CoreLogic Inc Valuation – July 2018 $CLGX

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLGX – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,380,104,929 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 502.33% Pass
6. Moderate PEmg Ratio PEmg < 20 28.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.94 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.69 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.43 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

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

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.65 in 2014 to an estimated $1.69 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 10.24% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Corelogic Inc revealed the company was trading above its Graham Number of $24.89. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 28.99, which was below the industry average of 33.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-33.02.

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

Stage 3: Information for Further Research

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

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

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

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

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Corelogic Inc Valuation – Initial Coverage $CLGX

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Corelogic Inc Valuation – Initial Coverage $CLGX

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 Corelogic Inc (CLGX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): CoreLogic, Inc. is a provider of property information, analytics and data-enabled services. The Company provides detailed coverage of property, mortgages and other encumbrances, property risk and replacement cost, consumer credit, tenancy, location, hazard risk and related performance information. It operates through two segments: Property Intelligence and Risk Management and Work Flow. Its Property Intelligence segment and Risk Management and Work Flow segment owns or licenses real property, mortgage and consumer information, which includes loan information, property sales and characteristic information, natural hazard data, geospatial data, parcel maps and mortgage-backed securities information. Its valuation solutions provide a range of real estate valuation service. Its credit and screening solutions has access to consumer and business databases, which enables them to provide credit and income verification services to the mortgage, automotive and multifamily housing industries.

CLGX Chart

CLGX 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 CLGX – 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 $3,169,669,083 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.68 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 111.43% Pass
6. Moderate PEmg Ratio PEmg < 20 29.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.03 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 0.68 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -7.26 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.25
MG Growth Estimate 15.00%
MG Value $48.28
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $18.18
MG Value based on 0% Growth $10.66
Market Implied Growth Rate 10.40%
Current Price $36.73
% of Intrinsic Value 76.08%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.33 in 2012 to an estimated $1.25 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 10.4% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Corelogic Inc revealed the company was trading above its Graham Number of $20.55. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 29.29, which was above the industry average of 21.33. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.87.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.87
Graham Number $20.55
PEmg 29.29
Current Ratio 0.68
PB Ratio 3.03
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $445,607,000
Total Current Liabilities $655,881,000
Long-Term Debt $1,527,224,000
Total Assets $4,011,575,000
Intangible Assets $2,604,702,000
Total Liabilities $2,930,956,000
Shares Outstanding (Diluted Average) 89,188,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.50
Dec2015 $1.41
Dec2014 $0.79
Dec2013 $1.11
Dec2012 $1.08
Dec2011 -$0.68
Dec2010 -$0.50
Dec2009 $2.06
Dec2008 -$0.28
Dec2007 -$0.03
Dec2006 $2.92
Dec2005 $4.92
Dec2004 $3.80
Dec2003 $5.22
Dec2002 $2.92
Dec2001 $2.27
Dec2000 $1.24
Dec1999 $0.50
Dec1998 $3.21
Dec1997 $1.16
Dec1996 $1.00

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.25
Dec2015 $1.00
Dec2014 $0.65
Dec2013 $0.59
Dec2012 $0.33
Dec2011 $0.01
Dec2010 $0.52
Dec2009 $1.32
Dec2008 $1.39
Dec2007 $2.61
Dec2006 $3.94
Dec2005 $4.24
Dec2004 $3.63
Dec2003 $3.17
Dec2002 $2.11
Dec2001 $1.69
Dec2000 $1.41

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Paychex Inc Valuation – January 2019 $PAYX

Company Profile (excerpt from Reuters): Paychex, Inc., incorporated on April 26, 1979, is a provider of integrated human capital management (HCM) solutions for payroll, human resource (HR), retirement and insurance services for small- to medium-sized businesses in the United States. The Company also has operations in Germany. The Company offers services, including Payroll processing, Human Resource Services and Accounting and Financial Services. As of May 31, 2016, the Company serviced approximately 605,000 payroll clients. It offers a portfolio of HCM services and products that allows its clients to meet their payroll and HR needs. Its payroll-related ancillary services and human resource service (HRS) offerings often leverage the information gathered in the base payroll processing service, allowing it to provide outsourcing services covering the HCM spectrum. It also offers professional employer organization (PEO) services and provides insurance offerings through the Paychex Insurance Agency, Inc. (PIA).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PAYX – 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 $23,793,370,427 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.23 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 79.53% Pass
6. Moderate PEmg Ratio PEmg < 20 26.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.86 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 1.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $2.47
MG Growth Estimate 7.07%
MG Value $56.02
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $35.86
MG Value based on 0% Growth $21.02
Market Implied Growth Rate 9.12%
Current Price $66.16
% of Intrinsic Value 118.10%

