Cohu Inc Valuation – August 2018 $COHU

Company Profile (excerpt from Reuters): Cohu, Inc. (Cohu), incorporated on January 2, 1957, is a supplier of semiconductor test and inspection handlers, micro-electro mechanical system (MEMS) test modules, test contactors and thermal sub-systems used by global semiconductor manufacturers and test subcontractors. The Company develops, manufactures, sells and services a line of equipment capable of handling a range of integrated circuits and light-emitting diodes (LEDs). It operates through semiconductor equipment segment. It offers products for the pick-and-place, gravity-feed, test-in-strip and turret handling, MEMS, burn-in and system-level test markets. It sells various products, including Delta MATRiX, Delta Pyramid, Delta Eclipse, Delta LinX, Rasco SO1000, Rasco SO2000, Rasco Saturn and Jupiter, Rasco Jaguar, Ismeca NY32, Ismeca NY20 and Delta Fusion HD. Its principal manufacturing operations are located in Malacca, Malaysia (handlers); Poway, California (thermal subsystems); Laguna, the Philippines (kits and contactors); Kolbermoor, Germany (handlers); Osaka, Japan (contactors).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COHU – 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 $763,168,625 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.81 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 552.17% Pass
6. Moderate PEmg Ratio PEmg < 20 28.19 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.60 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 3.81 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.02 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 $0.93
MG Growth Estimate 15.00%
MG Value $35.91
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $13.52
MG Value based on 0% Growth $7.93
Market Implied Growth Rate 9.84%
Current Price $26.29
% of Intrinsic Value 73.22%

Cohu, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last ten years, 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 Undervalued after growing its EPSmg (normalized earnings) from $-0.19 in 2014 to an estimated $0.93 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.84% 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 Cohu, Inc. revealed the company was trading above its Graham Number of $19.99. The company pays a dividend of $0.24 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 28.19, which was below the industry average of 53.7, 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 $5.86.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.86
Graham Number $19.99
PEmg 28.19
Current Ratio 3.81
PB Ratio 2.60
Current Dividend $0.24
Dividend Yield 0.91%
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 $297,506,000
Total Current Liabilities $78,151,000
Long-Term Debt $4,547,000
Total Assets $422,718,000
Intangible Assets $82,915,000
Total Liabilities $124,366,000
Shares Outstanding (Diluted Average) 29,531,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.75
Dec2017 $1.14
Dec2016 $0.11
Dec2015 $0.01
Dec2014 $0.33
Dec2013 -$1.34
Dec2012 -$0.50
Dec2011 $0.64
Dec2010 $1.02
Dec2009 -$1.20
Dec2008 -$0.23
Dec2007 $0.34
Dec2006 $0.77
Dec2005 $1.50
Dec2004 $0.76
Dec2003 $0.00
Dec2002 -$0.04
Dec2001 -$0.32
Dec2000 $1.60
Dec1999 $1.26
Dec1998 $0.58

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.93
Dec2017 $0.37
Dec2016 -$0.11
Dec2015 -$0.20
Dec2014 -$0.19
Dec2013 -$0.40
Dec2012 $0.03
Dec2011 $0.24
Dec2010 $0.07
Dec2009 -$0.19
Dec2008 $0.42
Dec2007 $0.72
Dec2006 $0.81
Dec2005 $0.68
Dec2004 $0.31
Dec2003 $0.22
Dec2002 $0.43

Recommended Reading:

Other ModernGraham posts about the company

Cohu Inc Valuation – Initial Coverage $COHU

Other ModernGraham posts about related companies

Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN
iRobot Corp Valuation – July 2018 $IRBT
ScanSource Inc Valuation – July 2018 $SCSC
Cognex Corp Valuation – July 2018 $CGNX
Sanmina Corp Valuation – July 2018 $SANM
II-VI Inc Valuation – July 2018 $IIVI

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.

