Clorox Co Valuation – March 2019 $CLX

Company Profile (excerpt from Reuters): The Clorox Company, incorporated on September 5, 1986, is a manufacturer and marketer of consumer and professional products. The Company sells its products primarily through mass retail outlets, e-commerce channels, wholesale distributors and medical supply distributors. The Company operates through four segments: Cleaning, Household, Lifestyle and International. The Company markets some of the consumer brand names, including namesake bleach and cleaning products, Pine-Sol cleaners, Liquid-Plumr clog removers, Poett home care products, Fresh Step cat litter, Glad bags, wraps and containers, Kingsford charcoal, Hidden Valley dressings and sauces, Brita water-filtration products and Burt’s Bees natural personal care products. The Company also markets brands for professional services, including Clorox Healthcare and Clorox Commercial Solutions. The Company manufactures products in approximately 10 countries and markets them in over 100 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLX – March 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,224,279,591 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.15 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 44.05% Pass
6. Moderate PEmg Ratio PEmg < 20 27.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 27.67 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 1.15 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.77 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.75
MG Growth Estimate 5.25%
MG Value $109.28
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $83.37
MG Value based on 0% Growth $48.87
Market Implied Growth Rate 9.47%
Current Price $157.80
% of Intrinsic Value 144.40%

Clorox Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.26 in 2015 to an estimated $5.75 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.47% 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 Clorox Co revealed the company was trading above its Graham Number of $28.13. The company pays a dividend of $3.48 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 27.45, which was above the industry average of 26.43. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.8.

Clorox Co receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.80
Graham Number $28.13
PEmg 27.45
Current Ratio 1.15
PB Ratio 27.67
Current Dividend $3.48
Dividend Yield 2.21%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,365,000,000
Total Current Liabilities $1,186,000,000
Long-Term Debt $2,285,000,000
Total Assets $5,073,000,000
Intangible Assets $2,505,000,000
Total Liabilities $4,331,000,000
Shares Outstanding (Diluted Average) 130,094,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.20
Jun2018 $6.26
Jun2017 $5.33
Jun2016 $4.92
Jun2015 $4.37
Jun2014 $4.23
Jun2013 $4.30
Jun2012 $4.09
Jun2011 $4.02
Jun2010 $4.24
Jun2009 $3.79
Jun2008 $3.24
Jun2007 $3.26
Jun2006 $2.90
Jun2005 $6.11
Jun2004 $2.56
Jun2003 $2.23
Jun2002 $1.37
Jun2001 $1.35
Jun2000 $1.64
Jun1999 $0.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.75
Jun2018 $5.36
Jun2017 $4.81
Jun2016 $4.50
Jun2015 $4.26
Jun2014 $4.19
Jun2013 $4.15
Jun2012 $4.00
Jun2011 $3.88
Jun2010 $3.70
Jun2009 $3.57
Jun2008 $3.51
Jun2007 $3.57
Jun2006 $3.50
Jun2005 $3.44
Jun2004 $2.01
Jun2003 $1.63

Recommended Reading:

Other ModernGraham posts about the company

Clorox Co Valuation – May 2018 $CLX
Clorox Company Valuation – January 2017 $CLX
Clorox Company Analysis – September 2015 Update $CLX
23 Companies to Research This Week – 9/13/14
Clorox Company Annual Stock Valuation – 2014 $CLX

Other ModernGraham posts about related companies

Kimberly-Clark Corp Valuation – January 2019 $KMB
Newell Brands Inc Valuation – January 2019 $NWL
Sleep Number Corp Valuation – July 2018 $SNBR
National Presto Industries Inc Valuation – June 2018 $NPK
Leggett & Platt Inc Valuation – June 2018 $LEG
Clorox Co Valuation – May 2018 $CLX
Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG

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.

Clorox Co Valuation – May 2018 $CLX

Company Profile (excerpt from Reuters): The Clorox Company, incorporated on September 5, 1986, is a manufacturer and marketer of consumer and professional products. The Company sells its products primarily through mass retail outlets, e-commerce channels, wholesale distributors and medical supply distributors. The Company operates through four segments: Cleaning, Household, Lifestyle and International. The Company markets some of the consumer brand names, including namesake bleach and cleaning products, Pine-Sol cleaners, Liquid-Plumr clog removers, Poett home care products, Fresh Step cat litter, Glad bags, wraps and containers, Kingsford charcoal, Hidden Valley dressings and sauces, Brita water-filtration products and Burt’s Bees natural personal care products. The Company also markets brands for professional services, including Clorox Healthcare and Clorox Commercial Solutions. The Company manufactures products in approximately 10 countries and markets them in over 100 countries.