Paychex, 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 is only concerned with the low current ratio. 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 $1.68 in 2015 to an estimated $2.47 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.12% 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 Paychex, Inc. revealed the company was trading above its Graham Number of $18.85. The company pays a dividend of $2.06 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.75, which was above the industry average of 26.19. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.97.

Paychex, 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) $1.97
Graham Number $18.85
PEmg 26.75
Current Ratio 1.23
PB Ratio 9.86
Current Dividend $2.06
Dividend Yield 3.11%
Number of Consecutive Years of Dividend Growth 5

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 11/1/2018
Total Current Assets $5,290,000,000
Total Current Liabilities $4,306,800,000
Long-Term Debt $0
Total Assets $7,002,400,000
Intangible Assets $938,600,000
Total Liabilities $4,577,900,000
Shares Outstanding (Diluted Average) 361,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.80
May2018 $2.58
May2017 $2.25
May2016 $2.09
May2015 $1.85
May2014 $1.71
May2013 $1.56
May2012 $1.51
May2011 $1.42
May2010 $1.32
May2009 $1.48
May2008 $1.56
May2007 $1.35
May2006 $1.22
May2005 $0.97
May2004 $0.80
May2003 $0.78
May2002 $0.73
May2001 $0.68
May2000 $0.51
May1999 $0.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.47
May2018 $2.24
May2017 $2.01
May2016 $1.84
May2015 $1.68
May2014 $1.57
May2013 $1.48
May2012 $1.45
May2011 $1.42
May2010 $1.41
May2009 $1.41
May2008 $1.31
May2007 $1.13
May2006 $0.98
May2005 $0.84
May2004 $0.75
May2003 $0.68

Recommended Reading:

Other ModernGraham posts about the company

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Paychex Inc Valuation – June 2016 $PAYX
Paychex Inc. Valuation – November 2015 Update $PAYX
Paychex Inc. Analysis – August 2015 Update $PAYX
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CoreLogic Inc Valuation – July 2018 $CLGX

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.

Fleetcor Technologies Inc Valuation – January 2019 $FLT

Company Profile (excerpt from Reuters): FleetCor Technologies, Inc., incorporated on February 3, 1998, is a provider of workforce payment products. The Company offers fuel card payments product solutions, corporate payments products, toll products, lodging cards and gift cards. The Company operates through two segments: North America and International. The Company’s products are sold to businesses, retailers, oil companies and marketers, and government entities. The Company’s payment programs enable its customers to manage and control their commercial payments, card programs and employee spending. The Company also provides a suite of fleet related and workforce payment products, including mobile telematics services, fleet maintenance management and employee benefit and transportation related payments. As of December 31, 2016, its products were used in 53 countries around the world, with its primary geographies in the United States, Brazil and the United Kingdom.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLT – 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 $15,931,247,424 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.24 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 -43.58% Fail
6. Moderate PEmg Ratio PEmg < 20 105.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 14.96 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 2.24 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.12 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 $1.76
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $25.46
MG Value based on 0% Growth $14.93
Market Implied Growth Rate 48.63%
Current Price $185.72
% of Intrinsic Value N/A

FleetCor Technologies, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the 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 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 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 $3.21 in 2014 to an estimated $1.76 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 48.63% 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 below the price.

