Kaiser Aluminum Corp Valuation – August 2018 $KALU

Company Profile (excerpt from Reuters): Kaiser Aluminum Corporation, incorporated on February 20, 1987, manufactures and sells semi-fabricated specialty aluminum mill products. It operates in the Fabricated Products segment. Fabricated Products segment focuses on producing rolled, extruded and drawn aluminum products used principally for aerospace and defense, automotive and general engineering products that include consumer durables, electronics, electrical and machinery and equipment applications. The Company offers its products for various end market applications, such as aerospace and high strength (Aero/HS products); automotive (Automotive Extrusions); general engineering (GE products), and other industrial (Other products). Its fabricated aluminum mill products include flat-rolled (plate and sheet), extruded (rod, bar, hollows and shapes), drawn (rod, bar, pipe and tube) and cast aluminum products.

Downloadable PDF version of this valuation:

ModernGraham Valuation of KALU – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,837,890,816 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.63 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 146.51% Pass
6. Moderate PEmg Ratio PEmg < 20 54.38 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.46 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 3.63 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.72 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.04
MG Growth Estimate -4.25%
MG Value $2.48
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $29.56
MG Value based on 0% Growth $17.33
Market Implied Growth Rate 22.94%
Current Price $110.87
% of Intrinsic Value 4462.52%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.84 in 2014 to an estimated $2.04 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 22.94% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Kaiser Aluminum Corp. revealed the company was trading above its Graham Number of $75.48. The company pays a dividend of $2 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 54.38, which was above the industry average of 53.66. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.48.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.48
Graham Number $75.48
PEmg 54.38
Current Ratio 3.63
PB Ratio 2.46
Current Dividend $2.00
Dividend Yield 1.80%
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 6/1/2018
Total Current Assets $704,800,000
Total Current Liabilities $194,100,000
Long-Term Debt $370,000,000
Total Assets $1,423,800,000
Intangible Assets $43,100,000
Total Liabilities $662,800,000
Shares Outstanding (Diluted Average) 16,905,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.69
Dec2017 $2.63
Dec2016 $5.09
Dec2015 -$13.76
Dec2014 $3.86
Dec2013 $5.44
Dec2012 $4.45
Dec2011 $1.32
Dec2010 $0.61
Dec2009 $3.51
Dec2008 -$3.45
Dec2007 $4.97
Dec2006 $64.49
Dec2005 -$9.46
Dec2004 -$9.36
Dec2003 -$9.83
Dec2002 -$5.82
Dec2001 -$5.73
Dec2000 $0.21
Dec1999 -$0.68
Dec1998 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.04
Dec2017 $0.36
Dec2016 -$0.18
Dec2015 -$1.79
Dec2014 $3.84
Dec2013 $3.58
Dec2012 $2.20
Dec2011 $1.18
Dec2010 $5.41
Dec2009 $9.21
Dec2008 $11.19
Dec2007 $15.06
Dec2006 $15.40
Dec2005 -$8.77
Dec2004 -$7.66
Dec2003 -$5.99
Dec2002 -$3.52

Recommended Reading:

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Kaiser Aluminum Corp Valuation – Initial Coverage $KALU

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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.

Kaiser Aluminum Corp Valuation – Initial Coverage $KALU

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Kaiser Aluminum Corp (KALU) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Kaiser Aluminum Corporation is engaged in the production of semi-fabricated specialty aluminum products. The Company manufactures aluminum plate and sheet, and extruded and drawn products, primarily used in aerospace/high strength, automotive, general engineering and other industrial end market applications. It operates in the Fabricated Products segment. The Company’s Fabricated Products segment produces rolled, extruded and drawn aluminum products used principally for aerospace and defense, automotive, consumer durables, electronics, electrical, and machinery and equipment applications. The Company operates over 10 focused production facilities in the United States and one in Canada. The Company serves end market applications, such as aerospace and high strength products (Aero/HS products), extrusions for automotive applications (Automotive Extrusions), general engineering products (GE products) and other industrial products (Other products).