CLX Chart

CLX data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLX – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $15,849,258,490 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.18 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 35.44% Pass
6. Moderate PEmg Ratio PEmg < 20 22.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 18.96 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 1.18 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.97 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.29
MG Growth Estimate 3.93%
MG Value $86.65
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $76.75
MG Value based on 0% Growth $44.99
Market Implied Growth Rate 7.12%
Current Price $120.33
% of Intrinsic Value 138.87%

Clorox Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.19 in 2014 to an estimated $5.29 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.12% 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 Clorox Co revealed the company was trading above its Graham Number of $23.95. The company pays a dividend of $3.2 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.73, which was above the industry average of 17.54. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.94.

Clorox Co receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.94
Graham Number $23.95
PEmg 22.73
Current Ratio 1.18
PB Ratio 18.96
Current Dividend $3.20
Dividend Yield 2.66%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $2,373,000,000
Total Current Liabilities $2,013,000,000
Long-Term Debt $1,789,000,000
Total Assets $5,444,000,000
Intangible Assets $1,918,000,000
Total Liabilities $4,607,000,000
Shares Outstanding (Diluted Average) 131,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.07
Jun2017 $5.33
Jun2016 $4.92
Jun2015 $4.37
Jun2014 $4.23
Jun2013 $4.30
Jun2012 $4.09
Jun2011 $4.02
Jun2010 $4.24
Jun2009 $3.79
Jun2008 $3.24
Jun2007 $3.26
Jun2006 $2.90
Jun2005 $6.11
Jun2004 $2.56
Jun2003 $2.23
Jun2002 $1.37
Jun2001 $1.35
Jun2000 $1.64
Jun1999 $1.03
Jun1998 $1.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.29
Jun2017 $4.81
Jun2016 $4.50
Jun2015 $4.26
Jun2014 $4.19
Jun2013 $4.15
Jun2012 $4.00
Jun2011 $3.88
Jun2010 $3.70
Jun2009 $3.57
Jun2008 $3.51
Jun2007 $3.57
Jun2006 $3.50
Jun2005 $3.44
Jun2004 $2.01
Jun2003 $1.67
Jun2002 $1.38

Recommended Reading:

Other ModernGraham posts about the company

Clorox Company Valuation – January 2017 $CLX
Clorox Company Analysis – September 2015 Update $CLX
23 Companies to Research This Week – 9/13/14
Clorox Company Annual Stock Valuation – 2014 $CLX

Other ModernGraham posts about related companies

Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG
Newell Brands Inc Valuation – February 2017 $NWL
Clorox Company Valuation – January 2017 $CLX
Select Comfort Corp Valuation – Initial Coverage $SCSS
Leggett & Platt Inc Valuation – August 2016 $LEG
National Presto Industries Inc Valuation – July 2016 $NPK
Leggett & Platt Inc Stock Valuation – February 2016 $LEG

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.

Clorox Company Valuation – January 2017 $CLX

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 Clorox Company (CLX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Clorox Company is a manufacturer and marketer of consumer and professional products. The Company sells its products primarily through mass retail outlets, e-commerce channels, wholesale distributors and medical supply distributors. The Company operates through four segments: Cleaning, Household, Lifestyle and International. Its Cleaning segment consists of laundry, home care and professional products marketed and sold in the United States. Its Household segment consists of charcoal, cat litter and plastic bags, wraps and container products marketed and sold in the United States. Its Lifestyle segment consists of food products, water-filtration systems and filters, and natural personal care products marketed and sold in the United States. Its International segment consists of products sold outside the United States. It markets some of the consumer brand names, such as namesake bleach and cleaning products, Pine-Sol cleaners, Liquid-Plumr clog removers and Kingsford charcoal.

CLX Chart

CLX 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 CLX – 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 $15,535,313,894 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.93 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 29.10% Fail
6. Moderate PEmg Ratio PEmg < 20 25.15 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 55.11 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 0.93 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -16.88 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 $4.79
MG Growth Estimate 2.33%
MG Value $63.04
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $69.46
MG Value based on 0% Growth $40.72
Market Implied Growth Rate 8.33%
Current Price $120.49
% of Intrinsic Value 191.14%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.15 in 2013 to an estimated $4.79 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.33% 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 Clorox Co revealed the company was trading above its Graham Number of $16.25. The company pays a dividend of $3.11 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 25.15, which was below the industry average of 25.38, 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 $-20.89.