At the time of valuation, further research into FleetCor Technologies, Inc. revealed the company was trading above its Graham Number of $29.9. The company pays a dividend of $0.76 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 105.76, which was above the industry average of 25.74. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.95.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.95
Graham Number $29.90
PEmg 105.76
Current Ratio 2.24
PB Ratio 14.96
Current Dividend $0.76
Dividend Yield 0.41%
Number of Consecutive Years of Dividend Growth 11

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,324,667,000
Total Current Liabilities $1,040,080,000
Long-Term Debt $1,436,746,000
Total Assets $4,605,064,000
Intangible Assets $1,399,632,000
Total Liabilities $2,974,337,000
Shares Outstanding (Diluted Average) 131,350,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.13
Dec2017 $0.02
Dec2016 $1.01
Dec2015 $1.93
Dec2014 $3.72
Dec2013 $3.41
Dec2012 $2.84
Dec2011 $2.55
Dec2010 $2.29
Dec2009 $2.53
Dec2008 $2.58
Dec2007 $1.49
Dec2006 $0.67
Dec2005 $0.10
Dec2004 $0.16
Dec2003 $0.27
Dec2002 $0.16
Dec2001 -$0.14
Dec2000 $0.12
Dec1999 $0.11
Dec1998 $0.41

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.76
Dec2017 $1.39
Dec2016 $2.24
Dec2015 $2.87
Dec2014 $3.21
Dec2013 $2.88
Dec2012 $2.59
Dec2011 $2.41
Dec2010 $2.20
Dec2009 $1.93
Dec2008 $1.42
Dec2007 $0.73
Dec2006 $0.33
Dec2005 $0.14
Dec2004 $0.15
Dec2003 $0.13
Dec2002 $0.08

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

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Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI

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.

TrueBlue Inc Valuation – October 2018 $TBI

Company Profile (excerpt from Reuters): TrueBlue, Inc., incorporated on March 18, 1985, is a provider of specialized workforce solutions. The Company is engaged in providing staffing, on-site workforce management and recruitment process outsourcing services. The Company operates through three segments: PeopleReady, PeopleManagement and PeopleScout. Its PeopleReady segment provides blue-collar contingent staffing through the PeopleReady service line. Its PeopleManagement segment provides primarily on-premise contingent staffing and on-premise management of those contingent staffing services through four segments: Staff Management a SMX (Staff Management), SIMOS Insourcing Solutions Corporation (SIMOS), Centerline and PlaneTechs. Its PeopleScout segment provides permanent employee recruitment process outsourcing (RPO) and management of outsourced labor service providers through two segments: PeopleScout and PeopleScout MSP. Through its subsidiary, TMP Holdings LTD, the Company provides employer branding and recruitment marketing solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TBI – October 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 $1,029,902,476 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.98 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 112.23% Pass
6. Moderate PEmg Ratio PEmg < 20 19.85 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.82 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 1.98 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.55 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.28
MG Growth Estimate 2.08%
MG Value $16.16
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.52
MG Value based on 0% Growth $10.86
Market Implied Growth Rate 5.67%
Current Price $25.35
% of Intrinsic Value 156.84%

Trueblue 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, low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.12 in 2014 to an estimated $1.28 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.67% 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 Trueblue Inc revealed the company was trading above its Graham Number of $24.52. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 19.85, which was below the industry average of 27.67, 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 $-3.16.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.16
Graham Number $24.52
PEmg 19.85
Current Ratio 1.98
PB Ratio 1.82
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $432,966,000
Total Current Liabilities $219,129,000
Long-Term Debt $117,199,000
Total Assets $1,124,220,000
Intangible Assets $341,455,000
Total Liabilities $560,919,000
Shares Outstanding (Diluted Average) 40,469,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.98
Dec2017 $1.34
Dec2016 -$0.37
Dec2015 $1.71
Dec2014 $1.59
Dec2013 $1.11
Dec2012 $0.84
Dec2011 $0.73
Dec2010 $0.46
Dec2009 $0.20
Dec2008 -$0.10
Dec2007 $1.44
Dec2006 $1.45
Dec2005 $1.18
Dec2004 $0.75
Dec2003 $0.41
Dec2002 $0.28
Dec2001 $0.23
Dec2000 $0.24
Dec1999 $0.53
Dec1998 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.28
Dec2017 $0.98
Dec2016 $0.85
Dec2015 $1.38
Dec2014 $1.12
Dec2013 $0.81
Dec2012 $0.59
Dec2011 $0.49
Dec2010 $0.48
Dec2009 $0.60
Dec2008 $0.85
Dec2007 $1.23
Dec2006 $1.02
Dec2005 $0.73
Dec2004 $0.46
Dec2003 $0.32
Dec2002 $0.30

Recommended Reading:

Other ModernGraham posts about the company

Trueblue Inc Valuation – Initial Coverage $TBI

Other ModernGraham posts about related companies

Convergys Corp Valuation – September 2018 $CVG
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Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI

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.

