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Intel Corporation Valuation – April 2019 #INTC

Company Profile (excerpt from Reuters): Intel Corporation, incorporated on March 1, 1989, is engaged in designing and manufacturing products and technologies, such as the cloud. The Company’s segments are Client Computing Group (CCG), Data Center Group (DCG), Internet of Things Group (IOTG), Non-Volatile Memory Solutions Group (NSG), Intel Security Group (ISecG), Programmable Solutions Group (PSG), All Other and New Technology Group (NTG). The Company delivers computer, networking and communications platforms to a set of customers, including original equipment manufacturers (OEMs), original design manufacturers (ODMs), cloud and communications service providers, as well as industrial, communications and automotive equipment manufacturers. It offers platforms to integrate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-Chip (SoC), or a multichip package. Its platforms are managed by additional hardware, software and services offered by Intel.

Downloadable PDF version of this valuation:

ModernGraham Valuation of INTC – 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 $249,631,094,870 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.73 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 61.87% Pass
6. Moderate PEmg Ratio PEmg < 20 16.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.42 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 1.73 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.06 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 PassModernGraham Valuation of INTC – April 2019

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.40
MG Growth Estimate 8.02%
MG Value $83.35
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $49.26
MG Value based on 0% Growth $28.88
Market Implied Growth Rate 3.91%
Current Price $55.45
% of Intrinsic Value 66.53%

Intel 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 PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.21 in 2015 to an estimated $3.4 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.91% 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 Intel Corporation revealed the company was trading above its Graham Number of $39.14. The company pays a dividend of $1.2 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.32, which was below the industry average of 35.4, 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 $-5.24.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.24
Graham Number $39.14
PEmg 16.32
Current Ratio 1.73
PB Ratio 3.42
Current Dividend $1.20
Dividend Yield 2.16%
Number of Consecutive Years of Dividend Growth 4

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 $28,787,000,000
Total Current Liabilities $16,626,000,000
Long-Term Debt $25,098,000,000
Total Assets $127,963,000,000
Intangible Assets $36,349,000,000
Total Liabilities $52,981,000,000
Shares Outstanding (Diluted Average) 4,620,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.10
Dec2018 $4.48
Dec2017 $1.99
Dec2016 $2.12
Dec2015 $2.33
Dec2014 $2.31
Dec2013 $1.89
Dec2012 $2.13
Dec2011 $2.39
Dec2010 $2.01
Dec2009 $0.77
Dec2008 $0.92
Dec2007 $1.18
Dec2006 $0.86
Dec2005 $1.40
Dec2004 $1.16
Dec2003 $0.85
Dec2002 $0.46
Dec2001 $0.19
Dec2000 $1.51
Dec1999 $1.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.40
Dec2018 $2.91
Dec2017 $2.13
Dec2016 $2.18
Dec2015 $2.21
Dec2014 $2.15
Dec2013 $2.00
Dec2012 $1.91
Dec2011 $1.69
Dec2010 $1.27
Dec2009 $0.95
Dec2008 $1.06
Dec2007 $1.11
Dec2006 $1.04
Dec2005 $1.02
Dec2004 $0.83
Dec2003 $0.72

Recommended Reading:

Other ModernGraham posts about the company

Intel Corp Valuation – November 2018 $INTC
Intel Corp Valuation – February 2018 $INTC
5 Overvalued Dow Components – July 2016
Intel Corporation Valuation – May 2016 $INTC
11 Best Stocks For Value Investors This Week – 11/21/15

Other ModernGraham posts about related companies

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Maxim Integrated Products Inc Valuation – April 2019 #MXIM
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Lam Research Corp Valuation – April 2019 #LRCX
Emerson Electric Co Valuation – April 2019 #EMR
Skyworks Solutions Inc Valuation – March 2019 #SWKS
Garmin Ltd Valuation – March 2019 #GRMN
Hewlett Packard Enterprise Co Valuation – March 2019 #HPE
Fortive Corp Valuation – March 2019 #FTV

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.