KALU Chart

KALU data by YCharts

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of KALU – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,431,881,734 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.13 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -207.95% Fail
6. Moderate PEmg Ratio PEmg < 20 -206.31 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.77 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 4.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.74 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$0.39
MG Growth Estimate -4.25%
MG Value $2.12
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$5.59
MG Value based on 0% Growth -$3.28
Market Implied Growth Rate -107.41%
Current Price $79.50
% of Intrinsic Value 3743.30%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.2 in 2012 to an estimated $-0.39 for 2016. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Kaiser Aluminum Corp. revealed the company was trading above its Graham Number of $67.6. The company pays a dividend of $1.75 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 -206.31, which was below the industry average of 47.18, 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 $2.12.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.12
Graham Number $67.60
PEmg -206.31
Current Ratio 4.13
PB Ratio 1.77
Current Dividend $1.75
Dividend Yield 2.20%
Number of Consecutive Years of Dividend Growth 5

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $657,900,000
Total Current Liabilities $159,200,000
Long-Term Debt $368,500,000
Total Assets $1,433,400,000
Intangible Assets $63,900,000
Total Liabilities $619,300,000
Shares Outstanding (Diluted Average) 18,175,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.47
Dec2015 -$13.76
Dec2014 $3.86
Dec2013 $5.44
Dec2012 $4.45
Dec2011 $1.32
Dec2010 $0.61
Dec2009 $3.51
Dec2008 -$3.45
Dec2007 $4.97
Dec2006 $64.49
Dec2005 -$9.46
Dec2004 -$9.36
Dec2003 -$9.83
Dec2002 -$5.82
Dec2001 -$5.73
Dec2000 $0.21
Dec1999 -$0.68
Dec1998 $0.01
Dec1997 $0.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.39
Dec2015 -$1.79
Dec2014 $3.84
Dec2013 $3.58
Dec2012 $2.20
Dec2011 $1.18
Dec2010 $5.41
Dec2009 $9.21
Dec2008 $11.19
Dec2007 $15.06
Dec2006 $15.40
Dec2005 -$8.77
Dec2004 -$7.66
Dec2003 -$5.99
Dec2002 -$3.52
Dec2001 -$1.95
Dec2000 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

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

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Goldcorp Inc Valuation – August 2016 $GG

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.

Freeport-McMoRan Inc Valuation – March 2019 $FCX

Company Profile (excerpt from Reuters): Freeport-McMoRan Inc. (FCX), incorporated on November 10, 1987, is a mining company. The Company operates through geographical assets with proven and probable reserves of copper, gold and molybdenum, and traded copper producer. The Company’s segments include refined copper products, copper in concentrate, gold, molybdenum, oil and other. The Company’s segments include the Morenci, Cerro Verde, Grasberg copper mines, the Rod & Refining operations and the United States (U.S.) Oil and Gas Operations. The Company has organized its operations into five divisions, which include North America copper mines, South America mining, Indonesia mining and Molybdenum mines. The Company’s portfolio of assets includes the Grasberg minerals district in Indonesia, copper and gold deposits, and mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FCX – 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 $18,649,389,164 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.22 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -75.28% Fail
6. Moderate PEmg Ratio PEmg < 20 -30.12 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.05 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.22 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.51 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.43
MG Growth Estimate 12.74%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$6.20
MG Value based on 0% Growth -$3.63
Market Implied Growth Rate -19.31%
Current Price $12.87
% of Intrinsic Value N/A