Convergys Corp Valuation – September 2018 $CVG

Company Profile (excerpt from Reuters): Convergys Corporation, incorporated on July 2, 1996, is engaged in customer experience outsourcing. The Company’s geographical segments include North America and Rest of World. The Company offers services across industries, including communications and media, technology, financial services, retail, government and healthcare. The Company helps businesses to create customer experiences across multiple interaction channels, such as voice, chat, e-mail and interactive voice response.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CVG – September 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,237,035,640 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.49 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 138.55% Pass
6. Moderate PEmg Ratio PEmg < 20 18.30 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.78 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 2.49 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.41 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 $1.34
MG Growth Estimate 4.51%
MG Value $23.50
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $19.46
MG Value based on 0% Growth $11.41
Market Implied Growth Rate 4.90%
Current Price $24.56
% of Intrinsic Value 104.51%

Convergys 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, and the poor dividend history. 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 $1.03 in 2014 to an estimated $1.34 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.9% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Convergys Corp revealed the company was trading above its Graham Number of $21.27. The company pays a dividend of $0.39 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 18.3, which was below the industry average of 28.37, 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.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$1.27
Graham Number $21.27
PEmg 18.30
Current Ratio 2.49
PB Ratio 1.78
Current Dividend $0.39
Dividend Yield 1.59%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $730,400,000
Total Current Liabilities $293,100,000
Long-Term Debt $177,900,000
Total Assets $2,204,700,000
Intangible Assets $1,206,500,000
Total Liabilities $854,400,000
Shares Outstanding (Diluted Average) 97,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.34
Dec2017 $1.22
Dec2016 $1.40
Dec2015 $1.61
Dec2014 $1.13
Dec2013 $0.56
Dec2012 $0.86
Dec2011 $2.72
Dec2010 -$0.43
Dec2009 -$0.63
Dec2008 -$0.75
Dec2007 $1.23
Dec2006 $1.17
Dec2005 $0.86
Dec2004 $0.77
Dec2003 $1.15
Dec2002 $0.88
Dec2001 $0.80
Dec2000 $1.09
Dec1999 $0.81
Dec1998 $0.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.34
Dec2017 $1.29
Dec2016 $1.25
Dec2015 $1.25
Dec2014 $1.03
Dec2013 $0.86
Dec2012 $0.79
Dec2011 $0.65
Dec2010 -$0.22
Dec2009 $0.05
Dec2008 $0.48
Dec2007 $1.07
Dec2006 $0.99
Dec2005 $0.89
Dec2004 $0.92
Dec2003 $0.98
Dec2002 $0.87

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks for Value Investors This Week – 3/26/17
Convergys Corp Valuation – Initial Coverage $CVG

Other ModernGraham posts about related companies

Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN

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.

Strategic Education Inc Valuation – August 2018 $STRA

Company Profile (excerpt from Reuters): Strategic Education, Inc., formerly Strayer Education, Inc., incorporated on May 10, 1996, is an education services holding company. The Company provides post-secondary education and other academic programs, through its subsidiaries, Strayer University (the University), New York Code and Design Academy (NYCDA) and Capella Education Company (Capella). As of December 31, 2016, the University offered undergraduate and graduate degree programs in business administration, accounting, information technology, education, health services administration, nursing, public administration and criminal justice at 74 physical campuses located in the Mid-Atlantic and Southern regions of the United States, and online. The University also offers an executive Master of Business Administration (MBA) online through its Jack Welch Management Institute. Its subsidiary, NYCDA, provides non-degree courses in Web and application software development, primarily at its campus in New York City.