Clorox Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.89
Graham Number $16.25
PEmg 25.15
Current Ratio 0.93
PB Ratio 55.11
Current Dividend $3.11
Dividend Yield 2.58%
Number of Consecutive Years of Dividend Growth 20

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $1,416,000,000
Total Current Liabilities $1,522,000,000
Long-Term Debt $1,789,000,000
Total Assets $4,466,000,000
Intangible Assets $1,929,000,000
Total Liabilities $4,177,000,000
Shares Outstanding (Diluted Average) 132,193,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.26
Jun2016 $4.92
Jun2015 $4.37
Jun2014 $4.23
Jun2013 $4.30
Jun2012 $4.09
Jun2011 $4.02
Jun2010 $4.24
Jun2009 $3.79
Jun2008 $3.24
Jun2007 $3.26
Jun2006 $2.90
Jun2005 $6.11
Jun2004 $2.56
Jun2003 $2.23
Jun2002 $1.37
Jun2001 $1.35
Jun2000 $1.64
Jun1999 $1.03
Jun1998 $1.43
Jun1997 $1.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.79
Jun2016 $4.50
Jun2015 $4.26
Jun2014 $4.19
Jun2013 $4.15
Jun2012 $4.00
Jun2011 $3.88
Jun2010 $3.70
Jun2009 $3.57
Jun2008 $3.51
Jun2007 $3.57
Jun2006 $3.50
Jun2005 $3.44
Jun2004 $2.01
Jun2003 $1.67
Jun2002 $1.38
Jun2001 $1.37

Recommended Reading:

Other ModernGraham posts about the company

Clorox Company Analysis – September 2015 Update $CLX
23 Companies to Research This Week – 9/13/14
Clorox Company Annual Stock Valuation – 2014 $CLX

Other ModernGraham posts about related companies

Select Comfort Corp Valuation – Initial Coverage $SCSS
Leggett & Platt Inc Valuation – August 2016 $LEG
National Presto Industries Inc Valuation – July 2016 $NPK
Leggett & Platt Inc Stock Valuation – February 2016 $LEG
National Presto Industries Valuation – January 2016 Update $NPK
Newell Rubbermaid Inc. Valuation – October 2015 Update $NWL
National Presto Industries Inc. Valuation – October 2015 Update $NPK
Clorox Company Analysis – September 2015 Update $CLX
National Presto Industries Analysis – July 2015 Update $NPK
National Presto Industries Inc. Quarterly Valuation – March 2015 $NPK

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.

Clorox Company Analysis – September 2015 Update $CLX

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Clorox Company (CLX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Clorox Company (Clorox) is a United States-based manufacturer and marketer of consumer and professional products. The Company sells its products through mass retail outlets, e-commerce channels, distributors, and medical supply providers. The Company operates through strategic business units that are aggregated into four reportable segments: Cleaning, which consists of laundry, home care and professional products marketed and sold in the United States; Household, which consists of charcoal, cat litter and plastic bags, wraps and container products; Lifestyle, which includes food products, water-filtration systems and filters and natural personal care products, and International, which consists of products sold outside the United States, such as laundry, home care, water-filtration, charcoal and cat litter products, dressings and sauces, plastic bags, wraps and containers and natural personal care products.

[level-free]

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of CLX – September 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 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 Fail
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 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

CLX value Chart September 2015

EPSmg $4.44
MG Growth Estimate 1.61%
MG Value $52.00
Opinion Overvalued
MG Value based on 3% Growth $64.34
MG Value based on 0% Growth $37.72
Market Implied Growth Rate 8.15%
Current Price $110.03
% of Intrinsic Value 211.59%

Clorox Company does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the level of debt relative to the current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $4.01 in 2012 to an estimated $4.44 for 2016.  This level of demonstrated earnings growth does not support the market’s implied estimate of 8.15% 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.

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

Stage 3: Information for Further Research

CLX Charts September 2015

Net Current Asset Value (NCAV) -$19.85
Graham Number $9.91
PEmg 24.80
Current Ratio 1.02
PB Ratio 122.93
Dividend Yield 2.69%
Number of Consecutive Years of Dividend Growth 20

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $1,429,000,000
Total Current Liabilities $1,405,000,000
Long-Term Debt $1,796,000,000
Total Assets $4,164,000,000
Intangible Assets $1,652,000,000
Total Liabilities $4,046,000,000
Shares Outstanding (Diluted Average) 131,834,000

Earnings Per Share History

Next Fiscal Year Estimate $4.74
Jun15 $4.37
Jun14 $4.23
Jun13 $4.30
Jun12 $4.09
Jun11 $4.02
Jun10 $4.24
Jun09 $3.81
Jun08 $3.24
Jun07 $3.26
Jun06 $2.90
Jun05 $6.11
Jun04 $2.56
Jun03 $2.23
Jun02 $1.37
Jun01 $1.35
Jun00 $1.64
Jun99 $1.03
Jun98 $1.41
Jun97 $1.21
Jun96 $1.07