General Electric Co Valuation – April 2019 #GE

Company Profile (excerpt from Reuters): General Electric Company (GE), incorporated on April 15, 1892, is a global digital industrial company. The Company’s products and services range from aircraft engines, power generation, and oil and gas production equipment to medical imaging, financing and industrial products. The Company’s segments include Power, Renewable Energy, Oil & Gas, Aviation, Healthcare, Transportation, Energy Connections & Lighting, and Capital. As of December 31, 2016, the Company served customers in approximately 180 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GE – 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 $87,183,478,373 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.81 Fail
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 -186.59% Fail
6. Moderate PEmg Ratio PEmg < 20 -15.11 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.69 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 1.81 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.75 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.66
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$9.61
MG Value based on 0% Growth -$5.63
Market Implied Growth Rate -11.80%
Current Price $10.01
% of Intrinsic Value N/A

General Electric Company 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 or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.7 in 2015 to an estimated $-0.66 for 2019. 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 General Electric Company revealed the company was trading above its Graham Number of $6.64. The company pays a dividend of $0.37 per share, for a yield of 3.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -15.11, which was below the industry average of 24.48, 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 $-15.42.

General Electric Company 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) -$15.42
Graham Number $6.64
PEmg -15.11
Current Ratio 1.81
PB Ratio 1.69
Current Dividend $0.37
Dividend Yield 3.70%
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 $123,547,000,000
Total Current Liabilities $68,269,000,000
Long-Term Debt $96,883,000,000
Total Assets $309,129,000,000
Intangible Assets $77,770,000,000
Total Liabilities $257,648,000,000
Shares Outstanding (Diluted Average) 8,697,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.55
Dec2018 -$2.62
Dec2017 -$1.03
Dec2016 $0.75
Dec2015 -$0.62
Dec2014 $1.50
Dec2013 $1.27
Dec2012 $1.29
Dec2011 $1.23
Dec2010 $1.06
Dec2009 $1.01
Dec2008 $1.72
Dec2007 $2.17
Dec2006 $2.00
Dec2005 $1.57
Dec2004 $1.64
Dec2003 $1.51
Dec2002 $1.41
Dec2001 $1.37
Dec2000 $1.27
Dec1999 $1.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.66
Dec2018 -$0.98
Dec2017 $0.02
Dec2016 $0.64
Dec2015 $0.70
Dec2014 $1.33
Dec2013 $1.22
Dec2012 $1.22
Dec2011 $1.27
Dec2010 $1.39
Dec2009 $1.60
Dec2008 $1.87
Dec2007 $1.89
Dec2006 $1.71
Dec2005 $1.54
Dec2004 $1.50
Dec2003 $1.39

Recommended Reading:

Other ModernGraham posts about the company

General Electric Co Valuation – November 2018 $GE
5 Overvalued Dow Components – June 2018
5 Overvalued Dow Components – February 2018
General Electric Co Valuation – February 2018 $GE
5 Overvalued Dow Components – February 2017

Other ModernGraham posts about related companies

3M Co Valuation – April 2019 #MMM
Illinois Tool Works Inc Valuation – April 2019 #ITW
Honeywell International Inc Valuation – March 2019 #HON
Ingersoll-Rand PLC Valuation – January 2019 $IR
General Electric Co Valuation – November 2018 $GE
3M Co Valuation – November 2018 $MMM
ITT Inc Valuation – July 2018 $ITT
Illinois Tool Works Inc Valuation – June 2018 $ITW
Honeywell International Inc Valuation – June 2018 $HON
General Electric Co Valuation – February 2018 $GE

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.