Downloadable PDF version of this valuation:

ModernGraham Valuation of STRA – August 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 $1,564,597,123 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.09 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -68.41% Fail
6. Moderate PEmg Ratio PEmg < 20 46.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.04 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 3.09 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.99
MG Growth Estimate -4.25%
MG Value $8.90
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $43.40
MG Value based on 0% Growth $25.44
Market Implied Growth Rate 18.86%
Current Price $138.38
% of Intrinsic Value 1555.37%

Strategic Education 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 growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. 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 seeing its EPSmg (normalized earnings) decline from $4.85 in 2014 to an estimated $2.99 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.86% 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 Strategic Education Inc revealed the company was trading above its Graham Number of $36.84. The company pays a dividend of $1 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 46.23, which was above the industry average of 33.97. Finally, the company was trading above its Net Current Asset Value (NCAV) of $8.9.

Strategic Education 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) $8.90
Graham Number $36.84
PEmg 46.23
Current Ratio 3.09
PB Ratio 7.04
Current Dividend $1.00
Dividend Yield 0.72%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $214,172,000
Total Current Liabilities $69,204,000
Long-Term Debt $0
Total Assets $336,765,000
Intangible Assets $17,919,000
Total Liabilities $112,925,000
Shares Outstanding (Diluted Average) 11,380,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.22
Dec2017 $1.84
Dec2016 $3.21
Dec2015 $3.73
Dec2014 $4.35
Dec2013 $1.55
Dec2012 $5.76
Dec2011 $8.88
Dec2010 $9.70
Dec2009 $7.60
Dec2008 $5.67
Dec2007 $4.47
Dec2006 $3.61
Dec2005 $3.26
Dec2004 $2.74
Dec2003 $2.27
Dec2002 $1.78
Dec2001 $1.55
Dec2000 $1.41
Dec1999 $1.23
Dec1998 $1.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.99
Dec2017 $2.90
Dec2016 $3.53
Dec2015 $4.07
Dec2014 $4.85
Dec2013 $5.63
Dec2012 $7.62
Dec2011 $8.12
Dec2010 $7.23
Dec2009 $5.64
Dec2008 $4.42
Dec2007 $3.62
Dec2006 $3.04
Dec2005 $2.61
Dec2004 $2.18
Dec2003 $1.81
Dec2002 $1.53

Recommended Reading:

Other ModernGraham posts about the company

Strayer Education Inc Valuation – Initial Coverage $STRA

Other ModernGraham posts about related companies

Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN
Verisk Analytics Inc Valuation – June 2018 $VRSK
Robert Half International Inc Valuation – June 2018 $RHI

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.

Multi-Color Corp Valuation – August 2018 $LABL

Company Profile (excerpt from Reuters): Multi-Color Corporation (Multi-Color), incorporated on April 15, 1985, is engaged in label solutions business, supporting brands, including producers of home and personal care, wine and spirit, food and beverage, healthcare and specialty consumer products. The Company serves international brand owners in North, Central and South America, Europe, Australia, New Zealand, South Africa and China and Southeast Asia with a range of label technologies in Pressure Sensitive, Glue-Applied (Cut and Stack), In-Mold, Shrink Sleeve and Heat Transfer. The Company also provides a range of print methods, including flexographic, lithographic, rotogravure, letterpress and digital, and in-house prepress services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LABL – August 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 $1,252,349,622 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.97 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 202.06% Pass
6. Moderate PEmg Ratio PEmg < 20 16.39 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.76 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 1.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.41 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 $3.73
MG Growth Estimate 12.99%
MG Value $128.53
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $54.06
MG Value based on 0% Growth $31.69
Market Implied Growth Rate 3.94%
Current Price $61.10
% of Intrinsic Value 47.54%

Multi-Color Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current 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 $2 in 2015 to an estimated $3.73 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.94% 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 above the price.

At the time of valuation, further research into Multi-Color Corporation revealed the company was trading above its Graham Number of $59.67. The company pays a dividend of $0.2 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was 16.39, which was below the industry average of 33.97, 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 $-73.5.

