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Cintas Corp Valuation – February 2019 $CTAS

Company Profile (excerpt from Reuters): Cintas Corporation, incorporated on November 13, 1986, is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. The Company’s segments include uniform rental and facility services, and first aid and safety services. Rental processing plants, rental branches, first aid and safety facilities, fire protection facilities, direct sales offices, distribution centers and manufacturing facilities are all utilized by the businesses included in All Other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,646,953,154 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.99 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 262.24% Pass
6. Moderate PEmg Ratio PEmg < 20 29.17 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.82 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 1.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.30 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 $6.44
MG Growth Estimate 15.00%
MG Value $248.02
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $93.41
MG Value based on 0% Growth $54.76
Market Implied Growth Rate 10.34%
Current Price $187.92
% of Intrinsic Value 75.77%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.94 in 2015 to an estimated $6.44 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 10.34% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Cintas Corporation revealed the company was trading above its Graham Number of $68.91. The company pays a dividend of $1.62 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 29.17, which was below the industry average of 29.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.68.

Cintas Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.68
Graham Number $68.91
PEmg 29.17
Current Ratio 1.99
PB Ratio 6.82
Current Dividend $1.62
Dividend Yield 0.86%
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 11/1/2018
Total Current Assets $2,215,870,000
Total Current Liabilities $1,114,686,000
Long-Term Debt $2,536,408,000
Total Assets $7,405,083,000
Intangible Assets $3,354,133,000
Total Liabilities $4,377,839,000
Shares Outstanding (Diluted Average) 109,874,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.44
May2018 $7.56
May2017 $4.38
May2016 $6.21
May2015 $3.63
May2014 $3.05
May2013 $2.52
May2012 $2.27
May2011 $1.68
May2010 $1.40
May2009 $1.48
May2008 $2.15
May2007 $2.09
May2006 $1.92
May2005 $1.69
May2004 $1.54
May2003 $1.45
May2002 $1.36
May2001 $1.30
May2000 $1.14
May1999 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.44
May2018 $5.62
May2017 $4.42
May2016 $4.14
May2015 $2.94
May2014 $2.46
May2013 $2.07
May2012 $1.83
May2011 $1.66
May2010 $1.70
May2009 $1.85
May2008 $1.99
May2007 $1.85
May2006 $1.68
May2005 $1.53
May2004 $1.42
May2003 $1.31

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
Cintas Corp Valuation – April 2018 $CTAS
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Other ModernGraham posts about related companies

Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX
Fleetcor Technologies Inc Valuation – January 2019 $FLT
TrueBlue Inc Valuation – October 2018 $TBI
Convergys Corp Valuation – September 2018 $CVG
Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA

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.

Cintas Corp Valuation – April 2018 $CTAS

Company Profile (excerpt from Reuters): Cintas Corporation, incorporated on November 13, 1986, is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, first aid and safety services and fire protection products and services. The Company’s segments include uniform rental and facility services, and first aid and safety services. Rental processing plants, rental branches, first aid and safety facilities, fire protection facilities, direct sales offices, distribution centers and manufacturing facilities are all utilized by the businesses included in All Other.

CTAS Chart

CTAS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – April 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 $18,164,860,211 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.15 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 292.32% Pass
6. Moderate PEmg Ratio PEmg < 20 30.84 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.49 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 2.15 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.41 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.53
MG Growth Estimate 15.00%
MG Value $212.93
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $80.19
MG Value based on 0% Growth $47.01
Market Implied Growth Rate 11.17%
Current Price $170.58
% of Intrinsic Value 80.11%

Cintas Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.46 in 2014 to an estimated $5.53 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 11.17% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Cintas Corporation revealed the company was trading above its Graham Number of $59.9. The company pays a dividend of $1.33 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 30.84, which was below the industry average of 32.93, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-18.65.

