

Cardinal Financial Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.93 in 2012 to an estimated $1.3 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.24% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cardinal Financial Corporation revealed the company was trading above its Graham Number of $21.85. The company pays a dividend of $0.47 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 24.97, which was above the industry average of 13.43.

Cardinal Financial Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

cfnl-charts-december-2016

Graham Number $21.85
PEmg 24.97
PB Ratio 2.43
Dividend Yield 1.44%
TTM Dividend $0.47
Number of Consecutive Years of Dividend Growth 7

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ModernGraham tagged articles Morningstar
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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $464,876,000
Total Assets $4,219,648,000
Intangible Assets $36,115,000
Total Liabilities $3,767,811,000
Shares Outstanding (Diluted Average) 33,767,000

Earnings Per Share History

Next Fiscal Year Estimate $1.54
Dec2015 $1.43
Dec2014 $1.00
Dec2013 $0.82
Dec2012 $1.51
Dec2011 $0.94
Dec2010 $0.62
Dec2009 $0.37
Dec2008 $0.01
Dec2007 $0.18
Dec2006 $0.30
Dec2005 $0.44
Dec2004 $0.19
Dec2003 $0.54
Dec2002 -$0.13
Dec2001 -$3.11
Dec2000 -$0.98
Dec1999 -$0.94
Dec1998 -$0.64
Dec1997 -$0.12

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.30
Dec2015 $1.17
Dec2014 $1.02
Dec2013 $0.97
Dec2012 $0.93
Dec2011 $0.57
Dec2010 $0.35
Dec2009 $0.23
Dec2008 $0.18
Dec2007 $0.29
Dec2006 $0.32
Dec2005 $0.08
Dec2004 -$0.30
Dec2003 -$0.67
Dec2002 -$1.23
Dec2001 -$1.58
Dec2000 -$0.72

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

BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI
Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB
Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D
M&T Bank Corp Valuation – July 2016 $MTB
Citigroup Inc Valuation – July 2016 $C

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.

Canadian Imperial Bank of Commerce Valuation – Initial Coverage $TSE:CM

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 Canadian Imperial Bank of Commerce (TSE:CM) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Canadian Imperial Bank of Commerce (CIBC) is a global financial institution. The Company provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets. The Company’s Retail and Business Banking segment provides personal and business clients across Canada with financial advice, products and services in its banking centers or through remote channels, such as mobile advisors, telephone, online or mobile banking. The Company’s Wealth Management segment provides advice and investment solutions. The Company’s Capital Markets segment provides integrated credit and global markets products, investment banking advisory services and research to corporate, government and institutional clients around the world.

CM Chart

CM 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.

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ModernGraham Valuation of TSE-CM – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $44,071,398,789 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 1032.70% Pass
5. Moderate PEmg Ratio PEmg < 20 11.50 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.87 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $9.62
MG Growth Estimate 5.40%
MG Value $185.80
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $139.53
MG Value based on 0% Growth $81.79
Market Implied Growth Rate 1.50%
Current Price $110.65
% of Intrinsic Value 59.55%

Canadian Imperial Bank of Commerce is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. 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 $7.07 in 2013 to an estimated $9.62 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.5% 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 Canadian Imperial Bank of Commerce revealed the company was trading below its Graham Number of $114.08. The company pays a dividend of $4.75 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.5, which was below the industry average of 21.43, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Canadian Imperial Bank of Commerce performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $114.08
PEmg 11.50
PB Ratio 1.87
Dividend Yield 4.29%
TTM Dividend $4.75
Number of Consecutive Years of Dividend Growth 7

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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 10/1/2016
Long-Term Debt & Capital Lease Obligation $3,366,000,000
Total Assets $501,357,000,000
Intangible Assets $2,949,000,000
Total Liabilities $477,885,000,000
Shares Outstanding (Diluted Average) 395,919,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.22
Oct2016 $10.70
Oct2015 $8.87
Oct2014 $7.86
Oct2013 $8.11
Oct2012 $7.76
Oct2011 $6.71
Oct2010 $5.87
Oct2009 $2.65
Oct2008 -$5.89
Oct2007 $9.21
Oct2006 $7.43
Oct2005 -$0.46
Oct2004 $5.53
Oct2003 $5.18
Oct2002 $1.35
Oct2001 $4.13
Oct2000 $4.86
Oct1999 $2.22
Oct1998 $2.26
Oct1997 $3.51