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.44
Jun15 $4.26
Jun14 $4.19
Jun13 $4.15
Jun12 $4.01
Jun11 $3.88
Jun10 $3.71
Jun09 $3.58
Jun08 $3.51
Jun07 $3.57
Jun06 $3.50
Jun05 $3.44
Jun04 $2.01
Jun03 $1.67
Jun02 $1.38
Jun01 $1.36
Jun00 $1.34

Recommended Reading:

Other ModernGraham posts about the company

23 Companies to Research This Week – 9/13/14
Clorox Company Annual Stock Valuation – 2014 $CLX

Other ModernGraham posts about related companies

National Presto Industries Analysis – July 2015 Update $NPK
National Presto Industries Inc. Quarterly Valuation – March 2015 $NPK
National Presto Industries Inc. Quarterly Valuation – December 2014 $NPK
Leggett & Platt Inc. Annual Valuation – 2014 $LEG
Newell Rubbermaid Inc. Annual Valuation – 2014 $NWL
National Presto Industries Quarterly Stock Valuation – September 2014 $NPK
Leggett & Platt Inc. Quarterly Valuation – September 2014 $LEG
Clorox Company Annual Stock Valuation – 2014 $CLX
National Presto Industries Quarterly Valuation – June 2014 $NPK
Leggett & Platt Inc. Quarterly Valuation – June 2014 $LEG

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 read our full disclaimer.

 

Clorox Company Annual Stock Valuation – 2014 $CLX

220px-The_Clorox_Company_logoBenjamin 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 5 Undervalued Companies for the Enterprising Investor.  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 specific look at how Clorox Company (CLX) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Clorox Company (Clorox) is a manufacturer and marketer of consumer and professional products. Clorox operates in four segments: Cleaning, Household, Lifestyle and International. Clorox sells its products primarily through merchandisers, grocery stores, other retail outlets, distributors and medical supply providers. Clorox markets some of the brand names, including its namesake bleach and cleaning products, Clorox Healthcare, HealthLink, Aplicare and Dispatch products, Green Works naturally derived home care products, Pine-Sol cleaners, Poett home care products, Fresh Step cat litter, Glad bags, wraps and containers, Kingsford charcoal, Hidden Valley and K C Masterpiece dressings and sauces, Brita water-filtration products, and Burt’s Bees and gud natural personal care products. During the fiscal year ended June 30, 2012 (fiscal 2012), Clorox acquired HealthLink, Aplicare, Inc., and Soy Vay Enterprises, Inc.
CLX Chart

CLX data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 4/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years - PASS
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - PASS
  6. Moderate PEmg ratio – PEmg is less than 20 - FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - PASS

Valuation Summary

Key Data:

Recent Price $89.29
MG Value $41.30
MG Opinion Overvalued
Value Based on 3% Growth $57.27
Value Based on 0% Growth $33.57
Market Implied Growth Rate 7.05%
Net Current Asset Value (NCAV) -$21.03
PEmg 22.61
Current Ratio 0.85
PB Ratio 74.68

Balance Sheet – 6/30/2014

Current Assets $1,395,000,000
Current Liabilities $1,638,000,000
Total Debt $1,595,000,000
Total Assets $4,258,000,000
Intangible Assets $1,712,000,000
Total Liabilities $4,104,000,000
Outstanding Shares 128,800,000

Earnings Per Share

2014 (estimate) $4.26
2013 $4.31
2012 $4.10
2011 $2.07
2010 $4.26
2009 $3.81
2008 $3.24
2007 $3.23
2006 $2.89
2005 $2.88

Earnings Per Share – ModernGraham

2014 (estimate) $3.95
2013 $3.77
2012 $3.49
2011 $3.24
2010 $3.71
2009 $3.36

Dividend History

CLX Dividend Chart

CLX Dividend data by YCharts

Conclusion:

Clorox Company does not qualify for either the Defensive Investor or the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios.  The Enterprising Investor is concerned with the high level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time.  As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $3.71 in 2010 to an estimated $3.95 for 2014.  This level of demonstrated growth does not support the market’s implied estimate of 7.05% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value below the price.