Cohu Inc Valuation – Initial Coverage $COHU

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 Cohu Inc (COHU) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cohu, Inc. is a supplier of semiconductor test and inspection handlers, micro-electro mechanical system (MEMS) test modules, test contactors and thermal sub-systems used by global semiconductor manufacturers and test subcontractors. The Company develops, manufactures, sells and services a line of equipment capable of handling a range of integrated circuits and light-emitting diodes (LEDs). It operates through semiconductor equipment segment. It offers products for the pick-and-place, gravity-feed, test-in-strip and turret handling, MEMS, burn-in and system-level test markets. It sells various products, including Delta EDGE, Delta MATRiX, Delta Pyramid, Delta Summit, Delta Eclipse, Delta LinX, Rasco SO1000, Rasco SO2000, Rasco Saturn and Jupiter, Rasco Jaguar, Ismeca NY32, Ismeca NY20 and Delta Fusion HD. Its principal manufacturing operations are located in Poway, California (Delta); Laguna, Philippines; Kolbermoor, Germany (Rasco), and Suzhou, China (Ismeca-kits).

COHU Chart

COHU data by YCharts

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

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of COHU – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $358,164,122 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.79 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 -141.28% Fail
6. Moderate PEmg Ratio PEmg < 20 -123.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.49 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 3.79 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 -$0.11
MG Growth Estimate -4.25%
MG Value $4.91
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$1.55
MG Value based on 0% Growth -$0.91
Market Implied Growth Rate -65.80%
Current Price $13.13
% of Intrinsic Value 267.54%

Cohu, 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 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 $0.03 in 2012 to an estimated $-0.11 for 2016. 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 Cohu, Inc. revealed the company was trading above its Graham Number of $4.73. The company pays a dividend of $0.24 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was -123.09, which was below the industry average of 28.12, 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 $4.91.

Cohu, 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) $4.91
Graham Number $4.73
PEmg -123.09
Current Ratio 3.79
PB Ratio 1.49
Current Dividend $0.24
Dividend Yield 1.83%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $240,833,000
Total Current Liabilities $63,530,000
Long-Term Debt $0
Total Assets $347,488,000
Intangible Assets $81,366,000
Total Liabilities $106,525,000
Shares Outstanding (Diluted Average) 27,367,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.11
Dec2015 $0.01
Dec2014 $0.33
Dec2013 -$1.34
Dec2012 -$0.50
Dec2011 $0.64
Dec2010 $1.02
Dec2009 -$1.20
Dec2008 -$0.23
Dec2007 $0.34
Dec2006 $0.77
Dec2005 $1.50
Dec2004 $0.76
Dec2003 $0.00
Dec2002 -$0.04
Dec2001 -$0.32
Dec2000 $1.60
Dec1999 $1.26
Dec1998 $0.58
Dec1997 $1.47
Dec1996 $1.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.11
Dec2015 -$0.20
Dec2014 -$0.19
Dec2013 -$0.40
Dec2012 $0.03
Dec2011 $0.24
Dec2010 $0.07
Dec2009 -$0.19
Dec2008 $0.42
Dec2007 $0.72
Dec2006 $0.81
Dec2005 $0.68
Dec2004 $0.31
Dec2003 $0.22
Dec2002 $0.43
Dec2001 $0.75
Dec2000 $1.26

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Apple Inc Valuation – January 2017 $AAPL
Silicon Laboratories Valuation – Initial Coverage $SLAB
Itron Inc Valuation – Initial Coverage $ITRI
Celestica Inc Valuation – Initial Coverage $TSE:CLS
Intersil Corp Valuation – Initial Coverage $ISIL
iRobot Corp Valuation – Initial Coverage $IRBT
Advanced Micro Devices Inc Valuation – January 2017 $AMD
IPG Photonics Corp Valuation – Initial Coverage $IPGP
Ciena Corporation Valuation – Initial Coverage $CIEN
ScanSource Inc Valuation – Initial Coverage $SCSC

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.