Freeport-McMoRan Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability 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 growing its EPSmg (normalized earnings) from $-2.83 in 2015 to an estimated $-0.43 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 Freeport-McMoRan Inc revealed the company was trading above its Graham Number of $3.26. The company pays a dividend of $0.15 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was -30.12, which was below the industry average of 106.38, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.33.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.33
Graham Number $3.26
PEmg -30.12
Current Ratio 3.22
PB Ratio 1.05
Current Dividend $0.15
Dividend Yield 1.17%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $10,720,000,000
Total Current Liabilities $3,329,000,000
Long-Term Debt $11,124,000,000
Total Assets $42,216,000,000
Intangible Assets $398,000,000
Total Liabilities $24,324,000,000
Shares Outstanding (Diluted Average) 1,458,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.07
Dec2018 $1.78
Dec2017 $1.25
Dec2016 -$3.16
Dec2015 -$11.31
Dec2014 -$1.26
Dec2013 $2.64
Dec2012 $3.19
Dec2011 $4.78
Dec2010 $4.57
Dec2009 $1.47
Dec2008 -$14.86
Dec2007 $3.75
Dec2006 $3.32
Dec2005 $2.34
Dec2004 $0.43
Dec2003 $0.49
Dec2002 $0.44
Dec2001 $0.27
Dec2000 $0.13
Dec1999 $0.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.43
Dec2018 -$1.30
Dec2017 -$2.68
Dec2016 -$3.76
Dec2015 -$2.83
Dec2014 $1.86
Dec2013 $3.39
Dec2012 $2.46
Dec2011 $1.37
Dec2010 -$0.34
Dec2009 -$2.13
Dec2008 -$2.95
Dec2007 $2.69
Dec2006 $1.91
Dec2005 $1.06
Dec2004 $0.40
Dec2003 $0.37

Recommended Reading:

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Freeport-McMoRan Inc Valuation – May 2018 $FCX
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Freeport-McMoRan Inc Valuation – January 2017 $FCX
Freeport-McMoRan Inc. Analysis – September 2015 Update $FCX
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Sandstorm Gold Ltd Valuation – August 2018 $TSE-SSL
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Natural Resource Partners LP Valuation – August 2018 $NRP
Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA

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.

Newmont Mining Corp Valuation – January 2019 $NEM

Company Profile (excerpt from Reuters): Newmont Mining Corporation, incorporated on December 06, 2001, is a mining company, which is focused on the production of and exploration for gold and copper. The Company is primarily a gold producer with operations and/or assets in the United States, Australia, Peru, Ghana and Suriname. The Company’s segments include North America, South America, Asia Pacific and Africa. The Company’s North America segment consists primarily of Carlin, Phoenix, Twin Creeks and Long Canyon in the state of Nevada, and Cripple Creek &Victor (CC&V) in the state of Colorado, in the United States. The Company’s South America segment consists primarily of Yanacocha in Peru and Merian in Suriname. The Company’s Asia Pacific segment consists primarily of Boddington, Tanami and Kalgoorlie in Australia. The Company’s Africa segment consists primarily of Ahafo and Akyem in Ghana.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NEM – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $16,869,348,574 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.70 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -106.55% Fail
6. Moderate PEmg Ratio PEmg < 20 261.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 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 4.70 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.04 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.12
MG Growth Estimate 2.28%
MG Value $1.58
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $1.76
MG Value based on 0% Growth $1.03
Market Implied Growth Rate 126.26%
Current Price $31.67
% of Intrinsic Value 1999.06%

Newmont Mining Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor is only concerned with the lack of earnings stability over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.11 in 2014 to an estimated $0.12 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 126.26% 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 Newmont Mining Corp revealed the company was trading above its Graham Number of $19.39. The company pays a dividend of $0.25 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 261.02, which was above the industry average of 88.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-7.57.

Newmont Mining Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.57
Graham Number $19.39
PEmg 261.02
Current Ratio 4.70
PB Ratio 1.46
Current Dividend $0.25
Dividend Yield 0.79%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $4,935,000,000
Total Current Liabilities $1,051,000,000
Long-Term Debt $4,043,000,000
Total Assets $20,559,000,000
Intangible Assets $0
Total Liabilities $8,985,000,000
Shares Outstanding (Diluted Average) 535,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.84
Dec2017 -$0.18
Dec2016 -$1.18
Dec2015 $0.43
Dec2014 $1.02
Dec2013 -$5.09
Dec2012 $3.61
Dec2011 $0.73
Dec2010 $4.55
Dec2009 $2.66
Dec2008 $1.83
Dec2007 -$4.17
Dec2006 $1.75
Dec2005 $0.72
Dec2004 $0.99
Dec2003 $1.15
Dec2002 $0.41
Dec2001 -$0.28
Dec2000 -$0.51
Dec1999 -$0.62
Dec1998 -$2.47