Emerson Electric Co Valuation – April 2019 #EMR

Company Profile (excerpt from Reuters): Emerson Electric Co., incorporated on September 24, 1890, is a diversified global manufacturing company, which provides solutions to customers by bringing technology and engineering together in the industrial, commercial and consumer markets around the world. The Company operates through four segments based on the nature of the products and services rendered: Process Management, Industrial Automation, Climate Technologies and Commercial & Residential Solutions. The Company’s principal production operations are electronics assembly, metal stamping, forming, casting, machining, welding, plating, heat treating, painting and assembly. In addition, the Company uses specialized production operations, including automatic and semiautomatic testing, automated material handling and storage, ferrous and nonferrous machining, and special furnaces for heat treating and foundry applications.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EMR – 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 $42,765,260,725 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.88 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 7.18% Fail
6. Moderate PEmg Ratio PEmg < 20 21.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.28 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 0.88 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 Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.19
MG Growth Estimate -0.32%
MG Value $25.12
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $46.32
MG Value based on 0% Growth $27.15
Market Implied Growth Rate 6.64%
Current Price $69.58
% of Intrinsic Value 277.00%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.26 in 2015 to an estimated $3.19 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.64% 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 Emerson Electric Co. revealed the company was trading above its Graham Number of $33.94. The company pays a dividend of $1.94 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.78, which was below the industry average of 35.4, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-8.75.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$8.75
Graham Number $33.94
PEmg 21.78
Current Ratio 0.88
PB Ratio 5.28
Current Dividend $1.94
Dividend Yield 2.79%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $6,658,000,000
Total Current Liabilities $7,540,000,000
Long-Term Debt $2,641,000,000
Total Assets $20,429,000,000
Intangible Assets $9,182,000,000
Total Liabilities $12,153,000,000
Shares Outstanding (Diluted Average) 627,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.60
Sep2018 $3.46
Sep2017 $2.35
Sep2016 $2.52
Sep2015 $3.99
Sep2014 $3.03
Sep2013 $2.76
Sep2012 $2.67
Sep2011 $3.27
Sep2010 $2.84
Sep2009 $2.27
Sep2008 $3.06
Sep2007 $2.66
Sep2006 $2.24
Sep2005 $1.70
Sep2004 $1.49
Sep2003 $1.30
Sep2002 $0.15
Sep2001 $1.20
Sep2000 $1.65
Sep1999 $1.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.19
Sep2018 $3.02
Sep2017 $2.84
Sep2016 $3.06
Sep2015 $3.26
Sep2014 $2.91
Sep2013 $2.82
Sep2012 $2.84
Sep2011 $2.89
Sep2010 $2.67
Sep2009 $2.52
Sep2008 $2.50
Sep2007 $2.11
Sep2006 $1.68
Sep2005 $1.32
Sep2004 $1.14
Sep2003 $1.03

Recommended Reading:

Other ModernGraham posts about the company

Emerson Electric Co Valuation – June 2018 $EMR
Emerson Electric Co Valuation – August 2017 $EMR
Emerson Electric Co Valuation – February 2016 $EMR
5 Speculative and Overvalued Companies to Avoid – January 2015
15 Companies in the Spotlight This Week – 12/27/14

Other ModernGraham posts about related companies

Garmin Ltd Valuation – March 2019 #GRMN
Hewlett Packard Enterprise Co Valuation – March 2019 #HPE
Fortive Corp Valuation – March 2019 #FTV
Analog Devices Inc Valuation – March 2019 #ADI
IPG Photonics Corp Valuation – March 2019 #IPGP
Micron Technology Inc Valuation – March 2019 #MU
Amphenol Corp Valuation – March 2019 #APH
Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN

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.

Wells Fargo & Co Valuation – April 2019 #WFC

Company Profile (excerpt from Reuters): Wells Fargo & Company, incorporated on January 24, 1929, is a bank holding company. The Company is a diversified financial services company. The Company has three operating segments: Community Banking, Wholesale Banking, and Wealth and Investment Management. The Company provides retail, commercial and corporate banking services through banking locations and offices, the Internet and other distribution channels to individuals, businesses and institutions in all 50 states, the District of Columbia and in other countries. The Company provides other financial services through its subsidiaries engaged in various businesses, principally: wholesale banking, mortgage banking, consumer finance, equipment leasing, agricultural finance, commercial finance, securities brokerage and investment banking, insurance agency and brokerage services, computer and data processing services, trust services, investment advisory services, mortgage-backed securities servicing and venture capital investment. The Company has its administrative facilities at various locations, including Phoenix, Arizona; San Francisco, California; San Jose, California; Greenwood Village, Colorado; Littleton, Colorado; Rochester, Minnesota; St. Louis, Missouri; Las Vegas, Nevada; Portland, Oregon, and Austin, Texas. The Company offers approximately 13,000 automated teller machines (ATMs) and over 6,000 retail banking stores coast to coast.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WFC – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $220,466,305,698 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.90% Pass
5. Moderate PEmg Ratio PEmg < 20 11.21 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.16 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.33
MG Growth Estimate 1.75%
MG Value $52.06
Opinion Fairly Valued
MG Grade A-
MG Value based on 3% Growth $62.85
MG Value based on 0% Growth $36.84
Market Implied Growth Rate 1.36%
Current Price $48.61
% of Intrinsic Value 93.38%