Cintas Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.65
Graham Number $59.90
PEmg 30.84
Current Ratio 2.15
PB Ratio 6.49
Current Dividend $1.33
Dividend Yield 0.78%
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 2/1/2018
Total Current Assets $1,970,832,000
Total Current Liabilities $917,573,000
Long-Term Debt $2,534,760,000
Total Assets $6,919,849,000
Intangible Assets $3,377,344,000
Total Liabilities $4,025,852,000
Shares Outstanding (Diluted Average) 110,175,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.30
May2017 $4.38
May2016 $6.21
May2015 $3.63
May2014 $3.05
May2013 $2.52
May2012 $2.27
May2011 $1.68
May2010 $1.40
May2009 $1.48
May2008 $2.15
May2007 $2.09
May2006 $1.92
May2005 $1.69
May2004 $1.54
May2003 $1.45
May2002 $1.36
May2001 $1.30
May2000 $1.14
May1999 $0.82
May1998 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.53
May2017 $4.42
May2016 $4.14
May2015 $2.94
May2014 $2.46
May2013 $2.07
May2012 $1.83
May2011 $1.66
May2010 $1.70
May2009 $1.85
May2008 $1.99
May2007 $1.85
May2006 $1.68
May2005 $1.53
May2004 $1.42
May2003 $1.31
May2002 $1.19

Recommended Reading:

Other ModernGraham posts about the company

Dividend Growth Stocks for Intelligent Investors – June 2016
Dividend Growth Stocks for Intelligent Investors – February 2016
13 Best Stocks For Value Investors This Week – 12/12/15
Cintas Corp Valuation – December 2015 Update $CTAS
The Best Companies of the Business Support Industry – November 2015

Other ModernGraham posts about related companies

Xerox Corp Valuation – March 2018 $XRX
Avery Dennison Corp Valuation – March 2018 $AVY
Ecolab Inc Valuation – March 2018 $ECL
Paychex Inc Valuation – March 2018 $PAYX
United Rentals Inc Valuation – September 2017 $URI
Exponent Inc Valuation – Initial Coverage $EXPO
ExlService Holdings Inc Valuation – Initial Coverage $EXLS
Trueblue Inc Valuation – Initial Coverage $TBI
Global Payments Inc Valuation – Initial Coverage $GPN
Strayer Education Inc Valuation – Initial Coverage $STRA

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.

Cintas Corporation Valuation – July 2016 $CTAS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today - June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cintas Corporation (CTAS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cintas Corporation provides products and services to businesses of all types. The Company is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, and first aid, safety and fire protection products and services. The Company has three segments: Rental Uniforms and Ancillary Products, Uniform Direct Sales, and First Aid, Safety and Fire Protection Services. The Company’s Rental Uniforms and Ancillary Products segment consists of the rental and servicing of uniforms and other garments, including flame resistant clothing, mats, mops and shop towels and other ancillary items. The Company’s Uniform Direct Sales segment consists of the direct sale of uniforms and related items. The Company’s First Aid, Safety and Fire Protection Services segment consists of first aid, safety and fire protection products and services.

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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. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – July 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,592,815,164 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.95 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 179.13% Pass
6. Moderate PEmg Ratio PEmg < 20 24.63 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.40 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 1.95 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.36 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

CTAS value chart July 2016

EPSmg $4.36
MG Growth Estimate 15.00%
MG Value $167.73
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $63.17
MG Value based on 0% Growth $37.03
Market Implied Growth Rate 8.06%
Current Price $107.30
% of Intrinsic Value 63.97%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.07 in 2013 to an estimated $4.36 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Cintas Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

CTAS charts July 2016

Net Current Asset Value (NCAV) -$6.11
Graham Number $40.34
PEmg 24.63
Current Ratio 1.95
PB Ratio 6.40
Current Dividend $1.05
Dividend Yield 0.98%
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 5/1/2016
Total Current Assets $1,590,035,000
Total Current Liabilities $815,555,000
Long-Term Debt $1,050,000,000
Total Assets $4,104,393,000
Intangible Assets $1,375,308,000
Total Liabilities $2,261,734,000
Shares Outstanding (Diluted Average) 109,956,000