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.12
Dec2017 -$0.49
Dec2016 -$0.51
Dec2015 -$0.07
Dec2014 $0.11
Dec2013 $0.20
Dec2012 $2.78
Dec2011 $1.95
Dec2010 $2.15
Dec2009 $0.82
Dec2008 $0.01
Dec2007 -$0.57
Dec2006 $1.15
Dec2005 $0.77
Dec2004 $0.65
Dec2003 $0.33
Dec2002 -$0.29

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Newmont Mining Corp Valuation – March 2018 $NEM
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Kirkland Lake Gold Ltd Valuation – August 2018 $TSE-KL
Natural Resource Partners LP Valuation – August 2018 $NRP
Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA
Ivanhoe Mines Ltd Valuation – August 2018 $TSE-IVN

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.

SunCoke Energy Inc Valuation – September 2018 $SXC

Company Profile (excerpt from Reuters): SunCoke Energy, Inc., incorporated on December 8, 2010, is an independent producer of coke in the Americas. The Company’s segments include Domestic Coke, Brazil Coke, Coal Logistics, and Corporate and Other. The Company designs, develops, builds, owns and operates five cokemaking facilities in the United States with collective nameplate capacity to produce approximately 4.2 million tons of coke per year, as of December 31, 2016.

Downloadable PDF version of this valuation:

ModernGraham Valuation of SXC – September 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $727,544,987 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 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 -18.53% Fail
6. Moderate PEmg Ratio PEmg < 20 24.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.10 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.25 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 Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.45
MG Growth Estimate 15.00%
MG Value $17.50
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $6.59
MG Value based on 0% Growth $3.86
Market Implied Growth Rate 8.11%
Current Price $11.24
% of Intrinsic Value 64.21%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.01 in 2014 to an estimated $0.45 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.11% 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 SunCoke Energy Inc revealed the company was trading above its Graham Number of $5.85. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 24.72, which was below the industry average of 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 $-16.12.

SunCoke Energy 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) -$16.12
Graham Number $5.85
PEmg 24.72
Current Ratio 1.86
PB Ratio 1.10
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $354,200,000
Total Current Liabilities $190,300,000
Long-Term Debt $860,000,000
Total Assets $2,084,300,000
Intangible Assets $239,200,000
Total Liabilities $1,411,900,000
Shares Outstanding (Diluted Average) 65,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.23
Dec2017 $1.88
Dec2016 $0.22
Dec2015 -$0.34
Dec2014 -$1.83
Dec2013 $0.36
Dec2012 $1.40
Dec2011 $0.87
Dec2010 $1.99

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.45
Dec2017 $0.40
Dec2016 -$0.24
Dec2015 -$0.28
Dec2014 $0.01
Dec2013 $0.93
Dec2012 $1.10
Dec2011 $0.82
Dec2010 $0.66

Recommended Reading:

Other ModernGraham posts about the company

SunCoke Energy Inc Valuation – Initial Coverage $SXC

Other ModernGraham posts about related companies

Allegheny Technologies Inc Valuation – September 2018 $ATI
SSR Mining Inc Valuation – August 2018 $TSE-SSRM
Sandstorm Gold Ltd Valuation – August 2018 $TSE-SSL
Kirkland Lake Gold Ltd Valuation – August 2018 $TSE-KL
Natural Resource Partners LP Valuation – August 2018 $NRP
Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA
Ivanhoe Mines Ltd Valuation – August 2018 $TSE-IVN
Cleveland-Cliffs Inc Valuation – July 2018 $CLF

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.

Allegheny Technologies Inc Valuation – September 2018 $ATI

Company Profile (excerpt from Reuters): Allegheny Technologies Incorporated (ATI), incorporated on August 26, 1999, is a manufacturer of specialty materials and complex components. The Company operates through two business segments: High Performance Materials & Components (HPMC), and Flat Rolled Products (FRP). The Company is engaged in manufacturing differentiated specialty alloys and forgings. ATI produces nickel-based alloys and superalloys, titanium and titanium-based alloys, specialty alloys, stainless steels, and zirconium and other related alloys in various mill product forms. Its capabilities range from alloy development, to melting and hot-working, through engineered finished components. It is also engaged in producing nickel-based alloy and titanium-based alloy powders for use in jet engine forgings and three-dimensional (3D)-printed products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ATI – September 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,426,092,997 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.87 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -273.09% Fail
6. Moderate PEmg Ratio PEmg < 20 -19.90 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.93 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 2.87 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.11 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 -$1.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$19.69
MG Value based on 0% Growth -$11.54
Market Implied Growth Rate -14.20%
Current Price $27.03
% of Intrinsic Value N/A

Allegheny Technologies Incorporated does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the 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 $0.97 in 2014 to an estimated $-1.36 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Allegheny Technologies Incorporated revealed the company was trading above its Graham Number of $22.24. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -19.9, which was below the industry average of 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 $-8.4.