Apple Inc Valuation – November 2018 $AAPL

Company Profile (excerpt from Reuters): Apple Inc., incorporated on January 3, 1977, designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players. The Company sells a range of related software, services, accessories, networking solutions and third-party digital content and applications. The Company’s segments include the Americas, Europe, Greater China, Japan and Rest of Asia Pacific. The Americas segment includes both North and South America. The Europe segment includes European countries, India, the Middle East and Africa. The Greater China segment includes China, Hong Kong and Taiwan. The Rest of Asia Pacific segment includes Australia and the Asian countries not included in the Company’s other operating segments. The Company’s products and services include iPhone, iPad, Mac, iPod, Apple Watch, Apple TV, a portfolio of consumer and professional software applications, iPhone OS (iOS), OS X and watchOS operating systems, iCloud, Apple Pay and a range of accessory, service and support offerings.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AAPL – November 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 $970,291,506,431 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.12 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 174.94% Pass
6. Moderate PEmg Ratio PEmg < 20 18.44 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.25 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 1.12 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 6.48 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

 

EPSmg $11.09
MG Growth Estimate 8.65%
MG Value $286.14
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $160.81
MG Value based on 0% Growth $94.27
Market Implied Growth Rate 4.97%
Current Price $204.47
% of Intrinsic Value 71.46%

Apple 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, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $7.03 in 2015 to an estimated $11.09 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.97% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Apple Inc. revealed the company was trading above its Graham Number of $81.34. The company pays a dividend of $2.72 per share, for a yield of 1.3% Its PEmg (price over earnings per share – ModernGraham) was 18.44, which was below the industry average of 38.82, 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 $-26.25.

Apple 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) -$26.25
Graham Number $81.34
PEmg 18.44
Current Ratio 1.12
PB Ratio 9.25
Current Dividend $2.72
Dividend Yield 1.33%
Number of Consecutive Years of Dividend Growth 7

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 $131,339,000,000
Total Current Liabilities $116,866,000,000
Long-Term Debt $93,735,000,000
Total Assets $365,725,000,000
Intangible Assets $0
Total Liabilities $258,578,000,000
Shares Outstanding (Diluted Average) 4,847,547,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.05
Sep2018 $11.91
Sep2017 $9.21
Sep2016 $8.31
Sep2015 $9.22
Sep2014 $6.45
Sep2013 $5.68
Sep2012 $6.31
Sep2011 $3.95
Sep2010 $2.16
Sep2009 $1.30
Sep2008 $0.97
Sep2007 $0.56
Sep2006 $0.32
Sep2005 $0.22
Sep2004 $0.05
Sep2003 $0.01
Sep2002 $0.01
Sep2001 -$0.01
Sep2000 $0.16
Sep1999 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $11.09
Sep2018 $9.75
Sep2017 $8.37
Sep2016 $7.70
Sep2015 $7.03
Sep2014 $5.60
Sep2013 $4.74
Sep2012 $3.83
Sep2011 $2.32
Sep2010 $1.36
Sep2009 $0.86
Sep2008 $0.57
Sep2007 $0.32
Sep2006 $0.18
Sep2005 $0.09
Sep2004 $0.03
Sep2003 $0.04

Recommended Reading:

Other ModernGraham posts about the company

Apple Inc Valuation – February 2018 $AAPL
Apple Inc Valuation – January 2017 $AAPL
Apple Inc Valuation – August 2016 $AAPL
Apple Inc Valuation – February 2016 $AAPL
My Personal Holdings: Apple Inc. – September 2015 Update $AAPL

Other ModernGraham posts about related companies

Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY
Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU

Disclaimer:

The author held a long position in AAPL but 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.

Littelfuse Inc Valuation – September 2018 $LFUS

Company Profile (excerpt from Reuters): Littelfuse, Inc., incorporated on November 25, 1991, is a supplier of circuit protection products for the electronics, automotive and industrial markets. The Company operates through three segments: Electronics, Automotive and Industrial. In addition to the portfolio of circuit protection products and solutions, the Company offers electronic reed switches and sensors, automotive sensors for comfort and safety systems and a range of electromechanical and electronic switch and control devices for commercial and specialty vehicles, as well as protection relays and power distribution centers for the control and distribution of electricity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LFUS – 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 $5,704,732,255 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.59 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 120.38% Pass
6. Moderate PEmg Ratio PEmg < 20 40.15 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.86 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 3.59 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.99 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 $5.57
MG Growth Estimate 6.28%
MG Value $117.27
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $80.75
MG Value based on 0% Growth $47.33
Market Implied Growth Rate 15.82%
Current Price $223.56
% of Intrinsic Value 190.63%

Littelfuse, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high 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 $3.93 in 2014 to an estimated $5.57 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.82% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Littelfuse, Inc. revealed the company was trading above its Graham Number of $83.77. The company pays a dividend of $1.36 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 40.15, which was below the industry average of 40.28, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.29.