Earnings Per Share History

Next Fiscal Year Estimate $4.20
May2016 $6.21
May2015 $3.63
May2014 $3.05
May2013 $2.52
May2012 $2.27
May2011 $1.68
May2010 $1.40
May2009 $1.48
May2008 $2.15
May2007 $2.09
May2006 $1.94
May2005 $1.74
May2004 $1.58
May2003 $1.45
May2002 $1.36
May2001 $1.30
May2000 $1.14
May1999 $0.82
May1998 $0.79
May1997 $0.64

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.36
May2016 $4.14
May2015 $2.94
May2014 $2.46
May2013 $2.07
May2012 $1.83
May2011 $1.66
May2010 $1.70
May2009 $1.86
May2008 $2.00
May2007 $1.87
May2006 $1.71
May2005 $1.56
May2004 $1.43
May2003 $1.31
May2002 $1.19
May2001 $1.05

Recommended Reading:

Other ModernGraham posts about the company

Dividend Growth Stocks for Intelligent Investors – June 2016
Dividend Growth Stocks for Intelligent Investors – February 2016
13 Best Stocks For Value Investors This Week – 12/12/15
Cintas Corp Valuation – December 2015 Update $CTAS
The Best Companies of the Business Support Industry – November 2015

Other ModernGraham posts about related companies

Pitney Bowes Inc Valuation – July 2016 $PBI
Xerox Corp Valuation – June 2016 $XRX
Avery Dennison Corp Valuation – June 2016 $AVY
Ecolab Inc Valuation – June 2016 $ECL
Paychex Inc Valuation – June 2016 $PAYX
Automatic Data Processing Valuation – May 2016 $ADP
Robert Half International Inc Valuation – February 2016 $RHI
Accenture PLC Valuation – February 2016 $ACN
Cintas Corp Valuation – December 2015 Update $CTAS
Accenture PLC Valuation – February 2016 $ACN

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.

Cintas Corp Valuation – December 2015 Update $CTAS

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 – November 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 Cintas Corp (CTAS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cintas Corporation provides products and services to businesses of all types. The Company is a provider of corporate identity uniforms through rental and sales programs, as well as a provider of related business services, including entrance mats, restroom cleaning services and supplies, carpet and tile cleaning services, and first aid, safety and fire protection products and services. The Company has three segments: Rental Uniforms and Ancillary Products, Uniform Direct Sales, and First Aid, Safety and Fire Protection Services. The Company’s Rental Uniforms and Ancillary Products segment consists of the rental and servicing of uniforms and other garments, including flame resistant clothing, mats, mops and shop towels and other ancillary items. The Company’s Uniform Direct Sales segment consists of the direct sale of uniforms and related items. The Company’s First Aid, Safety and Fire Protection Services segment consists of first aid, safety and fire protection products and services.

[level-free]

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

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

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – December 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 $9,896,574,864 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.81 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 83.74% Pass
6. Moderate PEmg Ratio PEmg < 20 27.47 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.57 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 1.81 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.36 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

CTAS value Chart December 2015

EPSmg $3.34
MG Growth Estimate 12.46%
MG Value $111.71
Opinion Fairly Valued
MG Value based on 3% Growth $48.46
MG Value based on 0% Growth $28.41
Market Implied Growth Rate 9.49%
Current Price $91.81
% of Intrinsic Value 82.18%

Cintas Corp qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio as well as the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research.

As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.83 in 2012 to an estimated $3.34 for 2016.  This level of demonstrated earnings growth supports the market’s implied estimate of 9.49% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

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 Cintas Corp (CTAS)?  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

CTAS Charts December 2015

Net Current Asset Value (NCAV) -$4.81
Graham Number $37.77
PEmg 27.47
Current Ratio 1.81
PB Ratio 5.57
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 20

 

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Aug15
Total Current Assets $1,733,952,000
Total Current Liabilities $959,326,000
Long-Term Debt $1,050,000,000
Total Assets $4,122,949,000
Intangible Assets $1,347,809,000
Total Liabilities $2,274,280,000
Shares Outstanding (Diluted Average) 112,229,000