Allegheny Technologies Incorporated scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$8.40
Graham Number $22.24
PEmg -19.90
Current Ratio 2.87
PB Ratio 1.93
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $2,126,300,000
Total Current Liabilities $741,300,000
Long-Term Debt $1,535,500,000
Total Assets $5,393,300,000
Intangible Assets $531,000,000
Total Liabilities $3,351,400,000
Shares Outstanding (Diluted Average) 145,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2017 -$0.83
Dec2016 -$5.97
Dec2015 -$3.53
Dec2014 -$0.03
Dec2013 $1.44
Dec2012 $1.43
Dec2011 $1.97
Dec2010 $0.72
Dec2009 $0.32
Dec2008 $5.67
Dec2007 $7.26
Dec2006 $5.61
Dec2005 $3.59
Dec2004 $0.22
Dec2003 -$3.89
Dec2002 -$0.82
Dec2001 -$0.31
Dec2000 $1.60
Dec1999 $3.13
Dec1998 $2.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.36
Dec2017 -$2.48
Dec2016 -$2.65
Dec2015 -$0.57
Dec2014 $0.97
Dec2013 $1.37
Dec2012 $1.57
Dec2011 $2.15
Dec2010 $2.80
Dec2009 $4.06
Dec2008 $5.44
Dec2007 $4.40
Dec2006 $2.30
Dec2005 $0.35
Dec2004 -$1.06
Dec2003 -$1.16
Dec2002 $0.54

Recommended Reading:

Other ModernGraham posts about the company

Allegheny Technologies Inc Valuation – March 2017 $ATI
Allegheny Technologies Inc. Valuation – November 2015 Update $ATI
26 Companies in the Spotlight This Week – 11/22/14
Allegheny Technologies Inc. Annual Valuation – 2014 $ATI
ModernGraham Valuation: Allegheny Technologies (ATI)

Other ModernGraham posts about related companies

SSR Mining Inc Valuation – August 2018 $TSE-SSRM
Sandstorm Gold Ltd Valuation – August 2018 $TSE-SSL
Kirkland Lake Gold Ltd Valuation – August 2018 $TSE-KL
Natural Resource Partners LP Valuation – August 2018 $NRP
Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA
Ivanhoe Mines Ltd Valuation – August 2018 $TSE-IVN
Cleveland-Cliffs Inc Valuation – July 2018 $CLF
Cloud Peak Energy Inc Valuation – July 2018 $CLD

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.

SSR Mining Inc Valuation – August 2018 $TSE-SSRM

Company Profile (excerpt from Reuters): SSR Mining Inc., formerly Silver Standard Resources Inc., incorporated on December 11, 1946, is a resource company. The Company is engaged in the operation, acquisition, exploration and development of precious metal resource properties located in the Americas. The Company’s segments include Pirquitas mine, Marigold mine, Seabee Gold Operation, and Exploration and evaluation properties. As of December 31, 2016, the Company has three producing mines and a portfolio of silver resource dominant projects located throughout the Americas. As of December 31, 2016, the Marigold mine produced 205,116 ounces of gold. As of December 31, 2016, the Seabee Gold Operation produced 77,640 ounces of gold. As of December 31, 2016, the Pirquitas mine produced 10.4 million ounces of silver.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SSRM – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,583,074,000 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 8.67 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -65.85% Fail
6. Moderate PEmg Ratio PEmg < 20 465.40 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.17 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 8.67 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.36 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.03
MG Growth Estimate 15.00%
MG Value $2.71
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $0.40
MG Value based on 0% Growth $0.23
Market Implied Growth Rate 228.45%
Current Price $12.69
% of Intrinsic Value 468.03%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.85 in 2014 to an estimated $0.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 228.45% 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 SSR Mining Inc revealed the company was trading above its Graham Number of $7.1. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 465.4, which was above the industry average of 53.66. Finally, the company was trading above its Net Current Asset Value (NCAV) of $2.71.