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.62
Oct2016 $9.10
Oct2015 $8.16
Oct2014 $7.62
Oct2013 $7.07
Oct2012 $5.51
Oct2011 $4.16
Oct2010 $3.21
Oct2009 $2.11
Oct2008 $2.29
Oct2007 $6.04
Oct2006 $4.24
Oct2005 $2.81
Oct2004 $4.37
Oct2003 $3.71
Oct2002 $2.97
Oct2001 $3.65

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

Bank of New York Mellon Corp Valuation – January 2017 $BK
Simmons First National Corporation Valuation – Initial Coverage $SFNC
ServisFirst Bancshares Inc Valuation – Initial Coverage $SFBS
Ingredion Inc Valuation – Initial Coverage $INGR
City Holding Company Valuation – Initial Coverage $CHCO
Southside Bancshares Inc Valuation – Initial Coverage $SBSI
Independent Bank Corp Valuation – Initial Coverage $INDB
Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR
Signature Bank Valuation – Initial Coverage $SBNY
Cardinal Financial Corp Valuation – Initial Coverage $CFNL

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.

SVB Financial Group Valuation – Initial Coverage $SIVB

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 SVB Financial Group (SIVB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): SVB Financial Group (SVB Financial) is a diversified financial services, bank holding and financial holding company. The Company operates through three segments: Global Commercial Bank, SVB Private Bank and SVB Capital. The Global Commercial Bank segment consists of the operations of its Commercial Bank, and of SVB Wine, SVB Analytics and its Debt Fund Investments. SVB Private Bank is the private banking division of the Bank, which provides a range of personal financial solutions for consumers. SVB Capital is the venture capital investment arm of SVB Financial Group, which focuses primarily on funds management. The Company, through its subsidiaries and divisions, offers a range of banking and financial products and services to clients across the United States, as well as in international entrepreneurial markets. The Company offers services in the technology, life science/healthcare, private equity/venture capital and wine industries.

SIVB Chart

SIVB 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]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of SIVB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,250,132,270 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 206.79% Pass
5. Moderate PEmg Ratio PEmg < 20 29.02 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.57 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $6.06
MG Growth Estimate 14.98%
MG Value $233.22
Opinion Fairly Valued
MG Grade F
MG Value based on 3% Growth $87.93
MG Value based on 0% Growth $51.54
Market Implied Growth Rate 10.26%
Current Price $175.95
% of Intrinsic Value 75.44%

SVB Financial Group does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.03 in 2012 to an estimated $6.06 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 10.26% 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 SVB Financial Group revealed the company was trading above its Graham Number of $104.71. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 29.02, which was above the industry average of 21.43.

SVB Financial Group scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Graham Number $104.71
PEmg 29.02
PB Ratio 2.57
Dividend Yield 0.00%
TTM Dividend $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

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $795,971,000
Total Assets $43,274,037,000
Intangible Assets $0
Total Liabilities $39,680,986,000
Shares Outstanding (Diluted Average) 52,413,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.06
Dec2015 $6.62
Dec2014 $5.31
Dec2013 $4.67
Dec2012 $3.91
Dec2011 $3.94
Dec2010 $2.24
Dec2009 $0.66
Dec2008 $2.16
Dec2007 $3.37
Dec2006 $2.38
Dec2005 $2.40
Dec2004 $1.70
Dec2003 $0.35
Dec2002 $1.21
Dec2001 $1.79
Dec2000 $3.23
Dec1999 $1.23
Dec1998 $0.69
Dec1997 $0.68
Dec1996 $0.55

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.06
Dec2015 $5.34
Dec2014 $4.47
Dec2013 $3.73
Dec2012 $3.03
Dec2011 $2.56
Dec2010 $1.96
Dec2009 $1.95
Dec2008 $2.53
Dec2007 $2.49
Dec2006 $1.90
Dec2005 $1.60
Dec2004 $1.36
Dec2003 $1.31
Dec2002 $1.74
Dec2001 $1.84
Dec2000 $1.67

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

Simmons First National Corporation Valuation – Initial Coverage $SFNC
ServisFirst Bancshares Inc Valuation – Initial Coverage $SFBS
Ingredion Inc Valuation – Initial Coverage $INGR
City Holding Company Valuation – Initial Coverage $CHCO
Southside Bancshares Inc Valuation – Initial Coverage $SBSI
Independent Bank Corp Valuation – Initial Coverage $INDB
Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR
Signature Bank Valuation – Initial Coverage $SBNY
Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG

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.