Wells Fargo & Co qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value 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 $3.88 in 2015 to an estimated $4.33 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 1.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Wells Fargo & Co revealed the company was trading below its Graham Number of $63.18. The company pays a dividend of $1.64 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.21, which was below the industry average of 15.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Wells Fargo & Co fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $63.18
PEmg 11.21
PB Ratio 1.16
Dividend Yield 3.37%
TTM Dividend $1.64
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 12/1/2018
Long-Term Debt & Capital Lease Obligation $229,044,000,000
Total Assets $1,895,883,000,000
Intangible Assets $43,055,000,000
Total Liabilities $1,698,817,000,000
Shares Outstanding (Diluted Average) 4,698,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.70
Dec2018 $4.28
Dec2017 $4.10
Dec2016 $3.99
Dec2015 $4.12
Dec2014 $4.10
Dec2013 $3.89
Dec2012 $3.36
Dec2011 $2.82
Dec2010 $2.21
Dec2009 $1.75
Dec2008 $0.70
Dec2007 $2.38
Dec2006 $2.47
Dec2005 $2.25
Dec2004 $2.05
Dec2003 $1.83
Dec2002 $1.58
Dec2001 $0.99
Dec2000 $1.16
Dec1999 $1.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.33
Dec2018 $4.14
Dec2017 $4.06
Dec2016 $3.99
Dec2015 $3.88
Dec2014 $3.60
Dec2013 $3.17
Dec2012 $2.59
Dec2011 $2.13
Dec2010 $1.83
Dec2009 $1.73
Dec2008 $1.80
Dec2007 $2.30
Dec2006 $2.18
Dec2005 $1.94
Dec2004 $1.69
Dec2003 $1.46

Recommended Reading:

Other ModernGraham posts about the company

Wells Fargo & Co Valuation – June 2018 $WFC
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2018
Wells Fargo & Co Valuation – August 2017 $WFC
10 Undervalued Companies for the Defensive Dividend Stock Investor – January 2017
10 Undervalued Companies for the Defensive Dividend Stock Investor – December 2016

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US Bancorp Valuation – March 2019 #USB
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BB&T Corp Valuation – February 2019 $BBT
M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF

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.

Nielsen Holdings PLC Valuation – March 2019 #NLSN

Company Profile (excerpt from Reuters): Nielsen Holdings plc, incorporated on February 4, 2015, is a performance management company. The Company provides to clients an understanding of what consumers watch and what they buy and how those choices intersect. The Company’s segments include what consumers buy (Buy), consisting principally of market research information and analytical services, and what consumers watch and listen to (Watch), consisting principally of television, radio, online and mobile audience and advertising measurement services and corresponding analytics.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NLSN – 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 $8,413,430,517 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.21 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 -98.61% Fail
6. Moderate PEmg Ratio PEmg < 20 88.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.76 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 1.21 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 23.93 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.27
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $3.89
MG Value based on 0% Growth $2.28
Market Implied Growth Rate 39.91%
Current Price $23.67
% of Intrinsic Value N/A

Nielsen Holdings PLC 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 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 level of debt relative to the current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.28 in 2015 to an estimated $0.27 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 39.91% 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 Nielsen Holdings PLC revealed the company was trading above its Graham Number of $12.16. The company pays a dividend of $1.39 per share, for a yield of 5.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 88.32, which was above the industry average of 17.84. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.53.

Nielsen Holdings PLC 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) -$28.53
Graham Number $12.16
PEmg 88.32
Current Ratio 1.21
PB Ratio 2.76
Current Dividend $1.39
Dividend Yield 5.87%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,003,000,000
Total Current Liabilities $1,657,000,000
Long-Term Debt $8,280,000,000
Total Assets $15,179,000,000
Intangible Assets $12,011,000,000
Total Liabilities $12,136,000,000
Shares Outstanding (Diluted Average) 355,195,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.82
Dec2018 -$2.00
Dec2017 $1.20
Dec2016 $1.39
Dec2015 $1.54
Dec2014 $1.00
Dec2013 $1.94
Dec2012 $0.75
Dec2011 $0.23
Dec2010 $0.46
Dec2009 -$1.79
Dec2008 -$2.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.27
Dec2018 $0.20
Dec2017 $1.34
Dec2016 $1.38
Dec2015 $1.28
Dec2014 $1.06
Dec2013 $0.83
Dec2012 -$0.01
Dec2011 -$0.51
Dec2010 -$0.85
Dec2009 -$1.29
Dec2008 -$0.87

Recommended Reading:

Other ModernGraham posts about the company

Nielsen Holdings PLC Valuation – June 2018 $NLSN
10 Best Stocks for Value Investors This Week – 7/22/17
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Nielsen NV Valuation – August 2016 $NLSN
Nielsen NV Analysis – July 2015 Update $NLSN

Other ModernGraham posts about related companies

Interpublic Group of Companies Inc Valuation – March 2019 #IPG
Omnicom Group Inc Valuation – February 2019 $OMC
Nielsen Holdings PLC Valuation – June 2018 $NLSN
Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG

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.