Littelfuse, 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) -$6.29
Graham Number $83.77
PEmg 40.15
Current Ratio 3.59
PB Ratio 3.86
Current Dividend $1.36
Dividend Yield 0.61%
Number of Consecutive Years of Dividend Growth 8

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 $958,201,000
Total Current Liabilities $267,163,000
Long-Term Debt $687,538,000
Total Assets $2,587,994,000
Intangible Assets $1,222,279,000
Total Liabilities $1,117,974,000
Shares Outstanding (Diluted Average) 25,401,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.49
Dec2017 $5.21
Dec2016 $4.60
Dec2015 $3.56
Dec2014 $4.32
Dec2013 $3.94
Dec2012 $3.40
Dec2011 $3.90
Dec2010 $3.52
Dec2009 $0.43
Dec2008 $0.37
Dec2007 $1.64
Dec2006 $1.06
Dec2005 $0.78
Dec2004 $1.59
Dec2003 $0.70
Dec2002 $0.44
Dec2001 $0.19
Dec2000 $1.69
Dec1999 $1.16
Dec1998 $0.86

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.57
Dec2017 $4.51
Dec2016 $4.10
Dec2015 $3.84
Dec2014 $3.93
Dec2013 $3.50
Dec2012 $2.96
Dec2011 $2.48
Dec2010 $1.65
Dec2009 $0.76
Dec2008 $0.98
Dec2007 $1.24
Dec2006 $1.00
Dec2005 $0.90
Dec2004 $0.94
Dec2003 $0.69
Dec2002 $0.75

Recommended Reading:

Other ModernGraham posts about the company

Littelfuse Inc Valuation – Initial Coverage $LFUS

Other ModernGraham posts about related companies

CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY
Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR

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.

CTS Corporation Valuation – August 2018 $CTS

Company Profile (excerpt from Reuters): CTS Corporation, incorporated on February 8, 1929, is a global manufacturer of sensors, electronic components and actuators. The Company designs, manufactures and sells a line of sensors, electronic components and actuators primarily to original equipment manufacturers (OEMs) for the transportation, industrial, medical, information technology, defense and aerospace, and communications markets. The Company operates manufacturing facilities in North America, Asia and Europe. The Company’s products perform specific electronic functions for a given product family and are intended for use in customer assemblies. The Company’s products consist principally of sensors and actuators used in passenger or commercial vehicles; electronic components used in communications infrastructure, information technology and other high-speed applications; switches and potentiometers supplied to multiple markets, and fabricated piezoelectric materials and substrates used primarily in medical, industrial, defense and aerospace, and information technology markets.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTS – 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 $1,204,377,645 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.21 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 1177.27% Pass
6. Moderate PEmg Ratio PEmg < 20 42.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.36 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 2.21 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.45 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 $0.85
MG Growth Estimate 12.26%
MG Value $28.10
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $12.33
MG Value based on 0% Growth $7.23
Market Implied Growth Rate 17.17%
Current Price $36.45
% of Intrinsic Value 129.73%