Bank of New York Mellon Corp Valuation – January 2017 $BK

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 Bank of New York Mellon Corp (BK) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Bank of New York Mellon Corporation (BNY Mellon) is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes credit-related services; the leasing portfolio; corporate treasury activities, including its investment securities portfolio; its equity interest in ConvergEx Group; business exits, and corporate overhead. The Company has over $1.6 trillion in assets under management. BNY Mellon’s subsidiaries include The Bank of New York Mellon and BNY Mellon, National Association (BNY Mellon, N.A.). The Bank of New York Mellon is a New York state-chartered bank, which houses its Investment Services businesses, including Asset Servicing, Issuer Services, Treasury Services, Broker-Dealer and Advisor Services, as well as the bank-advised business of Asset Management.

[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]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of BK – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $51,016,635,714 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 259.01% Pass
5. Moderate PEmg Ratio PEmg < 20 19.00 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.30 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.54
MG Growth Estimate 11.13%
MG Value $77.99
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $36.76
MG Value based on 0% Growth $21.55
Market Implied Growth Rate 5.25%
Current Price $48.17
% of Intrinsic Value 61.76%

Bank of New York Mellon Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. 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 $1.46 in 2012 to an estimated $2.54 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.25% 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 above the price.

At the time of valuation, further research into Bank of New York Mellon Corp revealed the company was trading below its Graham Number of $48.91. The company pays a dividend of $0.7 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 19, which was below the industry average of 21.43, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Bank of New York Mellon Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $48.91
PEmg 19.00
PB Ratio 1.30
Dividend Yield 1.45%
TTM Dividend $0.70
Number of Consecutive Years of Dividend Growth 6

[/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
Long-Term Debt & Capital Lease Obligation $25,367,000,000
Total Assets $374,114,000,000
Intangible Assets $21,120,000,000
Total Liabilities $334,419,000,000
Shares Outstanding (Diluted Average) 1,067,682,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.11
Dec2015 $2.71
Dec2014 $2.15
Dec2013 $1.73
Dec2012 $1.73
Dec2011 $2.03
Dec2010 $2.06
Dec2009 -$1.16
Dec2008 $1.20
Dec2007 $2.18
Dec2006 $3.94
Dec2005 $2.03
Dec2004 $1.85
Dec2003 $1.52
Dec2002 $1.24
Dec2001 $1.81
Dec2000 $1.92
Dec1999 $2.27
Dec1998 $1.53
Dec1997 $1.36
Dec1996 $1.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.54
Dec2015 $2.19
Dec2014 $1.93
Dec2013 $1.64
Dec2012 $1.46
Dec2011 $1.30
Dec2010 $1.17
Dec2009 $1.03
Dec2008 $2.16
Dec2007 $2.53
Dec2006 $2.51
Dec2005 $1.76
Dec2004 $1.64
Dec2003 $1.61
Dec2002 $1.68
Dec2001 $1.86
Dec2000 $1.81

Recommended Reading:

Other ModernGraham posts about the company

5 Best Undervalued Stocks of the Week – 8/14/16
Bank of New York Mellon Corp Valuation – August 2016 $BK
19 Best Stocks For Value Investors This Week – 1/9/16
Bank of New York Mellon Valuation – January 2016 Update $BK
10 Companies Benjamin Graham Would Invest In Today – October 2015

Other ModernGraham posts about related companies

Simmons First National Corporation Valuation – Initial Coverage $SFNC
ServisFirst Bancshares Inc Valuation – Initial Coverage $SFBS
Ingredion Inc Valuation – Initial Coverage $INGR
City Holding Company Valuation – Initial Coverage $CHCO
Southside Bancshares Inc Valuation – Initial Coverage $SBSI
Independent Bank Corp Valuation – Initial Coverage $INDB
Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR
Signature Bank Valuation – Initial Coverage $SBNY
Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG

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.