Honeywell International Inc Valuation – March 2019 #HON

Company Profile (excerpt from Reuters): Honeywell International Inc., incorporated on November 24, 1999, is a technology and manufacturing company. The Company operates through four segments: Aerospace, Home and Building Technologies, Performance Materials and Technologies, and Safety and Productivity Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HON – 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 $115,752,559,066 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.29 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 111.25% Pass
6. Moderate PEmg Ratio PEmg < 20 23.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.44 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 1.29 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.79 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 $6.63
MG Growth Estimate 4.55%
MG Value $116.54
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $96.07
MG Value based on 0% Growth $56.32
Market Implied Growth Rate 7.74%
Current Price $158.92
% of Intrinsic Value 136.37%

Honeywell International 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 Overvalued after growing its EPSmg (normalized earnings) from $5.08 in 2015 to an estimated $6.63 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.74% 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 Honeywell International Inc. revealed the company was trading above its Graham Number of $66.13. The company pays a dividend of $3.06 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 23.99, which was below the industry average of 25.04, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.23.

Honeywell International 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) -$20.23
Graham Number $66.13
PEmg 23.99
Current Ratio 1.29
PB Ratio 6.44
Current Dividend $3.06
Dividend Yield 1.92%
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 12/1/2018
Total Current Assets $24,362,000,000
Total Current Liabilities $18,924,000,000
Long-Term Debt $9,756,000,000
Total Assets $57,773,000,000
Intangible Assets $19,685,000,000
Total Liabilities $39,415,000,000
Shares Outstanding (Diluted Average) 744,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.80
Dec2018 $8.98
Dec2017 $2.00
Dec2016 $6.21
Dec2015 $6.04
Dec2014 $5.33
Dec2013 $4.92
Dec2012 $3.69
Dec2011 $2.61
Dec2010 $2.59
Dec2009 $2.05
Dec2008 $3.76
Dec2007 $3.16
Dec2006 $2.52
Dec2005 $1.92
Dec2004 $1.45
Dec2003 $1.52
Dec2002 -$0.31
Dec2001 -$0.12
Dec2000 $2.05
Dec1999 $1.90

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.63
Dec2018 $5.93
Dec2017 $4.57
Dec2016 $5.65
Dec2015 $5.08
Dec2014 $4.35
Dec2013 $3.63
Dec2012 $2.97
Dec2011 $2.68
Dec2010 $2.75
Dec2009 $2.78
Dec2008 $2.95
Dec2007 $2.40
Dec2006 $1.82
Dec2005 $1.28
Dec2004 $0.95
Dec2003 $0.80

Recommended Reading:

Other ModernGraham posts about the company

Honeywell International Inc Valuation – June 2018 $HON
Honeywell International Inc Valuation – July 2017 $HON
Honeywell International Inc Valuation – February 2016 $HON
7 Best Stocks For Value Investors This Week – 10/24/15
Honeywell International Inc. Valuation – October 2015 Update $HON

Other ModernGraham posts about related companies

Ingersoll-Rand PLC Valuation – January 2019 $IR
General Electric Co Valuation – November 2018 $GE
3M Co Valuation – November 2018 $MMM
ITT Inc Valuation – July 2018 $ITT
Illinois Tool Works Inc Valuation – June 2018 $ITW
Honeywell International Inc Valuation – June 2018 $HON
General Electric Co Valuation – February 2018 $GE
3M Company Valuation – February 2018 $MMM
Raven Industries Inc Valuation – September 2017 $RAVN
Illinois Tool Works Inc Valuation – August 2017 $ITW

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.

Mattel Inc Valuation – March 2019 #MAT

Company Profile (excerpt from Reuters): Mattel, Inc., incorporated on March 6, 1968, designs, manufactures, and markets a range of toy products around the world, which are sold to its customers and directly to consumers. The Company’s segments are North America, which consists of the United States and Canada; International, and American Girl. The Company’s portfolio of brands and products are grouped into approximately four brand categories, including Mattel Girls & Boys Brands, Fisher-Price Brands, American Girl Brands, and Construction and Arts & Crafts Brands.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MAT – 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 $4,472,878,134 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.88 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 -182.75% Fail
6. Moderate PEmg Ratio PEmg < 20 -12.70 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.69 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 1.88 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.59 Fail
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 -$1.02
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$14.79
MG Value based on 0% Growth -$8.67
Market Implied Growth Rate -10.60%
Current Price $12.95
% of Intrinsic Value N/A

Mattel 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 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 level of debt relative to the net current assets, and 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 $1.7 in 2015 to an estimated $-1.02 for 2019. 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 Mattel 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 -12.7, which was below the industry average of 28.42, 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 $-6.43.