Earnings Per Share History

Next Fiscal Year Estimate $3.83
May15 $3.63
May14 $3.05
May13 $2.52
May12 $2.27
May11 $1.68
May10 $1.40
May09 $1.48
May08 $2.15
May07 $2.09
May06 $1.92
May05 $1.69
May04 $1.54
May03 $1.45
May02 $1.36
May01 $1.30
May00 $1.14
May99 $0.82
May98 $0.82
May97 $0.70
May96 $0.59

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.34
May15 $2.94
May14 $2.46
May13 $2.07
May12 $1.83
May11 $1.66
May10 $1.70
May09 $1.85
May08 $1.99
May07 $1.85
May06 $1.68
May05 $1.53
May04 $1.42
May03 $1.31
May02 $1.19
May01 $1.06
May00 $0.90

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Business Support Industry – November 2015
Dividend Growth Stocks for the Intelligent Investor – November 2015
Dividend Growth Stocks for the Intelligent Investor – October 2015
Dividend Growth Stocks for the Intelligent Investor – September 2015
19 Best Stocks For Value Investors This Week – 8/29/15

Other ModernGraham posts about related companies

The Best Companies of the Business Support Industry – November 2015
Paychex Inc. Valuation – November 2015 Update $PAYX
Robert Half International Inc. Valuation – November 2015 Update $RHI
Alliance Data Systems Corporation Analysis – October 2015 Update $ADS
Automatic Data Processing Analysis – September 2015 Update $ADP
Accenture PLC Analysis – September 2015 Update $ACN
Dun & Bradstreet Corp. Analysis – September 2015 Update $DNB
Cintas Corporation Analysis – August 2015 Update $CTAS
Apollo Education Group Inc. Analysis – Initial Coverage $APOL
Paychex Inc. Analysis – August 2015 Update $PAYX

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.

 

Cintas Corporation Analysis – August 2015 Update $CTAS

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 Cintas Corporation (CTAS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cintas Corporation (Cintas) provides products and services to businesses of all types. The Company operates in North America, as well as Latin America, Europe and Asia. Cintas operates in four segments: The Rental Uniforms and Ancillary Products segment consists of rental of corporate identify uniforms and other garments, including flame resistant clothing, and the rental or sale of mats, mops, shop towels, restroom supplies and other rental services. The Uniform Direct Sales segment consists of the direct sale of uniforms and related items. The First Aid, Safety and Fire Protection Services segment consists of first aid, safety and fire protection products and services. The Document Management Services segment consists of document destruction, document imaging and document retention services.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – August 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 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end Pass
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 Pass
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

EPSmg 3.33
MG Growth Estimate 12.33%
MG Value $110.24
Opinion Undervalued
MG Value based on 3% Growth $48.22
MG Value based on 0% Growth $28.27
Market Implied Growth Rate 8.17%
Current Price $82.60
% of Intrinsic Value 74.92%

Cintas Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned with the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.83 in 2012 to an estimated $3.33 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.17% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

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 Cintas Corporation (CTAS)?  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

CTAS charts August 2015

Net Current Asset Value (NCAV) -$4.54
PEmg 24.84
Current Ratio 2.79
PB Ratio 4.94
Dividend Yield 1.03%
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

Total Current Assets $1,735,807,000
Total Current Liabilities $621,058,000
Long-Term Debt $1,300,000,000
Total Assets $4,192,460,000
Intangible Assets $1,238,046,000
Total Liabilities $2,260,005,000
Shares Outstanding (Diluted Average) 115,530,000

Earnings Per Share History

Next Fiscal Year Estimate $3.78
May15 $3.63
May14 $3.05
May13 $2.52
May12 $2.27
May11 $1.68
May10 $1.40
May09 $1.48
May08 $2.15
May07 $2.09
May06 $1.92
May05 $1.69
May04 $1.54
May03 $1.45
May02 $1.36
May01 $1.30
May00 $1.14
May99 $0.82
May98 $0.82
May97 $0.70
May96 $0.59

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.33
May15 $2.94
May14 $2.46
May13 $2.07
May12 $1.83
May11 $1.66
May10 $1.70
May09 $1.85
May08 $1.99
May07 $1.85
May06 $1.68
May05 $1.53
May04 $1.42
May03 $1.31
May02 $1.19
May01 $1.06
May00 $0.90