Simmons First National Corporation Valuation – Initial Coverage $SFNC

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 Simmons First National Corporation (SFNC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Simmons First National Corporation is a financial holding company. The Company’s subsidiary bank is Simmons First National Bank (Simmons Bank), a national bank. Simmons Bank and its subsidiaries provide banking services to individuals and businesses across the market areas they serve. Simmons Bank offers consumer, real estate and commercial loans, checking, savings and time deposits. It also offers a range of products and services, including credit cards, trust services, investments, agricultural finance lending, equipment lending, insurance, consumer finance and small business administration (SBA) lending. The Company conducts its banking operations through approximately 150 branches or financial centers, located in communities throughout Arkansas, Missouri, and Kansas. Its loan portfolios were loans to businesses (commercial loans, commercial real estate loans and agricultural loans) and individuals (consumer loans, credit card loans and single-family residential real estate loans).

SFNC Chart

SFNC 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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of SFNC – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,982,739,635 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 38.78% Pass
5. Moderate PEmg Ratio PEmg < 20 26.01 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.69 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.42
MG Growth Estimate 6.00%
MG Value $49.56
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $35.07
MG Value based on 0% Growth $20.56
Market Implied Growth Rate 8.75%
Current Price $62.90
% of Intrinsic Value 126.92%

Simmons First National Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.73 in 2012 to an estimated $2.42 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.75% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Simmons First National Corporation revealed the company was trading above its Graham Number of $49.68. The company pays a dividend of $0.95 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 26.01, which was above the industry average of 21.43.

Simmons First National Corporation receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $49.68
PEmg 26.01
PB Ratio 1.69
Dividend Yield 1.51%
TTM Dividend $0.95
Number of Consecutive Years of Dividend Growth 5

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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
Long-Term Debt & Capital Lease Obligation $275,566,000
Total Assets $8,226,992,000
Intangible Assets $403,037,000
Total Liabilities $7,079,851,000
Shares Outstanding (Diluted Average) 30,828,000

Earnings Per Share History

Next Fiscal Year Estimate $2.99
Dec2015 $2.63
Dec2014 $2.11
Dec2013 $1.42
Dec2012 $1.64
Dec2011 $1.47
Dec2010 $2.15
Dec2009 $1.74
Dec2008 $1.91
Dec2007 $1.92
Dec2006 $1.90
Dec2005 $1.84
Dec2004 $1.65
Dec2003 $1.65
Dec2002 $1.54
Dec2001 $1.16
Dec2000 $1.29
Dec1999 $1.17
Dec1998 $1.12
Dec1997 $1.03
Dec1996 $0.89

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.42
Dec2015 $2.04
Dec2014 $1.75
Dec2013 $1.61
Dec2012 $1.73
Dec2011 $1.79
Dec2010 $1.95
Dec2009 $1.85
Dec2008 $1.88
Dec2007 $1.84
Dec2006 $1.78
Dec2005 $1.67
Dec2004 $1.54
Dec2003 $1.44
Dec2002 $1.31
Dec2001 $1.18
Dec2000 $1.16

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

Ingredion Inc Valuation – Initial Coverage $INGR
City Holding Company Valuation – Initial Coverage $CHCO
Southside Bancshares Inc Valuation – Initial Coverage $SBSI
Independent Bank Corp Valuation – Initial Coverage $INDB
Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR
Signature Bank Valuation – Initial Coverage $SBNY
Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI

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.

ServisFirst Bancshares Inc Valuation – Initial Coverage $SFBS

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 ServisFirst Bancshares Inc (SFBS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): ServisFirst Bancshares, Inc. is a bank holding company. The Company, through its subsidiary, ServisFirst Bank (the Bank), operates approximately 18 banking offices. Through its bank, the Company originates commercial, consumer and other loans and accepts deposits, provides electronic banking services, such as online and mobile banking, including remote deposit capture, delivers treasury and cash management services, and provides correspondent banking services to other financial institutions. The Company also offers a range of products and services, including around the clock telephone banking, direct deposit, Internet banking, mobile banking, traveler’s checks, safe deposit boxes, attorney trust accounts and automatic account transfers. The Company also participates in a shared network of automated teller machines (ATMs) and a debit card system that its customers are able to use throughout Alabama and in other states. Additionally, the Company offers Visa credit cards.