SSR Mining 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) $2.71
Graham Number $7.10
PEmg 465.40
Current Ratio 8.67
PB Ratio 1.17
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $996,963,000
Total Current Liabilities $115,001,000
Long-Term Debt $315,309,000
Total Assets $1,975,308,000
Intangible Assets $65,345,000
Total Liabilities $671,817,000
Shares Outstanding (Diluted Average) 119,920,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.21
Dec2017 $0.73
Dec2016 $0.83
Dec2015 -$2.11
Dec2014 -$1.81
Dec2013 -$3.03
Dec2012 $0.68
Dec2011 $1.01
Dec2010 $4.36
Dec2009 -$0.20
Dec2008 -$0.11
Dec2007 -$0.58
Dec2006 $0.28
Dec2005 -$0.11
Dec2004 -$0.03
Dec2003 -$0.10
Dec2002 -$0.06
Dec2001 -$0.13
Dec2000 -$0.08
Dec1999 -$0.05
Dec1998 -$0.74

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.03
Dec2017 -$0.40
Dec2016 -$1.01
Dec2015 -$1.63
Dec2014 -$0.85
Dec2013 -$0.06
Dec2012 $1.33
Dec2011 $1.41
Dec2010 $1.32
Dec2009 -$0.18
Dec2008 -$0.15
Dec2007 -$0.15
Dec2006 $0.04
Dec2005 -$0.08
Dec2004 -$0.07
Dec2003 -$0.09
Dec2002 -$0.13

Recommended Reading:

Other ModernGraham posts about the company

Silver Standard Resources Inc Valuation – Initial Coverage $TSE:SSO

Other ModernGraham posts about related companies

Kirkland Lake Gold Ltd Valuation – August 2018 $TSE-KL
Natural Resource Partners LP Valuation – August 2018 $NRP
Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA
Ivanhoe Mines Ltd Valuation – August 2018 $TSE-IVN
Cleveland-Cliffs Inc Valuation – July 2018 $CLF
Cloud Peak Energy Inc Valuation – July 2018 $CLD
Wheaton Precious Metals Corp Valuation – July 2018 $TSE-WPM
IAMGOLD Corp Valuation – July 2018 $TSE:IMG

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.

Sandstorm Gold Ltd Valuation – August 2018 $TSE-SSL

Company Profile (excerpt from Reuters): Sandstorm Gold Ltd is a Canada-based gold royalty company. The Company provides upfront financing to gold mining companies that are looking for capital and in return receives the right to a percentage of the gold produced from a mine, for the life of the mine. The Company has acquired a portfolio of 188 royalties, of which approximately 21 of the underlying mines are producing. It is focused on investments towards production profile through the acquisition of additional gold royalties.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-SSL – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $993,891,135 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.46 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 2642.86% Pass
6. Moderate PEmg Ratio PEmg < 20 158.61 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.27 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.46 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.03
MG Growth Estimate 15.00%
MG Value $1.30
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $0.49
MG Value based on 0% Growth $0.29
Market Implied Growth Rate 75.06%
Current Price $5.34
% of Intrinsic Value 411.98%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-0.12 in 2014 to an estimated $0.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 75.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Sandstorm Gold Ltd revealed the company was trading above its Graham Number of $2.86. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 158.61, which was above the industry average of 53.66. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.07.

