Korn/Ferry International Valuation – August 2018 $KFY

Company Profile (excerpt from Reuters): Korn/Ferry International (Korn Ferry), incorporated on October 13, 1999, is a people and organizational advisory company. The Company and its subsidiaries are engaged in the business of providing talent management solutions, including executive search on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing, and leadership and talent consulting services. Its segments include Executive Search, Hay Group and Futurestep. Its executive search business is managed on a geographic basis throughout various regions, such as North America, Europe, the Middle East and Africa (EMEA), Asia Pacific and Latin America. Hay Group and Futurestep are managed on a global basis with operations in North America, Europe, Asia Pacific and Latin America. The Company has a network of approximately 150 offices in over 50 countries across the world that enables it to meet the needs of its clients in all industries. Its clients include public and private companies, middle market and emerging growth companies, as well as government and nonprofit organizations.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of KFY – 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 $3,767,418,511 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 175.20% Pass
6. Moderate PEmg Ratio PEmg < 20 30.94 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.10 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 1.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.46 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 $2.17
MG Growth Estimate 8.97%
MG Value $57.42
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $31.49
MG Value based on 0% Growth $18.46
Market Implied Growth Rate 11.22%
Current Price $67.20
% of Intrinsic Value 117.04%

Korn/Ferry International is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.36 in 2015 to an estimated $2.17 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.22% 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 Korn/Ferry International revealed the company was trading above its Graham Number of $39.18. The company pays a dividend of $0.4 per share, for a yield of 0.6% Its PEmg (price over earnings per share – ModernGraham) was 30.94, which was below the industry average of 33.97, 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 $-0.96.

Korn/Ferry International receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.96
Graham Number $39.18
PEmg 30.94
Current Ratio 1.82
PB Ratio 3.10
Current Dividend $0.40
Dividend Yield 0.60%
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 4/1/2018
Total Current Assets $1,014,259,000
Total Current Liabilities $558,460,000
Long-Term Debt $211,311,000
Total Assets $2,287,914,000
Intangible Assets $787,438,000
Total Liabilities $1,068,299,000
Shares Outstanding (Diluted Average) 56,308,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.17
Apr2018 $2.35
Apr2017 $1.47
Apr2016 $0.58
Apr2015 $1.76
Apr2014 $1.48
Apr2013 $0.70
Apr2012 $1.15
Apr2011 $1.27
Apr2010 $0.12
Apr2009 -$0.23
Apr2008 $1.46
Apr2007 $1.24
Apr2006 $1.32
Apr2005 $0.90
Apr2004 $0.13
Apr2003 -$0.63
Apr2002 -$2.62
Apr2001 $0.81
Apr2000 $0.82
Apr1999 -$2.37

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.17
Apr2018 $1.62
Apr2017 $1.24
Apr2016 $1.13
Apr2015 $1.36
Apr2014 $1.09
Apr2013 $0.79
Apr2012 $0.81
Apr2011 $0.69
Apr2010 $0.52
Apr2009 $0.80
Apr2008 $1.21
Apr2007 $0.92
Apr2006 $0.45
Apr2005 -$0.09
Apr2004 -$0.49
Apr2003 -$0.80

Recommended Reading:

Other ModernGraham posts about the company

14 Best Stocks for Value Investors This Week – 2/11/17
Korn-Ferry International Valuation – Initial Coverage $KFY

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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.

Korn-Ferry International Valuation – Initial Coverage $KFY

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 – February 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 Korn/Ferry International (KFY) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Korn/Ferry International (Korn Ferry) is a people and organizational advisory company. The Company and its subsidiaries are engaged in the provision of talent management solutions, including executive search on a retained basis, recruitment for non-executive professionals, recruitment process outsourcing, and leadership and talent consulting services. Its segments include Executive Search, Hay Group and Futurestep. The Executive Search segment focuses on recruiting Board of Director and C-level positions, in addition to research-based interviewing and onboarding solutions, for clients predominantly in the consumer, financial services, industrial, life sciences/healthcare and technology industries. The Hay Group segment assists clients with ongoing assessment, compensation and development of their senior executives and management teams. The Futurestep segment provides talent acquisition solutions and services, such as project recruitment, individual professional search and consulting.

KFY Chart

KFY 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 KFY – 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 $1,587,964,354 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.96 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 194.81% Pass
6. Moderate PEmg Ratio PEmg < 20 21.58 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.52 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 1.96 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.70 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 $1.30
MG Growth Estimate 9.49%
MG Value $35.65
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $18.81
MG Value based on 0% Growth $11.03
Market Implied Growth Rate 6.53%
Current Price $27.98
% of Intrinsic Value 78.49%

Korn/Ferry International is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability over the last ten years, the poor dividend history, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.79 in 2013 to an estimated $1.3 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 6.53% 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 Korn/Ferry International revealed the company was trading above its Graham Number of $25.94. The company pays a dividend of $0.4 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 21.57, which was below the industry average of 21.9, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.23.