SFBS Chart

SFBS 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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of SFBS – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,943,280,971 Fail
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 12216566.67% Pass
5. Moderate PEmg Ratio PEmg < 20 31.60 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.97 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.18
MG Growth Estimate 15.00%
MG Value $45.61
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $17.18
MG Value based on 0% Growth $10.07
Market Implied Growth Rate 11.55%
Current Price $37.44
% of Intrinsic Value 82.09%

ServisFirst Bancshares, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.43 in 2012 to an estimated $1.18 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 11.55% 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 ServisFirst Bancshares, Inc. revealed the company was trading above its Graham Number of $17.59. The company pays a dividend of $0.15 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 31.6, which was above the industry average of 21.43.

ServisFirst Bancshares, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $17.59
PEmg 31.60
PB Ratio 3.97
Dividend Yield 0.40%
TTM Dividend $0.15
Number of Consecutive Years of Dividend Growth 3

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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
Long-Term Debt & Capital Lease Obligation $55,356,000
Total Assets $6,002,621,000
Intangible Assets $15,073,000
Total Liabilities $5,495,132,000
Shares Outstanding (Diluted Average) 53,879,000

Earnings Per Share History

Next Fiscal Year Estimate $1.43
Dec2015 $1.20
Dec2014 $1.05
Dec2013 $0.95
Dec2012 $0.83
Dec2011 $0.59

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.18
Dec2015 $1.02
Dec2014 $0.85
Dec2013 $0.66
Dec2012 $0.43
Dec2011 $0.20

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

Ingredion Inc Valuation – Initial Coverage $INGR
City Holding Company Valuation – Initial Coverage $CHCO
Southside Bancshares Inc Valuation – Initial Coverage $SBSI
Independent Bank Corp Valuation – Initial Coverage $INDB
Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR
Signature Bank Valuation – Initial Coverage $SBNY
Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI

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.

City Holding Company Valuation – Initial Coverage $CHCO

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 City Holding Company (CHCO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): City Holding Company is a financial holding company. The Company conducts its principal activities through its subsidiary, City National Bank of West Virginia (City National). City National provides banking, trust and investment management and other financial solutions through its network of approximately 85 banking offices located in the states of West Virginia, Virginia, eastern Kentucky and southeastern Ohio. It offers various products and services, including commercial banking, consumer banking, mortgage banking, and wealth management and trust services. It offers a range of commercial banking services to corporations and other business customers. Loans are provided for a variety of business purposes, including financing for commercial and industrial projects, income producing commercial real estate, owner-occupied real estate and construction and land development. City National provides merchant credit card services through an agreement with a third party vendor.

CHCO Chart

CHCO 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 CHCO – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $979,686,851 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 38.09% Pass
5. Moderate PEmg Ratio PEmg < 20 20.19 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.29 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.31
MG Growth Estimate 4.50%
MG Value $57.95
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $48.04
MG Value based on 0% Growth $28.16
Market Implied Growth Rate 5.84%
Current Price $66.89
% of Intrinsic Value 115.42%

City Holding Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.55 in 2012 to an estimated $3.31 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.84% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into City Holding Company revealed the company was trading above its Graham Number of $46.73. The company pays a dividend of $1.7 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.19, which was above the industry average of 13.43.

City Holding Company receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $46.73
PEmg 20.19
PB Ratio 2.29
Dividend Yield 2.54%
TTM Dividend $1.70
Number of Consecutive Years of Dividend Growth 5

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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
Long-Term Debt & Capital Lease Obligation $16,495,000
Total Assets $3,866,361,000
Intangible Assets $79,284,000
Total Liabilities $3,431,577,000
Shares Outstanding (Diluted Average) 14,910,000

Earnings Per Share History

Next Fiscal Year Estimate $3.35
Dec2015 $3.53
Dec2014 $3.38
Dec2013 $3.04
Dec2012 $2.61
Dec2011 $2.67
Dec2010 $2.47
Dec2009 $2.68
Dec2008 $1.74
Dec2007 $3.01
Dec2006 $2.99
Dec2005 $2.84
Dec2004 $2.75
Dec2003 $2.58
Dec2002 $1.90
Dec2001 -$1.54
Dec2000 -$2.27
Dec1999 $0.37
Dec1998 $0.31
Dec1997 $1.60
Dec1996 $1.34