Recommended Reading:

Other ModernGraham posts about the company

24 Companies in the Spotlight This Week – 3/28/15
Cintas Corporation Quarterly Valuation – March 2015 $CTAS
27 Companies in the Spotlight This Week – 12/20/14
Cintas Corporation Quarterly Valuation – December 2014 $CTAS

Other ModernGraham posts about related companies

Apollo Education Group Inc. Analysis – Initial Coverage $APOL
Paychex Inc. Analysis – August 2015 Update $PAYX
Robert Half International Inc. Analysis – August 2015 Update $RHI
United Rentals Inc. Analysis – Initial Coverage $URI
Automatic Data Processing Analysis – June 2015 Update $ADP
Accenture plc Analysis – June 2015 Update $ACN
Fiserv Inc. Analysis – 2015 Annual Update $FISV
Paychex Inc. Quarterly Valuation – May 2015 $PAYX
Robert Half International Quarterly Valuation – May 2015 $RHI
Omnicom Group Inc. Annual Valuation – 2015 $OMC

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.  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 see our detailed disclaimer.

Cintas Corporation Quarterly Valuation – March 2015 $CTAS

220px-Cintas.svgBenjamin 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 Most Undervalued Companies for the Defensive Investor – March 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 specific look at how Cintas Corporation (CTAS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cintas Corporation (Cintas) provides products and services to businesses of all types. The Company operates in North America, as well as Latin America, Europe and Asia. Cintas operates in four segments: The Rental Uniforms and Ancillary Products segment consists of rental of corporate identify uniforms and other garments, including flame resistant clothing, and the rental or sale of mats, mops, shop towels, restroom supplies and other rental services. The Uniform Direct Sales segment consists of the direct sale of uniforms and related items. The First Aid, Safety and Fire Protection Services segment consists of first aid, safety and fire protection products and services. The Document Management Services segment consists of document destruction, document imaging and document retention services.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  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 = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  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 $82.55
MG Value $91.07
MG Opinion Fairly Valued
Value Based on 3% Growth $42.22
Value Based on 0% Growth $24.75
Market Implied Growth Rate 9.92%
Net Current Asset Value (NCAV) -$4.32
PEmg 28.35
Current Ratio 2.70
PB Ratio 4.75

Balance Sheet - February 2015

Current Assets $1,797,000,000
Current Liabilities $666,000,000
Total Debt $1,300,000,000
Total Assets $4,353,000,000
Intangible Assets $1,239,000,000
Total Liabilities $2,306,000,000
Outstanding Shares 117,900,000

Earnings Per Share

2015 $3.54
2014 $3.05
2013 $2.52
2012 $2.27
2011 $1.68
2010 $1.40
2009 $1.48
2008 $2.15
2007 $2.09
2006 $1.92
2005 $1.69

Earnings Per Share – ModernGraham

2015 $2.91
2014 $2.46
2013 $2.07
2012 $1.83
2011 $1.66
2010 $1.70

Dividend History

Conclusion:

Cintas Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the high PEmg and PB ratios, while the Enterprising Investor is concerned with the level of debt relative to the net current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.66 in 2011 to an estimated $2.91 for 2015.  This level of demonstrated growth supports the market’s implied estimate of 9.92% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to 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 Cintas Corporation (CTAS)?  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 Cintas Corporation (CTAS) 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.

Cintas Corporation Quarterly Valuation – December 2014 $CTAS

220px-Cintas.svgBenjamin 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 Dow Components to Research – December 2014.  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 Cintas Corporation (CTAS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cintas Corporation (Cintas) provides specialized products and services to businesses of all types throughout the North America, Latin America, Europe and Asia. The Company operates in three segments: Rental Uniforms and Ancillary Products, Uniform Direct Sales and First Aid, Safety and Fire Protection Services. The Rental Uniforms and Ancillary Products segment consists of the rental and servicing of uniforms and other garments including flame resistant clothing, mats, mops and shop towels. The segment also provides restroom cleaning services and supplies and carpet and tile cleaning services. The Uniform Direct Sales segment consists of the direct sale of uniforms and related items and branded promotional products. The First Aid, Safety and Fire Protection Services segment consists of first aid, safety and fire protection products and services.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 5/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - PASS
  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 = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - PASS
  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 $71.03
MG Value $78.61
MG Opinion Fairly Valued
Value Based on 3% Growth $40.00
Value Based on 0% Growth $23.45
Market Implied Growth Rate 8.62%
Net Current Asset Value (NCAV) -$2.30
PEmg 25.75
Current Ratio 3.17
PB Ratio 3.69