Mattel 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) -$6.43
Graham Number $0.00
PEmg -12.70
Current Ratio 1.88
PB Ratio 6.69
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 $2,352,440,000
Total Current Liabilities $1,252,608,000
Long-Term Debt $2,851,723,000
Total Assets $5,243,465,000
Intangible Assets $1,973,952,000
Total Liabilities $4,574,000,000
Shares Outstanding (Diluted Average) 345,726,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.57
Dec2018 -$1.54
Dec2017 -$3.07
Dec2016 $0.92
Dec2015 $1.08
Dec2014 $1.45
Dec2013 $2.58
Dec2012 $2.22
Dec2011 $2.18
Dec2010 $1.86
Dec2009 $1.45
Dec2008 $1.05
Dec2007 $1.54
Dec2006 $1.53
Dec2005 $1.01
Dec2004 $1.35
Dec2003 $1.22
Dec2002 $0.52
Dec2001 $0.68
Dec2000 -$1.01
Dec1999 -$0.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.02
Dec2018 -$0.91
Dec2017 -$0.20
Dec2016 $1.38
Dec2015 $1.70
Dec2014 $2.03
Dec2013 $2.23
Dec2012 $1.96
Dec2011 $1.76
Dec2010 $1.52
Dec2009 $1.34
Dec2008 $1.29
Dec2007 $1.38
Dec2006 $1.25
Dec2005 $1.06
Dec2004 $0.90
Dec2003 $0.53

Recommended Reading:

Other ModernGraham posts about the company

Mattel Inc Valuation – June 2018 $MAT
Mattel Inc. Valuation – June 2017 $MAT
Mattel Inc Valuation – January 2016 Update $MAT
Mattel Inc. Analysis – September 2015 Update $MAT
30 Companies in the Spotlight This Week – 5/23/15

Other ModernGraham posts about related companies

Hasbro Inc Valuation – January 2019 $HAS
Electronic Arts Inc Valuation – November 2018 $EA
Activision Blizzard Inc Valuation – June 2018 $ATVI
Mattel Inc Valuation – June 2018 $MAT
Hasbro Inc Valuation – March 2018 $HAS
Electronic Arts Inc Valuation – February 2018 $EA
Mattel Inc. Valuation – June 2017 $MAT
Hasbro Inc Valuation – July 2016 $HAS
Electronic Arts Inc Valuation – May 2016 $EA
Mattel Inc Valuation – January 2016 Update $MAT

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.

Mondelez International Inc Valuation – March 2019 #MDLZ

Company Profile (excerpt from Reuters): Mondelez International, Inc., incorporated on January 10, 2005, is a snack company. The Company manufactures and markets snack food and beverage products for consumers. The Company operates through four segments: Latin America, Asia, Middle East, and Africa (AMEA), Europe and North America. As of December 31, 2016, its brands spanned five product categories, including Biscuits (including cookies, crackers and salted snacks); Chocolate; Gum and candy; Beverages (including coffee and powdered beverages), and Cheese and grocery. The Company’s portfolio includes various snack brands, including Nabisco, Oreo, LU and belVita biscuits; Cadbury, Milka, Cadbury Dairy Milk and Toblerone chocolate; Trident gum; Halls candy, and Tang powdered beverages.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MDLZ – 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 $71,479,143,112 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.45 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 7.34% Fail
6. Moderate PEmg Ratio PEmg < 20 22.20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.83 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 0.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.37 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.23
MG Growth Estimate -2.26%
MG Value $8.89
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $32.33
MG Value based on 0% Growth $18.95
Market Implied Growth Rate 6.85%
Current Price $49.50
% of Intrinsic Value 556.80%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.62 in 2015 to an estimated $2.23 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.85% 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 MONDELEZ INTERNATIONAL INC Common Stock revealed the company was trading above its Graham Number of $31.21. The company pays a dividend of $0.96 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 22.2, which was below the industry average of 26.89, 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 $-19.99.