CTS Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last ten years, 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 $0.47 in 2014 to an estimated $0.85 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.17% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into CTS Corporation revealed the company was trading above its Graham Number of $17.81. The company pays a dividend of $0.16 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 42.85, which was below the industry average of 53.7, 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 $1.59.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.59
Graham Number $17.81
PEmg 42.85
Current Ratio 2.21
PB Ratio 3.36
Current Dividend $0.16
Dividend Yield 0.44%
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 $232,060,000
Total Current Liabilities $105,146,000
Long-Term Debt $57,000,000
Total Assets $542,553,000
Intangible Assets $134,614,000
Total Liabilities $178,793,000
Shares Outstanding (Diluted Average) 33,564,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.35
Dec2017 $0.43
Dec2016 $1.03
Dec2015 $0.21
Dec2014 $0.78
Dec2013 -$0.12
Dec2012 $0.59
Dec2011 $0.60
Dec2010 $0.63
Dec2009 -$1.01
Dec2008 $0.81
Dec2007 $0.66
Dec2006 $0.63
Dec2005 $0.53
Dec2004 $0.53
Dec2003 $0.36
Dec2002 -$0.54
Dec2001 -$1.61
Dec2000 $2.92
Dec1999 $1.80
Dec1998 $1.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.85
Dec2017 $0.56
Dec2016 $0.58
Dec2015 $0.37
Dec2014 $0.47
Dec2013 $0.25
Dec2012 $0.40
Dec2011 $0.32
Dec2010 $0.23
Dec2009 $0.13
Dec2008 $0.68
Dec2007 $0.59
Dec2006 $0.47
Dec2005 $0.21
Dec2004 $0.14
Dec2003 $0.16
Dec2002 $0.30

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks for Value Investors This Week – 3/11/17
CTS Corporation Valuation – Initial Coverage $CTS

Other ModernGraham posts about related companies

Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY
Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC

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.

Kopin Corp Valuation – August 2018 $KOPN

Company Profile (excerpt from Reuters): Kopin Corporation, incorporated on April 23, 1984, is an inventor, developer, manufacturer and seller of Wearable technologies, which include components and systems. The Company’s segments are Forth Dimension Displays Ltd. (FDD), the manufacturer of its reflective display products for test and simulation products, and Kopin, which consists of Kopin Corporation, Kowon, Kopin Software Ltd. and e-MDT America (eMDT). Products, which include its components are augmented reality consumer wearable devices for sports and fitness and virtual reality consumer products for recreational and sport drones; military devices, such as thermal weapon sights and fighter pilot helmets, and industrial and public safety devices, such as fire fighter thermal camera enabled masks. The Company’s reflective display products are also configured as spatial light modulators and are used in industrial equipment for three dimensional (3D) Automated Optical Inspection. The Company’s systems connect via Bluetooth or wireless fidelity (WiFi) to a smartphone or similar device in order to access or transmit information from or to the Internet or devices that are in close proximity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KOPN – 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 $174,487,354 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.90 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 -327.66% Fail
6. Moderate PEmg Ratio PEmg < 20 -6.63 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.48 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 6.90 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 Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.34
MG Growth Estimate -4.25%
MG Value $0.71
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$4.99
MG Value based on 0% Growth -$2.92
Market Implied Growth Rate -7.56%
Current Price $2.28
% of Intrinsic Value 320.21%

Kopin Corporation 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, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.21 in 2014 to an estimated $-0.34 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 Kopin Corporation revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -6.63, which was below the industry average of 53.7, 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 $0.71.

Kopin Corporation 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) $0.71
Graham Number $0.00
PEmg -6.63
Current Ratio 6.90
PB Ratio 2.48
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 $64,125,000
Total Current Liabilities $9,290,000
Long-Term Debt $0
Total Assets $79,343,000
Intangible Assets $2,210,000
Total Liabilities $11,494,000
Shares Outstanding (Diluted Average) 73,917,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.34
Dec2017 -$0.36
Dec2016 -$0.37
Dec2015 -$0.23
Dec2014 -$0.45
Dec2013 -$0.08
Dec2012 -$0.29
Dec2011 $0.05
Dec2010 $0.13
Dec2009 $0.29
Dec2008 $0.04
Dec2007 -$0.10
Dec2006 -$0.03
Dec2005 $0.15
Dec2004 -$0.22
Dec2003 -$0.14
Dec2002 -$0.46
Dec2001 -$0.34
Dec2000 $0.09
Dec1999 $0.01
Dec1998 -$0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.34
Dec2017 -$0.33
Dec2016 -$0.30
Dec2015 -$0.25
Dec2014 -$0.21
Dec2013 -$0.06
Dec2012 -$0.02
Dec2011 $0.11
Dec2010 $0.11
Dec2009 $0.09
Dec2008 -$0.01
Dec2007 -$0.05
Dec2006 -$0.06
Dec2005 -$0.12
Dec2004 -$0.24
Dec2003 -$0.22
Dec2002 -$0.23

Recommended Reading:

Other ModernGraham posts about the company

Kopin Corporation Valuation – Initial Coverage $KOPN

Other ModernGraham posts about related companies

Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN

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.