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

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

Leggett & Platt Inc Valuation – March 2019 #LEG

Company Profile (excerpt from Reuters): Leggett & Platt, Incorporated, incorporated on February 23, 1901, is a diversified manufacturer that conceives, designs and produces a range of engineered components and products found in homes, offices and automobiles. The Company operates in four segments: Residential Furnishings, Commercial Products, Industrial Materials and Specialized Products. The Company’s brands include ComfortCore, Mira-Coil, VertiCoil, Quantum, Nanocoil, Softech, Lura-Flex, Superlastic and Active Support Technology, which includes mattress innersprings; Semi-Flex, which includes box spring components and foundations; Spuhl, which includes mattress innerspring manufacturing machines; Wall Hugger, which includes recliner chair mechanisms; Super Sagless, which includes motion and sofa sleeper mechanisms; No-Sag, which includes wire forms used in seating; LPSense, which includes capacitive sensing; Hanes, which includes fabric materials; Schukra, Pullmaflex and Flex-O-Lator, which includes automotive seating products, and Gribetz and Porter, which includes quilting and sewing machines.

LEG Chart

LEG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LEG – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,419,827,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.87 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 77.12% Pass
6. Moderate PEmg Ratio PEmg < 20 17.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.81 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 1.87 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.65 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 $2.38
MG Growth Estimate 8.74%
MG Value $61.86
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $34.54
MG Value based on 0% Growth $20.25
Market Implied Growth Rate 4.43%
Current Price $41.35
% of Intrinsic Value 66.84%

Leggett & Platt, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.51 in 2015 to an estimated $2.38 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.43% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $22.33. The company pays a dividend of $1.5 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.36, which was below the industry average of 26.43, 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 $-5.2.

Leggett & Platt, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.20
Graham Number $22.33
PEmg 17.36
Current Ratio 1.87
PB Ratio 4.81
Current Dividend $1.50
Dividend Yield 3.63%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,524,600,000
Total Current Liabilities $815,700,000
Long-Term Debt $1,167,800,000
Total Assets $3,382,000,000
Intangible Assets $1,012,500,000
Total Liabilities $2,224,400,000
Shares Outstanding (Diluted Average) 134,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.50
Dec2018 $2.26
Dec2017 $2.13
Dec2016 $2.76
Dec2015 $2.28
Dec2014 $0.68
Dec2013 $1.34
Dec2012 $1.70
Dec2011 $1.04
Dec2010 $1.15
Dec2009 $0.70
Dec2008 $0.62
Dec2007 -$0.06
Dec2006 $1.61
Dec2005 $1.30
Dec2004 $1.45
Dec2003 $1.05
Dec2002 $1.17
Dec2001 $0.94
Dec2000 $1.32
Dec1999 $1.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.38
Dec2018 $2.22
Dec2017 $2.08
Dec2016 $1.96
Dec2015 $1.51
Dec2014 $1.14
Dec2013 $1.31
Dec2012 $1.21
Dec2011 $0.87
Dec2010 $0.79
Dec2009 $0.69
Dec2008 $0.78
Dec2007 $0.93
Dec2006 $1.39
Dec2005 $1.25
Dec2004 $1.21
Dec2003 $1.12

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – February 2019
10 Best Dividend Paying Stocks for the Enterprising Investor – September 2018
Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Leggett & Platt Inc Valuation – June 2018 $LEG

Other ModernGraham posts about related companies

Clorox Co Valuation – March 2019 $CLX
Kimberly-Clark Corp Valuation – January 2019 $KMB
Newell Brands Inc Valuation – January 2019 $NWL
Sleep Number Corp Valuation – July 2018 $SNBR
National Presto Industries Inc Valuation – June 2018 $NPK
Leggett & Platt Inc Valuation – June 2018 $LEG
Clorox Co Valuation – May 2018 $CLX
Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP

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.

Kimberly-Clark Corp Valuation – January 2019 $KMB

Company Profile (excerpt from Reuters): Kimberly-Clark Corporation, incorporated on June 29, 1928, is engaged in the manufacturing and marketing of a range of products made from natural or synthetic fibers. The Company’s segments include Personal Care, Consumer Tissue, K-C Professional and Corporate & Other. The Company sells its products to supermarkets, mass merchandisers, drugstores, warehouse clubs, variety and department stores, and other retail outlets. It sells its products for away-from-home use through distributors and directly to manufacturing, lodging, office building, food service and public facilities. As of December 31, 2016, the Company and its equity companies had manufacturing facilities in 38 countries, and it sold products in more than 175 countries. The Company’s business outside North America includes Developing and Emerging Markets (D&E) and Developed Markets. D&E markets consist of Eastern Europe, the Middle East and Africa, Latin America and Asia-Pacific, excluding Australia and South Korea. Its Developed Markets consist of Western and Central Europe, Australia and South Korea.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KMB – 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 $40,257,491,250 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.75 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 29.94% Fail
6. Moderate PEmg Ratio PEmg < 20 23.13 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 362.04 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 0.75 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.38 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.03
MG Growth Estimate 1.63%
MG Value $59.11
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $72.89
MG Value based on 0% Growth $42.73
Market Implied Growth Rate 7.31%
Current Price $116.25
% of Intrinsic Value 196.66%

Kimberly Clark Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $4.53 in 2014 to an estimated $5.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.31% 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 Kimberly Clark Corp revealed the company was trading above its Graham Number of $13.39. The company pays a dividend of $3.88 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 23.13, which was above the industry average of 20. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.84.