Balance Sheet – September 2014

Current Assets $2,013,000,000
Current Liabilities $636,000,000
Total Debt $1,300,000,000
Total Assets $4,556,000,000
Intangible Assets $1,234,000,000
Total Liabilities $2,284,000,000
Outstanding Shares 118,000,000

Earnings Per Share

2015 (estimate) $3.08
2014 $3.05
2013 $2.52
2012 $2.27
2011 $1.68
2010 $1.40
2009 $1.48
2008 $2.15
2007 $2.09
2006 $1.92
2005 $1.69

Earnings Per Share – ModernGraham

2015 (estimate) $2.76
2014 $2.46
2013 $2.07
2012 $1.83
2011 $1.66
2010 $1.70

Dividend History

Conclusion:

Cintas Corporation qualifies for the Enterprising Investor but not for the Defensive Investor.  The Defensive Investor is concerned by the high PEmg and PB ratios.  The Enterprising Investor, on the other hand, has no initial concerns.  As a result, Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $1.66 in 2011 to an estimated $2.76 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 8.62% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to 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 Cintas Corporation (CTAS)?  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 Cintas Corporation (CTAS) 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.

United Rentals Inc Valuation – April 2019 #URI

Company Profile (excerpt from Reuters): United Rentals, Inc., incorporated on July 20, 1998, is a holding company. The Company is an equipment rental company, which operates throughout the United States and Canada. It operates through two segments: general rentals, and trench, power and pump. The general rentals segment includes the rental of construction, aerial, industrial and homeowner equipment and related services and activities. The trench, power and pump segment includes the rental of specialty construction products and related services. As of October 17, 2018, the Company had an integrated network of 1075 rental locations in North America and 11 in Europe. The Company conducts its operations through its subsidiaries, NES Rentals Holdings II, Inc., United Rentals (North America), Inc. (URNA) and subsidiaries of URNA.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of URI – April 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,549,825,287 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 2565.90% Pass
6. Moderate PEmg Ratio PEmg < 20 8.87 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.90 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -30.55 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 $13.67
MG Growth Estimate 15.00%
MG Value $526.14
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $198.16
MG Value based on 0% Growth $116.16
Market Implied Growth Rate 0.18%
Current Price $121.20
% of Intrinsic Value 23.04%

United Rentals, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. 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 Undervalued after growing its EPSmg (normalized earnings) from $4.32 in 2015 to an estimated $13.67 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.18% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into United Rentals, Inc. revealed the company was trading below its Graham Number of $128.67. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 8.87, which was below the industry average of 32.68, 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 $-159.15.

United Rentals, 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) -$159.15
Graham Number $128.67
PEmg 8.87
Current Ratio 0.83
PB Ratio 2.90
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 12/1/2018
Total Current Assets $1,761,000,000
Total Current Liabilities $2,116,000,000
Long-Term Debt $10,844,000,000
Total Assets $18,133,000,000
Intangible Assets $6,142,000,000
Total Liabilities $14,730,000,000
Shares Outstanding (Diluted Average) 81,487,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $17.27
Dec2018 $13.12
Dec2017 $15.73
Dec2016 $6.45
Dec2015 $6.07
Dec2014 $5.15
Dec2013 $3.64
Dec2012 $0.79
Dec2011 $1.38
Dec2010 -$0.44
Dec2009 -$1.02
Dec2008 -$12.62
Dec2007 $3.25
Dec2006 $2.06
Dec2005 $1.80
Dec2004 -$0.88
Dec2003 -$3.29
Dec2002 -$4.88
Dec2001 $1.18
Dec2000 $1.89
Dec1999 $1.53