Sandstorm Gold Ltd 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) $0.07
Graham Number $2.86
PEmg 158.61
Current Ratio 2.46
PB Ratio 1.27
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $23,932,000
Total Current Liabilities $9,744,000
Long-Term Debt $0
Total Assets $818,257,000
Intangible Assets $0
Total Liabilities $10,610,000
Shares Outstanding (Diluted Average) 192,666,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.08
Dec2017 $0.08
Dec2016 $0.23
Dec2015 -$0.49
Dec2014 $0.10
Dec2013 -$0.83
Dec2012 $0.25
Dec2011 $0.16
Dec2010 -$0.05
Mar2009 -$0.10
Mar2008 -$0.05
Mar2007 -$0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.03
Dec2017 -$0.05
Dec2016 -$0.13
Dec2015 -$0.26
Dec2014 -$0.12
Dec2013 -$0.19
Dec2012 $0.10
Dec2011 $0.01
Dec2010 -$0.06
Mar2009 -$0.05
Mar2008 -$0.02
Mar2007 -$0.01

Recommended Reading:

Other ModernGraham posts about the company

Sandstorm Gold Ltd Valuation – Initial Coverage $TSE:SSL

Other ModernGraham posts about related companies

Kirkland Lake Gold Ltd Valuation – August 2018 $TSE-KL
Natural Resource Partners LP Valuation – August 2018 $NRP
Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA
Ivanhoe Mines Ltd Valuation – August 2018 $TSE-IVN
Cleveland-Cliffs Inc Valuation – July 2018 $CLF
Cloud Peak Energy Inc Valuation – July 2018 $CLD
Wheaton Precious Metals Corp Valuation – July 2018 $TSE-WPM
IAMGOLD Corp Valuation – July 2018 $TSE:IMG

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.

Kirkland Lake Gold Ltd Valuation – August 2018 $TSE-KL

Company Profile (excerpt from Reuters): Kirkland Lake Gold Ltd, formerly Newmarket Gold Inc, is a Canada-based mid tier gold mining, development and exploration company. It has a diversified portfolio of assets located in the stable mining jurisdictions of Canada and Australia. The Company’s main gold mines are: the Macassa Mine located in northeastern Ontario and the Fosterville Gold Mine located in the State of Victoria, Australia. In addition, the Company owns the Holt Mine and the Taylor Mine, which are situated along the Porcupine-Destor Fault Zone, in northeastern Ontario, the Cosmo Gold Mine located in the Northern Territory, Australia and the Stawell Gold Mine located in the State of Victoria, Australia. The Company’s subsidiaries are: Crocodile Gold Inc and Franc-Or Resources Peru SA, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-KL – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,090,684,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.74 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -2731.68% Fail
6. Moderate PEmg Ratio PEmg < 20 36.14 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.88 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 2.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.80
MG Growth Estimate 15.00%
MG Value $30.73
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $11.57
MG Value based on 0% Growth $6.79
Market Implied Growth Rate 13.82%
Current Price $28.85
% of Intrinsic Value 93.87%

Kirkland Lake Gold Ltd is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings stability over the last five years. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.07 in 2014 to an estimated $0.8 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 13.82% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Kirkland Lake Gold Ltd revealed the company was trading above its Graham Number of $14.86. The company pays a dividend of $0.04 per share, for a yield of 0.1% Its PEmg (price over earnings per share – ModernGraham) was 36.14, which was below the industry average of 53.66, 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 $0.14.

Kirkland Lake Gold Ltd receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $0.14
Graham Number $14.86
PEmg 36.14
Current Ratio 2.74
PB Ratio 3.88
Current Dividend $0.04
Dividend Yield 0.14%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $485,883,000
Total Current Liabilities $177,044,000
Long-Term Debt $0
Total Assets $2,038,858,000
Intangible Assets $0
Total Liabilities $456,244,000
Shares Outstanding (Diluted Average) 212,998,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.40
Dec2017 $0.80
Dec2016 $0.45
Apr2015 $0.28
Apr2014 -$0.16
Apr2013 -$0.05
Apr2012 $0.58
Apr2011 $0.29
Apr2010 -$0.20
Apr2009 -$0.20
Apr2008 -$0.06
Apr2007 -$0.16
Apr2006 -$0.13
Apr2005 -$0.67
Apr2004 -$0.74
Apr2003 -$0.25
Apr2002 -$0.16

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.80
Dec2017 $0.42
Dec2016 $0.23
Apr2015 $0.14
Apr2014 $0.07
Apr2013 $0.16
Apr2012 $0.20
Apr2011 -$0.01
Apr2010 -$0.16
Apr2009 -$0.18
Apr2008 -$0.23
Apr2007 -$0.34
Apr2006 -$0.42
Apr2005 -$0.49
Apr2004 -$0.35
Apr2003 -$0.13
Apr2002 -$0.05

Recommended Reading:

Other ModernGraham posts about the company

Kirkland Lakes Gold Ltd Valuation – Initial Coverage $TSE:KL

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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.