MONDELEZ INTERNATIONAL INC Common Stock 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) -$19.99
Graham Number $31.21
PEmg 22.20
Current Ratio 0.45
PB Ratio 2.83
Current Dividend $0.96
Dividend Yield 1.94%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $7,604,000,000
Total Current Liabilities $16,737,000,000
Long-Term Debt $12,532,000,000
Total Assets $62,729,000,000
Intangible Assets $38,727,000,000
Total Liabilities $37,016,000,000
Shares Outstanding (Diluted Average) 1,471,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.45
Dec2018 $2.28
Dec2017 $1.85
Dec2016 $1.04
Dec2015 $4.44
Dec2014 $1.28
Dec2013 $2.19
Dec2012 $1.73
Dec2011 $2.01
Dec2010 $2.39
Dec2009 $2.03
Dec2008 $1.90
Dec2007 $1.62
Dec2006 $1.85
Dec2005 $1.55
Dec2004 $1.55
Dec2003 $2.01
Dec2002 $1.96
Dec2001 $1.17
Dec2000 $1.38
Dec1999 $1.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.23
Dec2018 $2.14
Dec2017 $2.10
Dec2016 $2.19
Dec2015 $2.62
Dec2014 $1.78
Dec2013 $2.05
Dec2012 $1.99
Dec2011 $2.07
Dec2010 $2.06
Dec2009 $1.86
Dec2008 $1.75
Dec2007 $1.68
Dec2006 $1.74
Dec2005 $1.67
Dec2004 $1.69
Dec2003 $1.69

Recommended Reading:

Other ModernGraham posts about the company

Mondelez International Inc Valuation – June 2018 $MDLZ
Mondelez International Inc Valuation – March 2017 $MDLZ
Mondelez International Inc Valuation – August 2016 $MDLZ
5 Speculative and Overvalued Companies to Avoid – July 2015
Mondelez International Inc. Analysis – 2015 Update $MDLZ

Other ModernGraham posts about related companies

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McCormick & Co Valuation – February 2019 $MKC
Archer-Daniels Midland Co Valuation – February 2019 $ADM
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Monster Beverage Corp Valuation – February 2019 $MNST
Campbell Soup Co Valuation – January 2019 $CPB

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.

Celgene Corp Valuation – March 2019 #CELG

Company Profile (excerpt from Reuters): Celgene Corporation, incorporated on April 17, 1986, is an integrated global biopharmaceutical company. The Company, together with its subsidiaries, is engaged in the discovery, development and commercialization of therapies for the treatment of cancer and inflammatory diseases through solutions in protein homeostasis, immuno-oncology, epigenetics, immunology and neuro-inflammation. The Company’s commercial-stage products include REVLIMID (lenalidomide), POMALYST/IMNOVID (pomalidomide), OTEZLA (apremilast), ABRAXANE (paclitaxel albumin-bound particles for injectable suspension), VIDAZA, azacitidine for injection (generic version of VIDAZA) and THALOMID (thalidomide). Its clinical trial activity includes trials across the disease areas of hematology, solid tumors, and inflammation and immunology. The Company also markets ISTODAX, which is an epigenetic modifier.

CELG Chart

CELG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CELG – 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 $61,820,626,782 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.23 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 391.91% Pass
6. Moderate PEmg Ratio PEmg < 20 14.21 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.20 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 2.23 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.95 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 $6.19
MG Growth Estimate 15.00%
MG Value $238.39
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $89.78
MG Value based on 0% Growth $52.63
Market Implied Growth Rate 2.86%
Current Price $88.00
% of Intrinsic Value 36.91%

Celgene Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net 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 $1.94 in 2015 to an estimated $6.19 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.86% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Celgene Corporation revealed the company was trading above its Graham Number of $45.81. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 14.21, which was below the industry average of 47.6, 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 $-28.36.