Multi-Color Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$73.50
Graham Number $59.67
PEmg 16.39
Current Ratio 1.97
PB Ratio 1.76
Current Dividend $0.20
Dividend Yield 0.33%
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 6/1/2018
Total Current Assets $594,478,000
Total Current Liabilities $301,932,000
Long-Term Debt $1,581,974,000
Total Assets $2,819,043,000
Intangible Assets $1,705,262,000
Total Liabilities $2,104,478,000
Shares Outstanding (Diluted Average) 20,545,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.27
Mar2018 $3.87
Mar2017 $3.58
Mar2016 $2.82
Mar2015 $2.71
Mar2014 $1.70
Mar2013 $1.86
Mar2012 $1.32
Mar2011 $1.40
Mar2010 $1.16
Mar2009 $0.92
Mar2008 $2.18
Mar2007 $1.08
Mar2006 $0.95
Mar2005 $0.80
Mar2004 $0.66
Mar2003 $0.66
Mar2002 $0.51
Mar2001 $0.40
Mar2000 $0.60
Mar1999 $0.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.73
Mar2018 $3.28
Mar2017 $2.84
Mar2016 $2.34
Mar2015 $2.00
Mar2014 $1.59
Mar2013 $1.47
Mar2012 $1.31
Mar2011 $1.32
Mar2010 $1.28
Mar2009 $1.28
Mar2008 $1.36
Mar2007 $0.91
Mar2006 $0.78
Mar2005 $0.67
Mar2004 $0.59
Mar2003 $0.53

Recommended Reading:

Other ModernGraham posts about the company

11 Best Stocks for Value Investors This Week – 3/4/17
Multi-Color Corporation Valuation – Initial Coverage $LABL

Other ModernGraham posts about related companies

Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN
Verisk Analytics Inc Valuation – June 2018 $VRSK
Robert Half International Inc Valuation – June 2018 $RHI

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.

Korn/Ferry International Valuation – August 2018 $KFY

Company Profile (excerpt from Reuters): Korn/Ferry International (Korn Ferry), incorporated on October 13, 1999, is a people and organizational advisory company. The Company and its subsidiaries are engaged in the business of providing talent management solutions, including executive search on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing, and leadership and talent consulting services. Its segments include Executive Search, Hay Group and Futurestep. Its executive search business is managed on a geographic basis throughout various regions, such as North America, Europe, the Middle East and Africa (EMEA), Asia Pacific and Latin America. Hay Group and Futurestep are managed on a global basis with operations in North America, Europe, Asia Pacific and Latin America. The Company has a network of approximately 150 offices in over 50 countries across the world that enables it to meet the needs of its clients in all industries. Its clients include public and private companies, middle market and emerging growth companies, as well as government and nonprofit organizations.

KFY Chart

KFY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KFY – August 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 $3,767,418,511 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 175.20% Pass
6. Moderate PEmg Ratio PEmg < 20 30.94 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.10 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.46 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 $2.17
MG Growth Estimate 8.97%
MG Value $57.42
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $31.49
MG Value based on 0% Growth $18.46
Market Implied Growth Rate 11.22%
Current Price $67.20
% of Intrinsic Value 117.04%

Korn/Ferry International is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor 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 $1.36 in 2015 to an estimated $2.17 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.22% 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 Korn/Ferry International revealed the company was trading above its Graham Number of $39.18. The company pays a dividend of $0.4 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 30.94, which was below the industry average of 33.97, 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 $-0.96.

Korn/Ferry International receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.96
Graham Number $39.18
PEmg 30.94
Current Ratio 1.82
PB Ratio 3.10
Current Dividend $0.40
Dividend Yield 0.60%
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 4/1/2018
Total Current Assets $1,014,259,000
Total Current Liabilities $558,460,000
Long-Term Debt $211,311,000
Total Assets $2,287,914,000
Intangible Assets $787,438,000
Total Liabilities $1,068,299,000
Shares Outstanding (Diluted Average) 56,308,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.17
Apr2018 $2.35
Apr2017 $1.47
Apr2016 $0.58
Apr2015 $1.76
Apr2014 $1.48
Apr2013 $0.70
Apr2012 $1.15
Apr2011 $1.27
Apr2010 $0.12
Apr2009 -$0.23
Apr2008 $1.46
Apr2007 $1.24
Apr2006 $1.32
Apr2005 $0.90
Apr2004 $0.13
Apr2003 -$0.63
Apr2002 -$2.62
Apr2001 $0.81
Apr2000 $0.82
Apr1999 -$2.37