Knowles Corp Valuation – August 2018 $KN

Company Profile (excerpt from Reuters): Knowles Corporation, incorporated on June 12, 2013, is a global supplier of micro-acoustic, audio processing and specialty component solutions, serving the mobile consumer electronics, communications, medical, military, aerospace and industrial markets. The Company operates through two segments: Mobile Consumer Electronics (MCE) and Specialty Components (SC). MCE designs and manufactures acoustic products, including microphones and audio processing technologies used in mobile handsets, wearables and other consumer electronic devices. SC specializes in the design and manufacture of specialized electronic components used in medical and life science applications, as well as solutions and components used in communications infrastructure and a range of other markets. It has sales, support and engineering facilities in North America, Europe and Asia, and manufacturing facilities in Asia.

Downloadable PDF version of this valuation:

ModernGraham Valuation of KN – 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 $1,562,376,527 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.56 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 2923.33% Pass
6. Moderate PEmg Ratio PEmg < 20 -128.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.41 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 2.56 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.88 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$2.01
MG Value based on 0% Growth -$1.18
Market Implied Growth Rate -68.26%
Current Price $17.71
% of Intrinsic Value N/A

Knowles 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, 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 lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.01 in 2014 to an estimated $-0.14 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 Knowles Corp revealed the company was trading above its Graham Number of $13.36. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -128.02, which was below the industry average of 53.7, 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 $-0.5.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.50
Graham Number $13.36
PEmg -128.02
Current Ratio 2.56
PB Ratio 1.41
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 $364,800,000
Total Current Liabilities $142,400,000
Long-Term Debt $196,100,000
Total Assets $1,552,700,000
Intangible Assets $947,900,000
Total Liabilities $410,100,000
Shares Outstanding (Diluted Average) 90,732,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.63
Dec2017 $0.75
Dec2016 -$0.47
Dec2015 -$2.89
Dec2014 -$1.02
Dec2013 $1.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.14
Dec2017 -$0.51
Dec2016 -$0.97
Dec2015 -$0.99
Dec2014 -$0.01
Dec2013 $0.41

Recommended Reading:

Other ModernGraham posts about the company

Knowles Corp Valuation – Initial Coverage $KN

Other ModernGraham posts about related companies

Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN
iRobot Corp Valuation – July 2018 $IRBT

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.

Cree Inc Valuation – August 2018 $CREE

Company Profile (excerpt from Reuters): Cree, Inc., incorporated on July 14, 1987, is a manufacturer of lighting-class light emitting diode (LED) products, lighting products and semiconductor products for power and radio-frequency (RF) applications. The Company’s products are focused for applications, such as indoor and outdoor lighting, video displays, transportation, electronic signs and signals, power supplies, inverters and wireless systems. The Company has three segments: Lighting Products, LED Products, and Power and RF Products. The Company’s Lighting Products segment offers LED lighting systems and bulbs. The Company’s LED Products segment offers LED components, LED chips and silicon carbide (SiC) materials. The Company’s Power and RF Products segment offers power devices and RF devices.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CREE – 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 $5,081,249,414 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.74 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 -215.38% Fail
6. Moderate PEmg Ratio PEmg < 20 -45.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.45 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 3.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.47 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.11
MG Growth Estimate -4.25%
MG Value $3.23
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$16.16
MG Value based on 0% Growth -$9.47
Market Implied Growth Rate -26.89%
Current Price $50.48
% of Intrinsic Value 1561.44%

Cree, 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 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, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.88 in 2014 to an estimated $-1.11 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 Cree, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -45.29, which was below the industry average of 53.7, 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 $3.23.