Kimberly Clark 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) -$26.84
Graham Number $13.39
PEmg 23.13
Current Ratio 0.75
PB Ratio 362.04
Current Dividend $3.88
Dividend Yield 3.34%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $5,108,000,000
Total Current Liabilities $6,805,000,000
Long-Term Debt $5,739,000,000
Total Assets $14,583,000,000
Intangible Assets $1,480,000,000
Total Liabilities $14,471,000,000
Shares Outstanding (Diluted Average) 348,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.45
Dec2017 $6.40
Dec2016 $5.99
Dec2015 $2.77
Dec2014 $4.04
Dec2013 $5.53
Dec2012 $4.42
Dec2011 $3.99
Dec2010 $4.45
Dec2009 $4.52
Dec2008 $4.04
Dec2007 $4.09
Dec2006 $3.25
Dec2005 $3.28
Dec2004 $3.61
Dec2003 $3.33
Dec2002 $3.22
Dec2001 $3.02
Dec2000 $3.31
Dec1999 $3.09
Dec1998 $1.99

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.03
Dec2017 $5.19
Dec2016 $4.58
Dec2015 $3.96
Dec2014 $4.53
Dec2013 $4.71
Dec2012 $4.30
Dec2011 $4.23
Dec2010 $4.26
Dec2009 $4.05
Dec2008 $3.77
Dec2007 $3.59
Dec2006 $3.34
Dec2005 $3.35
Dec2004 $3.36
Dec2003 $3.22
Dec2002 $3.09

Recommended Reading:

Other ModernGraham posts about the company

Kimberly-Clark Corp Valuation – March 2018 $KMB
Kimberly-Clark Corporation Valuation – June 2016 $KMB
34 Companies in the Spotlight This Week – 2/7/15
Kimberly Clark Corporation Annual Valuation – 2015 $KMB
15 Companies in the Spotlight This Week – 2/1/14

Other ModernGraham posts about related companies

Newell Brands Inc Valuation – January 2019 $NWL
Sleep Number Corp Valuation – July 2018 $SNBR
National Presto Industries Inc Valuation – June 2018 $NPK
Leggett & Platt Inc Valuation – June 2018 $LEG
Clorox Co Valuation – May 2018 $CLX
Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG
Newell Brands Inc Valuation – February 2017 $NWL

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.

Newell Brands Inc Valuation – January 2019 $NWL

Company Profile (excerpt from Reuters): Newell Brands Inc., incorporated on February 23, 1987, is a marketer of consumer and commercial products. The Company’s segments include Writing, Home Solutions, Commercial Products, Baby & Parenting, Branded Consumables, Consumer Solutions, Outdoor Solutions and Process Solutions. The Company’s products are marketed under a portfolio of brands, including Paper Mate, Sharpie, Dymo, Expo, Parker, Elmer’s, Coleman, Marmot, Oster, Sunbeam, FoodSaver, Mr. Coffee, Rubbermaid Commercial Products, Graco, Baby Jogger, NUK, Calphalon, Rubbermaid, Contigo, First Alert and Yankee Candle. As of December 31, 2016, the Company sold its products in 200 countries throughout the world and had operated on the ground in 100 of these countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NWL – 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 $9,529,348,480 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.98 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
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 -425.11% Fail
6. Moderate PEmg Ratio PEmg < 20 -7.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.60 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.98 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.15 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.83
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$40.99
MG Value based on 0% Growth -$24.03
Market Implied Growth Rate -7.86%
Current Price $20.41
% of Intrinsic Value N/A

Newell Brands 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 stability or 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 stability or 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 $1.28 in 2014 to an estimated $-2.83 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Newell Brands Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.88 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 -7.22, which was below the industry average of 20, 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 $-8.84.