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $13.67
Dec2018 $11.01
Dec2017 $9.11
Dec2016 $5.34
Dec2015 $4.32
Dec2014 $3.00
Dec2013 $1.57
Dec2012 -$0.43
Dec2011 -$1.33
Dec2010 -$2.37
Dec2009 -$2.66
Dec2008 -$2.75
Dec2007 $1.66
Dec2006 $0.23
Dec2005 -$0.86
Dec2004 -$1.86
Dec2003 -$1.81

Recommended Reading:

Other ModernGraham posts about the company

United Rentals Inc Valuation – June 2018 $URI
United Rentals Inc Valuation – September 2017 $URI
United Rentals Inc Valuation – August 2016 $URI
United Rentals Inc. Analysis – Initial Coverage $URI

Other ModernGraham posts about related companies

Verisk Analytics Inc Valuation – March 2019 #VRSK
Global Payments Inc Valuation – March 2019 #GPN
Robert Half International Inc Valuation – March 2019 #RHI
Alliance Data Systems Corp Valuation – March 2019 #ADS
IHS Markit Ltd Valuation – February 2019 $INFO
Automatic Data Processing Inc Valuation – February 2019 $ADP
Fiserv Inc Valuation – February 2019 $FISV
Rollins Inc Valuation – February 2019 $ROL
Iron Mountain Inc Valuation – February 2019 $IRM
Cintas Corp Valuation – February 2019 $CTAS

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.

Verisk Analytics Inc Valuation – March 2019 #VRSK

Company Profile (excerpt from Reuters): Verisk Analytics, Inc., incorporated on May 23, 2008, is a data analytics provider serving customers in insurance, natural resources and financial services. The Company operates through two segments: Risk Assessment and Decision Analytics. Its Risk Assessment segment serves its property and casualty (P&C) insurance customers and focuses on prediction of loss, selection and pricing of risk, and compliance with their reporting requirements in each United States state in which they operate. In the Decision Analytics segment, the Company develops predictive models to forecast scenarios and produce both standard and customized analytics that help its customers manage their businesses, including predicting loss, selecting and pricing risk, detecting fraud before and after a loss event, and quantifying losses. The Company offers predictive analytics and decision support solutions to customers in rating, underwriting, claims, catastrophe and weather risk, natural resources intelligence, economic forecasting, and various other fields. In the United States, and around the world, the Company enables customers protect people, property, and financial assets. These solutions take various forms, including data, expert insight, statistical models and analytics all designed to allow its customers to make logical decisions. The Company also works with a range of companies, governments and institutions across the energy, and metals and mining value chains. The Company uses its data assets to develop predictive analytics and transformative models for its customers.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VRSK – 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 $21,005,247,318 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.49 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 129.90% Pass
6. Moderate PEmg Ratio PEmg < 20 34.71 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.38 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 0.49 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.99 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 $3.70
MG Growth Estimate 8.09%
MG Value $91.38
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $53.67
MG Value based on 0% Growth $31.46
Market Implied Growth Rate 13.10%
Current Price $128.47
% of Intrinsic Value 140.58%

Verisk Analytics, 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 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 $2.4 in 2015 to an estimated $3.7 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.1% 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 Verisk Analytics, Inc. revealed the company was trading above its Graham Number of $34.88. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 34.71, which was above the industry average of 32.74. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.03.