Cree, 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) $3.23
Graham Number $0.00
PEmg -45.29
Current Ratio 3.74
PB Ratio 2.45
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 $909,510,000
Total Current Liabilities $243,300,000
Long-Term Debt $316,000,000
Total Assets $2,652,638,000
Intangible Assets $1,018,487,000
Total Liabilities $585,767,000
Shares Outstanding (Diluted Average) 100,140,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$2.39
Jun2017 -$1.00
Jun2016 -$0.21
Jun2015 -$0.57
Jun2014 $1.00
Jun2013 $0.74
Jun2012 $0.39
Jun2011 $1.33
Jun2010 $1.45
Jun2009 $0.34
Jun2008 $0.38
Jun2007 $0.72
Jun2006 $0.98
Jun2005 $1.18
Jun2004 $0.85
Jun2003 $0.58
Jun2002 -$1.40
Jun2001 $0.37
Jun2000 $0.44
Jun1999 $0.21
Jun1998 $0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.11
Jun2017 -$0.32
Jun2016 $0.10
Jun2015 $0.37
Jun2014 $0.88
Jun2013 $0.83
Jun2012 $0.85
Jun2011 $1.00
Jun2010 $0.81
Jun2009 $0.57
Jun2008 $0.73
Jun2007 $0.89
Jun2006 $0.80
Jun2005 $0.57
Jun2004 $0.24
Jun2003 -$0.03
Jun2002 -$0.25

Recommended Reading:

Other ModernGraham posts about the company

Cree Inc Valuation – Initial Coverage $CREE

Other ModernGraham posts about related companies

Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN
iRobot Corp Valuation – July 2018 $IRBT

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.

Cray Inc Valuation – August 2018 $CRAY

Company Profile (excerpt from Reuters): Cray Inc., incorporated on December 7, 1987, is engaged in designing, developing, manufacturing, marketing and servicing the high performance computing (HPC) market, primarily categories of systems known as supercomputers. The Company provides data analytics, artificial intelligence and storage solutions. The Company’s segments include Supercomputing, Storage and Data Management, Maintenance and Support, and Engineering Services and Other. The Supercomputing segment includes a suite of supercomputer systems, which are used by research and engineering centers in universities, government laboratories and commercial institutions. The Storage and Data Management segment includes Cray Data Warp and Sonexion, as well as other third-party storage products and their ongoing maintenance and system analysts. The Maintenance and Support segment provides ongoing maintenance of Cray supercomputers, big data storage and analytics systems, as well as system analysts. The Engineering Services and Other segment includes the Company’s analytics business and Custom Engineering.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CRAY – 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 $911,171,772 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.15 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 -651.85% Fail
6. Moderate PEmg Ratio PEmg < 20 -19.34 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.35 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 4.15 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 Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.11
MG Growth Estimate -4.25%
MG Value $6.87
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$16.09
MG Value based on 0% Growth -$9.43
Market Implied Growth Rate -13.92%
Current Price $21.45
% of Intrinsic Value 312.34%

Cray 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, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.67 in 2014 to an estimated $-1.11 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 Cray Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -19.34, which was below the industry average of 53.7, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $6.87.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $6.87
Graham Number $0.00
PEmg -19.34
Current Ratio 4.15
PB Ratio 2.35
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 $427,882,000
Total Current Liabilities $103,212,000
Long-Term Debt $0
Total Assets $519,679,000
Intangible Assets $17,942,000
Total Liabilities $148,952,000
Shares Outstanding (Diluted Average) 40,616,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.40
Dec2017 -$3.33
Dec2016 $0.26
Dec2015 $0.68
Dec2014 $1.54
Dec2013 $0.81
Dec2012 $4.27
Dec2011 $0.40
Dec2010 $0.43
Dec2009 -$0.02
Dec2008 -$1.25
Dec2007 -$0.18
Dec2006 -$0.53
Dec2005 -$2.91
Dec2004 -$9.96
Dec2003 $3.77
Dec2002 $0.40
Dec2001 -$3.48
Dec2000 -$3.12
Dec1999 -$6.96
Dec1998 -$6.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.11
Dec2017 -$0.65
Dec2016 $0.97
Dec2015 $1.40
Dec2014 $1.67
Dec2013 $1.54
Dec2012 $1.53
Dec2011 $0.07
Dec2010 -$0.17
Dec2009 -$0.64
Dec2008 -$1.62
Dec2007 -$1.86
Dec2006 -$2.42
Dec2005 -$3.05
Dec2004 -$2.91
Dec2003 -$0.21
Dec2002 -$2.80

Recommended Reading:

Other ModernGraham posts about the company

Cray Inc Valuation – Initial Coverage $CRAY

Other ModernGraham posts about related companies

Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN
iRobot Corp Valuation – July 2018 $IRBT

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.

Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC

Company Profile (excerpt from Reuters): Kulicke and Soffa Industries, Inc., incorporated on November 26, 1956, designs, manufactures and sells capital equipment and expendable tools, as well as services, maintains, repairs and upgrades equipment, all used to assemble semiconductor devices. The Company supplies a range of bonding equipment. The Company operates through two segments: Equipment and Expendable Tools. The Equipment segment manufactures and sells a line of ball bonders, wedge bonders, advanced packaging and surface mount technology solutions. The Expendable Tools segment manufactures and sells expendable tools for a range of semiconductor packaging applications. It offers capital equipment and expendable tools used to assemble semiconductor devices, including integrated circuits (ICs), high and low powered discrete devices, light-emitting diodes (LEDs) and power modules. Its customers primarily consist of semiconductor device manufacturers, outsourced semiconductor assembly and test providers (OSATs), other electronics manufacturers and automotive electronics suppliers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KLIC – 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 $1,875,896,689 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 5.02 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 3.69% Fail
6. Moderate PEmg Ratio PEmg < 20 27.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.12 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 5.02 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 Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.97
MG Growth Estimate -3.49%
MG Value $9.65
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $14.05
MG Value based on 0% Growth $8.23
Market Implied Growth Rate 9.50%
Current Price $26.64
% of Intrinsic Value 275.99%

Kulicke and Soffa 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 ratio. The Enterprising Investor has concerns regarding the lack of earnings growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.26 in 2014 to an estimated $0.97 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.5% 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 Kulicke and Soffa Industries Inc. revealed the company was trading above its Graham Number of $13.95. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 27.5, which was below the industry average of 53.7, 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 $9.65.

Kulicke and Soffa Industries 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) $9.65
Graham Number $13.95
PEmg 27.50
Current Ratio 5.02
PB Ratio 2.12
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 $1,022,442,000
Total Current Liabilities $203,578,000
Long-Term Debt $0
Total Assets $1,225,925,000
Intangible Assets $111,780,000
Total Liabilities $343,843,000
Shares Outstanding (Diluted Average) 70,302,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.66
Sep2017 $1.75
Sep2016 $0.68
Sep2015 $0.69
Sep2014 $0.81
Sep2013 $0.78
Sep2012 $2.13
Sep2011 $1.73
Sep2010 $1.92
Sep2009 -$0.67
Sep2008 $0.07
Sep2007 $0.57
Sep2006 $0.78
Sep2005 -$2.02
Sep2004 $0.89
Sep2003 -$1.54
Sep2002 -$5.57
Sep2001 -$1.34
Sep2000 $1.90
Sep1999 -$0.36
Sep1998 -$0.12

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.97
Sep2017 $1.06
Sep2016 $0.82
Sep2015 $1.00
Sep2014 $1.26
Sep2013 $1.39
Sep2012 $1.47
Sep2011 $1.00
Sep2010 $0.60
Sep2009 -$0.12
Sep2008 $0.12
Sep2007 $0.01
Sep2006 -$0.68
Sep2005 -$1.58
Sep2004 -$1.28
Sep2003 -$2.04
Sep2002 -$1.89

Recommended Reading:

Other ModernGraham posts about the company

Kulicke and Soffa Industries Inc Valuation – Initial Coverage $KLIC

Other ModernGraham posts about related companies

Keysight Technologies Inc Valuation – August 2018 $KEYS
Semtech Corp Valuation – August 2018 $SMTC
Cohu Inc Valuation – August 2018 $COHU
Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN
iRobot Corp Valuation – July 2018 $IRBT

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.

Back To Top