Newell Brands 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) -$8.84
Graham Number $0.00
PEmg -7.22
Current Ratio 2.98
PB Ratio 1.60
Current Dividend $0.88
Dividend Yield 4.31%
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 9/1/2018
Total Current Assets $12,208,500,000
Total Current Liabilities $4,096,700,000
Long-Term Debt $9,296,800,000
Total Assets $22,398,100,000
Intangible Assets $8,745,000,000
Total Liabilities $16,371,900,000
Shares Outstanding (Diluted Average) 471,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$14.52
Dec2017 $5.63
Dec2016 $1.25
Dec2015 $1.29
Dec2014 $1.35
Dec2013 $1.63
Dec2012 $1.37
Dec2011 $0.42
Dec2010 $0.96
Dec2009 $0.97
Dec2008 -$0.18
Dec2007 $1.68
Dec2006 $1.40
Dec2005 $0.91
Dec2004 -$0.42
Dec2003 -$0.17
Dec2002 -$0.76
Dec2001 $0.99
Dec2000 $1.57
Dec1999 $0.34
Dec1998 $1.70

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.83
Dec2017 $2.76
Dec2016 $1.34
Dec2015 $1.33
Dec2014 $1.28
Dec2013 $1.19
Dec2012 $0.88
Dec2011 $0.68
Dec2010 $0.86
Dec2009 $0.86
Dec2008 $0.76
Dec2007 $1.05
Dec2006 $0.55
Dec2005 $0.12
Dec2004 -$0.10
Dec2003 $0.17
Dec2002 $0.48

Recommended Reading:

Other ModernGraham posts about the company

5 Low P/E Companies In The S&P 500 – August 2018
Best Stocks Below Their Graham Number – August 2018
10 Low PE Stock Picks for the Defensive Investor – August 2018
10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2018
Best Stocks Below Their Graham Number – June 2018

Other ModernGraham posts about related companies

Sleep Number Corp Valuation – July 2018 $SNBR
National Presto Industries Inc Valuation – June 2018 $NPK
Leggett & Platt Inc Valuation – June 2018 $LEG
Clorox Co Valuation – May 2018 $CLX
Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG
Newell Brands Inc Valuation – February 2017 $NWL
Clorox Company Valuation – January 2017 $CLX

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.

Sleep Number Corp Valuation – July 2018 $SNBR

Company Profile (excerpt from Reuters): Sleep Number Corporation, formerly Select Comfort Corporation, incorporated on February 27, 1987, is a designer, manufacturer, marketer, retailer and servicer of a line of Sleep Number beds. The Company offers consumers individualized sleep solutions and services, which include a complete line of Sleep Number beds, bases and bedding accessories. Its Sleep Number bed offers SleepIQ technology sensors that work directly with the bed’s DualAir technology to track each individual’s sleep. The Sleep Number bedding collection comprises a line of sleep products that are designed to solve sleep issues. It offers FlextFit adjustable bases, and Sleep Number pillows, sheets and other bedding products. It offers Sleep Number beds in ranges within the mattress category, and in a range of sizes, including twin, full, queen, eastern king and California king. It also offers an assortment of temperature-balancing products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SNBR – 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 $1,095,079,747 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.41 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 82.99% Pass
6. Moderate PEmg Ratio PEmg < 20 20.47 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 32.06 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 0.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $1.43
MG Growth Estimate 3.54%
MG Value $22.31
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $20.77
MG Value based on 0% Growth $12.18
Market Implied Growth Rate 5.99%
Current Price $29.33
% of Intrinsic Value 131.46%

Sleep Number Corp 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, 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 Overvalued after growing its EPSmg (normalized earnings) from $1.16 in 2014 to an estimated $1.43 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.99% 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 Sleep Number Corp revealed the company was trading above its Graham Number of $9.54. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 20.47, which was above the industry average of 19.42. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.12.

Sleep Number Corp scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.12
Graham Number $9.54
PEmg 20.47
Current Ratio 0.41
PB Ratio 32.06
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 3/1/2018
Total Current Assets $142,381,000
Total Current Liabilities $345,668,000
Long-Term Debt $0
Total Assets $458,701,000
Intangible Assets $77,042,000
Total Liabilities $422,704,000
Shares Outstanding (Diluted Average) 39,347,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.76
Dec2017 $1.55
Dec2016 $1.10
Dec2015 $0.97
Dec2014 $1.25
Dec2013 $1.08
Dec2012 $1.37
Dec2011 $1.07
Dec2010 $0.57
Dec2009 $0.77
Dec2008 -$1.59
Dec2007 $0.57
Dec2006 $0.85
Dec2005 $0.76
Dec2004 $0.53
Dec2003 $0.46
Dec2002 $0.73
Dec2001 -$0.44
Dec2000 -$1.39
Dec1999 -$0.30
Dec1998 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.43
Dec2017 $1.24
Dec2016 $1.11
Dec2015 $1.13
Dec2014 $1.16
Dec2013 $1.07
Dec2012 $0.85
Dec2011 $0.49
Dec2010 $0.21
Dec2009 $0.11
Dec2008 -$0.07
Dec2007 $0.67
Dec2006 $0.70
Dec2005 $0.55
Dec2004 $0.29
Dec2003 $0.05
Dec2002 -$0.19