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.31
Dec2015 $3.21
Dec2014 $2.98
Dec2013 $2.75
Dec2012 $2.55
Dec2011 $2.52
Dec2010 $2.49
Dec2009 $2.55
Dec2008 $2.54
Dec2007 $2.91
Dec2006 $2.77
Dec2005 $2.35
Dec2004 $1.63
Dec2003 $0.78
Dec2002 -$0.16
Dec2001 -$0.90
Dec2000 -$0.29

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

Southside Bancshares Inc Valuation – Initial Coverage $SBSI
Independent Bank Corp Valuation – Initial Coverage $INDB
Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR
Signature Bank Valuation – Initial Coverage $SBNY
Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI
Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB

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.

Southside Bancshares Inc Valuation – Initial Coverage $SBSI

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 Southside Bancshares Inc (SBSI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Southside Bancshares, Inc. (Southside) is a bank holding company for Southside Bank (the Bank). The Company is a community-focused financial institution that offers a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations in the communities. The Company operates through approximately 60 banking centers, over 20 of which are located in grocery stores, and 25 motor bank facilities. Its services include consumer and commercial loans, deposit accounts, trust services, safe deposit services and brokerage services. The Company’s consumer loan services include one- to four-family residential mortgage loans, home equity loans, home improvement loans, automobile loans and other installment loans. The Company’s Commercial real estate loans primarily include loans collateralized by commercial office buildings, retail, medical facilities and offices, warehouse facilities, hotels and churches.

SBSI Chart

SBSI 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 SBSI – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,102,748,012 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 5.61% Fail
5. Moderate PEmg Ratio PEmg < 20 22.96 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.15 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $1.68
MG Growth Estimate -0.99%
MG Value $10.93
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $24.32
MG Value based on 0% Growth $14.26
Market Implied Growth Rate 7.23%
Current Price $38.51
% of Intrinsic Value 352.25%

Southside Bancshares, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding 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 $1.8 in 2012 to an estimated $1.68 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.23% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Southside Bancshares, Inc. revealed the company was trading above its Graham Number of $27.9. The company pays a dividend of $0.24 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 22.96, which was above the industry average of 13.43.

Southside Bancshares, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Graham Number $27.90
PEmg 22.96
PB Ratio 2.15
Dividend Yield 0.62%
TTM Dividend $0.24
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 9/1/2016
Long-Term Debt & Capital Lease Obligation $621,640,000
Total Assets $5,464,903,000
Intangible Assets $96,580,000
Total Liabilities $4,992,343,000
Shares Outstanding (Diluted Average) 26,415,000

Earnings Per Share History

Next Fiscal Year Estimate $1.92
Dec2015 $1.65
Dec2014 $1.04
Dec2013 $2.09
Dec2012 $1.65
Dec2011 $1.87
Dec2010 $1.85
Dec2009 $2.10
Dec2008 $1.46
Dec2007 $0.80
Dec2006 $0.72
Dec2005 $0.71
Dec2004 $0.77
Dec2003 $0.68
Dec2002 $0.68
Dec2001 $0.61
Dec2000 $0.57
Dec1999 $0.46
Dec1998 $0.29
Dec1997 $0.27
Dec1996 $0.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.68
Dec2015 $1.59
Dec2014 $1.61
Dec2013 $1.90
Dec2012 $1.80
Dec2011 $1.78
Dec2010 $1.63
Dec2009 $1.39
Dec2008 $0.99
Dec2007 $0.75
Dec2006 $0.72
Dec2005 $0.71
Dec2004 $0.69
Dec2003 $0.63
Dec2002 $0.58
Dec2001 $0.50
Dec2000 $0.42

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

Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI
Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB
Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D

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.

Independent Bank Corp Valuation – Initial Coverage $INDB

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 Independent Bank Corp (INDB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Independent Bank Corp. is a bank holding company. The Company is the sole stockholder of Rockland Trust Company (Rockland or the Bank). The Bank is a community-oriented commercial bank. The Company operates in community banking business segment. The Company’s community banking business provides a range of banking services, including lending activities, acceptance of demand, savings, and time deposits, and investment management. The Bank operates approximately 80 banking offices and over three limited service branches located within Barnstable, Bristol, Middlesex, Norfolk, Plymouth, Suffolk and Worcester counties in Eastern Massachusetts. The Bank classifies loans as commercial, consumer real estate, or other consumer. Commercial loans consist of commercial and industrial loans, commercial real estate, commercial construction, and small business loans. Asset-based loans consist primarily of revolving lines of credit but also include term loans.