Natural Resource Partners LP Valuation – August 2018 $NRP

Company Profile (excerpt from Reuters): Natural Resource Partners L.P., incorporated on April 9, 2002, owns, operates, manages and leases a portfolio of mineral properties in the United States, including interests in coal, trona and soda ash, construction aggregates and other natural resources. The Company’s segments include Coal Royalty and Other, Soda Ash and VantaCore. The Company’s operations are conducted through NRP (Operating) LLC (Opco), and its operating assets are owned by its subsidiaries. NRP (GP) LP, its general partner, has responsibility for conducting the Company’s business and for managing its operations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NRP – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $385,145,764 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.84 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 -48.35% Fail
6. Moderate PEmg Ratio PEmg < 20 -25.31 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.94 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.84 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -41.77 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 -$1.25
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth -$18.08
MG Value based on 0% Growth -$10.60
Market Implied Growth Rate -16.90%
Current Price $31.55
% of Intrinsic Value N/A

Natural Resource Partners LP does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability 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 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 $12.88 in 2014 to an estimated $-1.25 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Natural Resource Partners LP revealed the company was trading below its Graham Number of $48.6. The company pays a dividend of $1.8 per share, for a yield of 5.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -25.31, which was below the industry average of 53.66, 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 $-47.97.

Natural Resource Partners LP receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.97
Graham Number $48.60
PEmg -25.31
Current Ratio 0.84
PB Ratio 0.94
Current Dividend $1.80
Dividend Yield 5.71%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $89,047,000
Total Current Liabilities $106,399,000
Long-Term Debt $724,854,000
Total Assets $1,377,206,000
Intangible Assets $927,614,000
Total Liabilities $848,367,000
Shares Outstanding (Diluted Average) 15,829,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.84
Dec2017 $3.96
Dec2016 $7.78
Dec2015 -$45.75
Dec2014 $9.42
Dec2013 $15.39
Dec2012 $19.70
Dec2011 $5.00
Dec2010 $15.40
Dec2009 $11.70
Dec2008 $19.50
Dec2007 $12.60
Dec2006 $17.40
Dec2005 $16.95
Dec2004 $11.45
Dec2003 $7.95
Dec2002 $1.40

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.25
Dec2017 -$3.47
Dec2016 -$4.36
Dec2015 -$6.70
Dec2014 $12.88
Dec2013 $14.22
Dec2012 $13.84
Dec2011 $11.55
Dec2010 $14.99
Dec2009 $15.07
Dec2008 $16.36
Dec2007 $14.29
Dec2006 $13.76
Dec2005 $10.48
Dec2004 $6.22
Dec2003 $3.02
Dec2002 $0.47

Recommended Reading:

Other ModernGraham posts about the company

Natural Resource Partners LP Valuation – February 2017 $NRP
Natural Resource Partners LP Analysis – October 2015 Update $NRP
10 Companies in the Spotlight This Week – 12/28/13
ModernGraham Valuation: Natural Resource Partners L.P. (NRP)

Other ModernGraham posts about related companies

Kaiser Aluminum Corp Valuation – August 2018 $KALU
Semafo Inc Valuation – August 2018 $TSE-SMF
US Silica Holdings Inc Valuation – August 2018 $SLCA
Ivanhoe Mines Ltd Valuation – August 2018 $TSE-IVN
Cleveland-Cliffs Inc Valuation – July 2018 $CLF
Cloud Peak Energy Inc Valuation – July 2018 $CLD
Wheaton Precious Metals Corp Valuation – July 2018 $TSE-WPM
IAMGOLD Corp Valuation – July 2018 $TSE:IMG
Centerra Gold Inc Valuation – July 2018 $TSE:CG
Alliance Resource Partners LP Valuation – July 2018 $ARLP

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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