Recommended Reading:

Other ModernGraham posts about the company

Select Comfort Corp Valuation – Initial Coverage $SCSS

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National Presto Industries Inc Valuation – June 2018 $NPK
Leggett & Platt Inc Valuation – June 2018 $LEG
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Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG
Newell Brands Inc Valuation – February 2017 $NWL
Clorox Company Valuation – January 2017 $CLX
Select Comfort Corp Valuation – Initial Coverage $SCSS

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.

National Presto Industries Inc Valuation – June 2018 $NPK

Company Profile (excerpt from Reuters): National Presto Industries, Inc., incorporated on November 8, 1905, operates through two business segments: the Housewares/Small Appliance segment and the Defense segment. The Housewares/Small Appliance segment designs, markets and distributes housewares and small electrical appliances, including pressure cookers and canners, kitchen electrics and comfort appliances. The Defense segment manufactures 40 millimeter (mm) ammunition, precision mechanical and electro-mechanical assemblies, and medium caliber cartridge cases; performs Load, Assemble and Pack (LAP) operations on ordnance-related products primarily for the United States Government and prime contractors; produces and sells a range of less lethal products and support accessories, and provides training for the use of less lethal products, and manufactures detonators, booster pellets, release cartridges, lead azide, and other military energetic devices and materials.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NPK – June 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 $872,418,120 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.33 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 -17.40% Fail
6. Moderate PEmg Ratio PEmg < 20 28.63 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.58 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 6.33 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.33
MG Growth Estimate -3.28%
MG Value $37.66
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $62.80
MG Value based on 0% Growth $36.82
Market Implied Growth Rate 10.06%
Current Price $124.00
% of Intrinsic Value 329.30%

National Presto Industries Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.54 in 2014 to an estimated $4.33 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into National Presto Industries Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 28.63, which was above the industry average of 17.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $37.66.

National Presto Industries 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) $37.66
Graham Number $0.00
PEmg 28.63
Current Ratio 6.33
PB Ratio 2.58
Current Dividend $1.00
Dividend Yield 0.81%
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 3/1/2018
Total Current Assets $312,981,000
Total Current Liabilities $49,433,000
Long-Term Debt $0
Total Assets $385,691,000
Intangible Assets $14,071,000
Total Liabilities $49,433,000
Shares Outstanding (Diluted Average) 6,999,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate
Dec2017 $7.58
Dec2016 $6.39
Dec2015 $5.83
Dec2014 $3.82
Dec2013 $5.97
Dec2012 $5.64
Dec2011 $6.98
Dec2010 $9.26
Dec2009 $9.13
Dec2008 $6.45
Dec2007 $5.65
Dec2006 $4.09
Dec2005 $2.40
Dec2004 $2.26
Dec2003 $2.27
Dec2002 $1.27
Dec2001 $0.92
Dec2000 $2.16
Dec1999 $2.84
Dec1998 $2.68

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.33
Dec2017 $6.30
Dec2016 $5.62
Dec2015 $5.37
Dec2014 $5.54
Dec2013 $6.73
Dec2012 $7.24
Dec2011 $7.86
Dec2010 $7.84
Dec2009 $6.60
Dec2008 $4.95
Dec2007 $3.91
Dec2006 $2.84
Dec2005 $2.09
Dec2004 $1.88
Dec2003 $1.76
Dec2002 $1.66

Recommended Reading:

Other ModernGraham posts about the company

National Presto Industries Inc Valuation – July 2016 $NPK
National Presto Industries Valuation – January 2016 Update $NPK
National Presto Industries Inc. Valuation – October 2015 Update $NPK
National Presto Industries Analysis – July 2015 Update $NPK
27 Companies in the Spotlight This Week – 4/4/15

Other ModernGraham posts about related companies

Clorox Co Valuation – May 2018 $CLX
Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG
Newell Brands Inc Valuation – February 2017 $NWL
Clorox Company Valuation – January 2017 $CLX
Select Comfort Corp Valuation – Initial Coverage $SCSS
Leggett & Platt Inc Valuation – August 2016 $LEG
National Presto Industries Inc Valuation – July 2016 $NPK

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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