INDB Chart

INDB 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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of INDB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,897,454,728 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 81.59% Pass
5. Moderate PEmg Ratio PEmg < 20 27.19 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $2.59
MG Growth Estimate 6.38%
MG Value $54.95
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $37.49
MG Value based on 0% Growth $21.98
Market Implied Growth Rate 9.35%
Current Price $70.30
% of Intrinsic Value 127.92%

Independent Bank Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.81 in 2012 to an estimated $2.59 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.35% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Independent Bank Corp revealed the company was trading above its Graham Number of $45.81. The company pays a dividend of $0.29 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 27.19, which was above the industry average of 13.43.

Independent Bank Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $45.81
PEmg 27.19
PB Ratio 2.27
Dividend Yield 0.41%
TTM Dividend $0.29
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

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $158,607,000
Total Assets $7,502,009,000
Intangible Assets $210,834,000
Total Liabilities $6,683,767,000
Shares Outstanding (Diluted Average) 26,377,000

Earnings Per Share History

Next Fiscal Year Estimate $3.00
Dec2015 $2.50
Dec2014 $2.49
Dec2013 $2.18
Dec2012 $1.95
Dec2011 $2.12
Dec2010 $1.90
Dec2009 $0.88
Dec2008 $1.52
Dec2007 $2.00
Dec2006 $2.17
Dec2005 $2.14
Dec2004 $2.06
Dec2003 $1.79
Dec2002 $1.61
Dec2001 $1.53
Dec2000 $1.06
Dec1999 $1.19
Dec1998 $1.08
Dec1997 $0.95
Dec1996 $0.79

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.59
Dec2015 $2.33
Dec2014 $2.21
Dec2013 $1.98
Dec2012 $1.81
Dec2011 $1.73
Dec2010 $1.58
Dec2009 $1.53
Dec2008 $1.90
Dec2007 $2.07
Dec2006 $2.05
Dec2005 $1.94
Dec2004 $1.76
Dec2003 $1.55
Dec2002 $1.39
Dec2001 $1.24
Dec2000 $1.07

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

Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI
Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB
Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D

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.

Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

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 – August 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 Cullen/Frost Bankers Inc (CFR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cullen/Frost Bankers, Inc. is a financial holding and bank holding company. The Company, through its subsidiaries, offers commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. It serves various industries, such as energy, manufacturing, services, construction and retail. It operates through two segments, which include Banking and Frost Wealth Advisors. Its Banking segment includes both commercial and consumer banking services, Frost Insurance Agency and Frost Securities. Its Banking segment offers commercial banking services, such as lending and cash management products to corporations and other business clients. Its Frost Wealth Advisors segment includes fee-based services within private trust, retirement services and financial management services, including personal wealth management and securities brokerage services.

CFR Chart

CFR 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 CFR – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,560,311,623 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 30.15% Fail
5. Moderate PEmg Ratio PEmg < 20 20.26 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.73 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $4.27
MG Growth Estimate 3.02%
MG Value $62.02
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $61.87
MG Value based on 0% Growth $36.27
Market Implied Growth Rate 5.88%
Current Price $86.46
% of Intrinsic Value 139.41%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.55 in 2012 to an estimated $4.27 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.88% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $69.78. The company pays a dividend of $2.14 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.26, which was above the industry average of 13.43.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $69.78
PEmg 20.26
PB Ratio 1.73
Dividend Yield 2.48%
TTM Dividend $2.14
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
Long-Term Debt & Capital Lease Obligation $236,072,000
Total Assets $29,602,912,000
Intangible Assets $661,599,000
Total Liabilities $26,441,116,000
Shares Outstanding (Diluted Average) 63,141,000

Earnings Per Share History

Next Fiscal Year Estimate $4.51
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38
Dec1997 $1.34
Dec1996 $1.16

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.27
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92
Dec2001 $1.69
Dec2000 $1.68

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

Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI
Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB
Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D

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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