Verisk Analytics, 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) -$19.03
Graham Number $34.88
PEmg 34.71
Current Ratio 0.49
PB Ratio 10.38
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 12/1/2018
Total Current Assets $644,500,000
Total Current Liabilities $1,324,600,000
Long-Term Debt $2,031,000,000
Total Assets $5,900,300,000
Intangible Assets $4,589,300,000
Total Liabilities $3,829,700,000
Shares Outstanding (Diluted Average) 167,347,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.30
Dec2018 $3.56
Dec2017 $3.29
Dec2016 $3.45
Dec2015 $3.01
Dec2014 $2.37
Dec2013 $2.02
Dec2012 $1.92
Dec2011 $1.63
Dec2010 $1.30
Dec2009 $0.70
Dec2008 $0.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.70
Dec2018 $3.31
Dec2017 $3.07
Dec2016 $2.82
Dec2015 $2.40
Dec2014 $2.02
Dec2013 $1.73
Dec2012 $1.48
Dec2011 $1.14
Dec2010 $0.79
Dec2009 $0.45
Dec2008 $0.28

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Disclaimer:

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

Global Payments Inc Valuation – March 2019 #GPN

Company Profile (excerpt from Reuters): Global Payments Inc., incorporated in September, 2000, is a provider of payment technology services. The Company provides payment and digital commerce solutions. The Company operates through three segments: North America, Europe and Asia-Pacific. The Company’s segments primarily provide payment solutions for credit cards, debit cards, electronic payments and check-related services. It target customers in various industries, including financial services, gaming, government, healthcare, professional services, restaurants, retail, universities, not-for-profit organizations and utilities. It provides services across a range of channels to merchants and partners in over 30 countries throughout North America, Europe, the Asia-Pacific region and Brazil.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GPN – 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 $21,328,691,229 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.03 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 214.90% Pass
6. Moderate PEmg Ratio PEmg < 20 36.24 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.12 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 1.03 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 46.61 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.73
MG Growth Estimate 15.00%
MG Value $143.55
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $54.07
MG Value based on 0% Growth $31.69
Market Implied Growth Rate 13.87%
Current Price $135.12
% of Intrinsic Value 94.13%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.66 in 2015 to an estimated $3.73 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 13.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Global Payments Inc revealed the company was trading above its Graham Number of $57.82. The company pays a dividend of $0.04 per share, for a yield of 0% Its PEmg (price over earnings per share – ModernGraham) was 36.24, which was above the industry average of 32.74. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-35.72.

Global Payments 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) -$35.72
Graham Number $57.82
PEmg 36.24
Current Ratio 1.03
PB Ratio 5.12
Current Dividend $0.04
Dividend Yield 0.03%
Number of Consecutive Years of Dividend Growth 0

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,376,208,000
Total Current Liabilities $3,268,620,000
Long-Term Debt $5,015,168,000
Total Assets $13,230,774,000
Intangible Assets $8,829,973,000
Total Liabilities $9,044,431,000
Shares Outstanding (Diluted Average) 158,707,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.88
Dec2018 $2.84
Dec2017 $3.01
May2016 $2.04
May2015 $2.06
May2014 $1.69
May2013 $1.38
May2012 $1.19
May2011 $1.30
May2010 $1.24
May2009 $0.23
May2008 $1.01
May2007 $0.88
May2006 $0.77
May2005 $0.29
May2004 $0.40
May2003 $0.18
May2002 $0.16
May2001 $0.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.73
Dec2018 $2.54
Dec2017 $2.28
May2016 $1.83
May2015 $1.66
May2014 $1.42
May2013 $1.22
May2012 $1.09
May2011 $1.00
May2010 $0.84
May2009 $0.64
May2008 $0.79
May2007 $0.62
May2006 $0.45
May2005 $0.27
May2004 $0.24
May2003 $0.14

Recommended Reading:

Other ModernGraham posts about the company

Global Payments Inc Valuation – June 2018 $GPN
Global Payments Inc Valuation – Initial Coverage $GPN

Other ModernGraham posts about related companies

Alliance Data Systems Corp Valuation – March 2019 #ADS
IHS Markit Ltd Valuation – February 2019 $INFO
Automatic Data Processing Inc Valuation – February 2019 $ADP
Fiserv Inc Valuation – February 2019 $FISV
Rollins Inc Valuation – February 2019 $ROL
Iron Mountain Inc Valuation – February 2019 $IRM
Cintas Corp Valuation – February 2019 $CTAS
Fidelity National Information Services Inc Valuation – January 2019 $FIS
Avery Dennison Corp Valuation – January 2019 $AVY
Paychex Inc Valuation – January 2019 $PAYX

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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