Celgene 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) -$28.36
Graham Number $45.81
PEmg 14.21
Current Ratio 2.23
PB Ratio 10.20
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 $9,067,000,000
Total Current Liabilities $4,057,000,000
Long-Term Debt $19,769,000,000
Total Assets $35,480,000,000
Intangible Assets $24,216,000,000
Total Liabilities $29,319,000,000
Shares Outstanding (Diluted Average) 714,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.60
Dec2018 $5.51
Dec2017 $3.64
Dec2016 $2.49
Dec2015 $1.94
Dec2014 $2.39
Dec2013 $1.68
Dec2012 $1.65
Dec2011 $1.43
Dec2010 $0.94
Dec2009 $0.83
Dec2008 -$1.73
Dec2007 $0.27
Dec2006 $0.09
Dec2005 $0.09
Dec2004 $0.08
Dec2003 $0.04
Dec2002 -$0.15
Dec2001 $0.00
Dec2000 -$0.03
Dec1999 -$0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.19
Dec2018 $3.72
Dec2017 $2.70
Dec2016 $2.16
Dec2015 $1.94
Dec2014 $1.83
Dec2013 $1.47
Dec2012 $1.11
Dec2011 $0.68
Dec2010 $0.23
Dec2009 -$0.11
Dec2008 -$0.47
Dec2007 $0.14
Dec2006 $0.06
Dec2005 $0.04
Dec2004 $0.00
Dec2003 -$0.03

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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.

Hormel Foods Corp Valuation – March 2019 #HRL

Company Profile (excerpt from Reuters): Hormel Foods Corporation, incorporated on September 20, 1928, is engaged in the production of a range of meat and food products and the marketing of those products throughout the United States and internationally. The Company is a processor of branded and unbranded food products for retail, foodservice and fresh product customers. The Company operates through four segments: Grocery Products, Refrigerated Foods, Jennie-O Turkey Store (JOTS) and International & Other. The Company’s Grocery Products segment is engaged in the processing, marketing and sale of shelf-stable food products sold for the retail market and also consist of health and nutrition products, including Muscle Milk protein products. The Grocery Products segment also includes the Company’s MegaMex Foods, LLC (MegaMex) joint venture. The Company’s Refrigerated Foods segment consists of the processing, marketing and sale of branded and unbranded pork, beef, chicken and turkey products for retail, foodservice and fresh product customers. The Company’s JOTS segment consists of the processing, marketing and sale of branded and unbranded turkey products for retail, foodservice and fresh product customers. The Company’s International & Other segment includes Hormel Foods International Corporation (HFIC), which manufactures, markets and sells the Company’s products internationally. The International & Other segment also includes the Company’s international joint ventures.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HRL – 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 $23,494,749,686 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 104.74% Pass
6. Moderate PEmg Ratio PEmg < 20 25.84 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.20 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 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.38 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.70
MG Growth Estimate 8.16%
MG Value $42.10
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $24.60
MG Value based on 0% Growth $14.42
Market Implied Growth Rate 8.67%
Current Price $43.84
% of Intrinsic Value 104.13%

Hormel Foods Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the low current ratio. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.1 in 2015 to an estimated $1.7 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 8.67% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Hormel Foods Corp revealed the company was trading above its Graham Number of $20.32. The company pays a dividend of $0.75 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 25.84, which was below the industry average of 26.89, 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 $-0.64.

Hormel Foods Corp performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.64
Graham Number $20.32
PEmg 25.84
Current Ratio 1.46
PB Ratio 4.20
Current Dividend $0.75
Dividend Yield 1.71%
Number of Consecutive Years of Dividend Growth 20

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Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $2,100,686,000
Total Current Liabilities $1,435,812,000
Long-Term Debt $250,000,000
Total Assets $8,155,398,000
Intangible Assets $3,921,741,000
Total Liabilities $2,449,619,000
Shares Outstanding (Diluted Average) 547,118,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.75
Oct2018 $1.86
Oct2017 $1.57
Oct2016 $1.64
Oct2015 $1.27
Oct2014 $1.12
Oct2013 $0.98
Oct2012 $0.93
Oct2011 $0.87
Oct2010 $0.73
Oct2009 $0.63
Oct2008 $0.52
Oct2007 $0.54
Oct2006 $0.51
Oct2005 $0.46
Oct2004 $0.42
Oct2003 $0.33
Oct2002 $0.34
Oct2001 $0.33
Oct2000 $0.30
Oct1999 $0.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.70
Oct2018 $1.61
Oct2017 $1.43
Oct2016 $1.30
Oct2015 $1.10
Oct2014 $0.98
Oct2013 $0.89
Oct2012 $0.81
Oct2011 $0.72
Oct2010 $0.62
Oct2009 $0.56
Oct2008 $0.51
Oct2007 $0.49
Oct2006 $0.44
Oct2005 $0.40
Oct2004 $0.36
Oct2003 $0.32

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Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Hormel Foods Corp Valuation – June 2018 $HRL
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

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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.

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