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.17
Apr2018 $1.62
Apr2017 $1.24
Apr2016 $1.13
Apr2015 $1.36
Apr2014 $1.09
Apr2013 $0.79
Apr2012 $0.81
Apr2011 $0.69
Apr2010 $0.52
Apr2009 $0.80
Apr2008 $1.21
Apr2007 $0.92
Apr2006 $0.45
Apr2005 -$0.09
Apr2004 -$0.49
Apr2003 -$0.80

Recommended Reading:

Other ModernGraham posts about the company

14 Best Stocks for Value Investors This Week – 2/11/17
Korn-Ferry International Valuation – Initial Coverage $KFY

Other ModernGraham posts about related companies

Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN
Verisk Analytics Inc Valuation – June 2018 $VRSK
Robert Half International Inc Valuation – June 2018 $RHI
Alliance Data Systems Corp Valuation – May 2018 $ADS

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.

Kelly Services Inc Valuation – August 2018 $KELYA

Company Profile (excerpt from Reuters): Kelly Services, Inc., incorporated on August 27, 1952, is a workforce solutions provider, which is engaged in offering a range of specialty services. The Company provides workforce solutions in three regions: the Americas; Europe, the Middle East and Africa (EMEA), and Asia Pacific (APAC). The Company’s segments are Americas Commercial, Americas Professional and Technical (Americas PT), EMEA Commercial, EMEA Professional and Technical (EMEA PT), and Outsourcing and Consulting Group (OCG). The Company places professional and technical employees at various levels in engineering, information technology (IT), law, healthcare and finance.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KELYA – August 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 $937,235,822 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.50 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -1283.33% Fail
6. Moderate PEmg Ratio PEmg < 20 11.83 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.80 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 1.50 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $2.06
MG Growth Estimate 11.87%
MG Value $66.46
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $29.89
MG Value based on 0% Growth $17.52
Market Implied Growth Rate 1.66%
Current Price $24.38
% of Intrinsic Value 36.68%

Kelly Services, Inc. Class A is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor is only concerned with the low current ratio. 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 $1.15 in 2014 to an estimated $2.06 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.66% 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 above the price.

At the time of valuation, further research into Kelly Services, Inc. Class A revealed the company was trading below its Graham Number of $38.61. The company pays a dividend of $0.3 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 11.83, which was below the industry average of 33.97, 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 $3.92.

Kelly Services, Inc. Class A performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $3.92
Graham Number $38.61
PEmg 11.83
Current Ratio 1.50
PB Ratio 0.80
Current Dividend $0.30
Dividend Yield 1.23%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $1,397,700,000
Total Current Liabilities $934,200,000
Long-Term Debt $0
Total Assets $2,436,600,000
Intangible Assets $107,300,000
Total Liabilities $1,245,300,000
Shares Outstanding (Diluted Average) 38,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.21
Dec2017 $1.81
Dec2016 $3.08
Dec2015 $1.39
Dec2014 $0.61
Dec2013 $1.54
Dec2012 $1.32
Dec2011 $1.69
Dec2010 $0.71
Dec2009 -$3.00
Dec2008 -$2.37
Dec2007 $1.67
Dec2006 $1.75
Dec2005 $1.09
Dec2004 $0.60
Dec2003 $0.14
Dec2002 $0.51
Dec2001 $0.47
Dec2000 $2.43
Dec1999 $2.36
Dec1998 $2.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.06
Dec2017 $1.89
Dec2016 $1.81
Dec2015 $1.22
Dec2014 $1.15
Dec2013 $1.10
Dec2012 $0.47
Dec2011 -$0.05
Dec2010 -$0.70
Dec2009 -$0.99
Dec2008 $0.19
Dec2007 $1.33
Dec2006 $1.05
Dec2005 $0.65
Dec2004 $0.56
Dec2003 $0.76
Dec2002 $1.24

Recommended Reading:

Other ModernGraham posts about the company

Best Stocks Below Their Graham Number – August 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017
Best Stocks Below Their Graham Number – February 2017
14 Best Stocks for Value Investors This Week – 2/11/17
Kelly Services Inc Valuation – Initial Coverage $KELYA

Other ModernGraham posts about related companies

Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN
Verisk Analytics Inc Valuation – June 2018 $VRSK
Robert Half International Inc Valuation – June 2018 $RHI
Alliance Data Systems Corp Valuation – May 2018 $ADS
Whirlpool Corporation Valuation – April 2018 $WHR

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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