Korn/Ferry International receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.23
Graham Number $25.94
PEmg 21.57
Current Ratio 1.96
PB Ratio 1.52
Current Dividend $0.40
Dividend Yield 1.43%
Number of Consecutive Years of Dividend Growth 3

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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 10/1/2016
Total Current Assets $715,356,000
Total Current Liabilities $365,436,000
Long-Term Debt $246,099,000
Total Assets $1,950,073,000
Intangible Assets $811,327,000
Total Liabilities $899,520,000
Shares Outstanding (Diluted Average) 56,983,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.64
Apr2016 $0.58
Apr2015 $1.76
Apr2014 $1.48
Apr2013 $0.70
Apr2012 $1.15
Apr2011 $1.27
Apr2010 $0.12
Apr2009 -$0.23
Apr2008 $1.46
Apr2007 $1.24
Apr2006 $1.32
Apr2005 $0.90
Apr2004 $0.13
Apr2003 -$0.63
Apr2002 -$2.62
Apr2001 $0.81
Apr2000 $0.82
Apr1999 -$2.37
Apr1998 $0.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.30
Apr2016 $1.13
Apr2015 $1.36
Apr2014 $1.09
Apr2013 $0.79
Apr2012 $0.81
Apr2011 $0.69
Apr2010 $0.52
Apr2009 $0.80
Apr2008 $1.21
Apr2007 $0.92
Apr2006 $0.45
Apr2005 -$0.09
Apr2004 -$0.49
Apr2003 -$0.80
Apr2002 -$0.79
Apr2001 $0.05

Recommended Reading:

Other ModernGraham posts about the company

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

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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.

Iron Mountain Inc Valuation – February 2019 $IRM

Company Profile (excerpt from Reuters): Iron Mountain Incorporated, incorporated on June 26, 2014, is a holding company, which stores records, primarily physical records and data backup media, and provides information management services in various locations throughout North America, Europe, Latin America, Asia Pacific and Africa. The Company operates through five segments: North American Records and Information Management Business, North American Data Management Business, Western European Business, Other International Business, and Corporate and Other Business. The Company offers records and information management services, and data management services. The Company provides storage and information management services to legal, financial, healthcare, insurance, life sciences, energy, businesses services, entertainment and government organizations. As of December 31, 2016, the Company’s courier fleet consisted of approximately 4,500 owned or leased vehicles. Its other services include information destruction services (primarily secure shredding) (Destruction), information governance and digital solutions, compliant records management and consulting services, and other ancillary services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IRM – February 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,478,514,374 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 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 -27.40% Fail
6. Moderate PEmg Ratio PEmg < 20 47.79 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.42 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 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -258.44 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 $0.77
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $11.11
MG Value based on 0% Growth $6.51
Market Implied Growth Rate 19.65%
Current Price $36.61
% of Intrinsic Value N/A

Iron Mountain 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 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 $1.13 in 2014 to an estimated $0.77 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 19.65% 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 Iron Mountain Inc revealed the company was trading above its Graham Number of $13.03. The company pays a dividend of $2.24 per share, for a yield of 6.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 47.79, which was above the industry average of 29.23. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.15.

Iron Mountain 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) -$30.15
Graham Number $13.03
PEmg 47.79
Current Ratio 0.97
PB Ratio 5.42
Current Dividend $2.24
Dividend Yield 6.11%
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 9/1/2018
Total Current Assets $1,215,975,000
Total Current Liabilities $1,247,352,000
Long-Term Debt $8,109,179,000
Total Assets $11,805,969,000
Intangible Assets $6,002,212,000
Total Liabilities $9,867,093,000
Shares Outstanding (Diluted Average) 286,982,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.93
Dec2017 $0.69
Dec2016 $0.42
Dec2015 $0.58
Dec2014 $1.66
Dec2013 $0.50
Dec2012 $0.98
Dec2011 $2.02
Dec2010 -$0.29
Dec2009 $1.08
Dec2008 $0.40
Dec2007 $0.76
Dec2006 $0.64
Dec2005 $0.56
Dec2004 $0.48
Dec2003 $0.43
Dec2002 $0.30
Dec2001 -$0.24
Dec2000 -$0.15
Dec1999 -$0.13
Dec1998 -$0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.77
Dec2017 $0.71
Dec2016 $0.76
Dec2015 $1.00
Dec2014 $1.13
Dec2013 $0.87
Dec2012 $0.98
Dec2011 $0.92
Dec2010 $0.42
Dec2009 $0.74
Dec2008 $0.57
Dec2007 $0.63
Dec2006 $0.54
Dec2005 $0.43
Dec2004 $0.29
Dec2003 $0.15
Dec2002 -$0.01

Recommended Reading:

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Iron Mountain Inc Valuation – April 2018 $IRM
Iron Mountain Inc Valuation – July 2016 $IRM
Iron Mountain Inc. Annual Valuation – 2015 $IRM
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Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA

Disclaimer:

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

Cintas Corp Valuation – February 2019 $CTAS

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CTAS – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $19,646,953,154 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.99 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 262.24% Pass
6. Moderate PEmg Ratio PEmg < 20 29.17 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.82 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.30 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.44
MG Growth Estimate 15.00%
MG Value $248.02
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $93.41
MG Value based on 0% Growth $54.76
Market Implied Growth Rate 10.34%
Current Price $187.92
% of Intrinsic Value 75.77%

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

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

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

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.68
Graham Number $68.91
PEmg 29.17
Current Ratio 1.99
PB Ratio 6.82
Current Dividend $1.62
Dividend Yield 0.86%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 11/1/2018
Total Current Assets $2,215,870,000
Total Current Liabilities $1,114,686,000
Long-Term Debt $2,536,408,000
Total Assets $7,405,083,000
Intangible Assets $3,354,133,000
Total Liabilities $4,377,839,000
Shares Outstanding (Diluted Average) 109,874,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

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Korn/Ferry International Valuation – August 2018 $KFY
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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.

Fidelity National Information Services Inc Valuation – January 2019 $FIS

Company Profile (excerpt from Reuters): Fidelity National Information Services, Inc. (FIS), incorporated on March 2, 2001, is a financial services technology company. The Company focuses on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. The Company operates through three segments: Integrated Financial Solutions (IFS), Global Financial Solutions (GFS), and Corporate and Other.

FIS Chart

FIS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FIS – 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 $34,661,328,720 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 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 183.97% Pass
6. Moderate PEmg Ratio PEmg < 20 36.36 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.45 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.94 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.91
MG Growth Estimate 8.96%
MG Value $76.92
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $42.20
MG Value based on 0% Growth $24.74
Market Implied Growth Rate 13.93%
Current Price $105.84
% of Intrinsic Value 137.61%

Fidelity National Information Servcs 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 $1.82 in 2014 to an estimated $2.91 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.93% 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 Fidelity National Information Servcs Inc revealed the company was trading above its Graham Number of $48.48. The company pays a dividend of $1.16 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 36.36, which was above the industry average of 26.19. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-30.

Fidelity National Information Servcs 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) -$30.00
Graham Number $48.48
PEmg 36.36
Current Ratio 1.34
PB Ratio 3.45
Current Dividend $1.16
Dividend Yield 1.10%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,597,000,000
Total Current Liabilities $2,692,000,000
Long-Term Debt $8,998,000,000
Total Assets $23,694,000,000
Intangible Assets $18,599,000,000
Total Liabilities $13,528,000,000
Shares Outstanding (Diluted Average) 331,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.21
Dec2017 $3.93
Dec2016 $1.72
Dec2015 $2.19
Dec2014 $2.35
Dec2013 $1.68
Dec2012 $1.55
Dec2011 $1.53
Dec2010 $1.15
Dec2009 $0.44
Dec2008 $1.11
Dec2007 $2.86
Dec2006 $1.37
Dec2005 $1.53
Dec2004 $1.48
Dec2003 $1.40
Dec2002 $1.30
Dec2001 $1.26
Dec2000 $1.30
Dec1999 $1.07
Dec1998 $0.85

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.91
Dec2017 $2.63
Dec2016 $1.95
Dec2015 $2.00
Dec2014 $1.82
Dec2013 $1.46
Dec2012 $1.29
Dec2011 $1.24
Dec2010 $1.20
Dec2009 $1.30
Dec2008 $1.71
Dec2007 $1.92
Dec2006 $1.43
Dec2005 $1.44
Dec2004 $1.38
Dec2003 $1.31
Dec2002 $1.23

Recommended Reading:

Other ModernGraham posts about the company

Fidelity National Information Services Inc Valuation – March 2018 $FIS
Fidelity National Information Services Valuation – July 2016 $FIS
47 Companies in the Spotlight This Week – 5/16/15
Fidelity National Information Services Inc. Annual Valuation – 2015 $FIS
40 Companies in the Spotlight This Week – 2/21/15

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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.

Avery Dennison Corp Valuation – January 2019 $AVY

Company Profile (excerpt from Reuters): Avery Dennison Corporation (Avery Dennison), incorporated on February 23, 1977, is engaged in the production of pressure-sensitive materials and a range of tickets, tags, labels and other converted products. The Company’s segments include Label and Graphic Materials (LGM); Retail Branding and Information Solutions (RBIS), and Industrial and Healthcare Materials (IHM). Some pressure-sensitive materials are sold to label printers and converters that convert the materials into labels and other products through embossing, printing, stamping and die-cutting. Some materials are sold by it in converted form as tapes and reflective sheeting. The Company also manufactures and sells a range of other converted products and items not involving pressure-sensitive components, such as fasteners, tickets, tags, radio-frequency identification (RFID) inlays and tags, and imprinting equipment and related services, which the Company markets to retailers, apparel manufacturers, and brand owners. As of December 31, 2016, the Company operated approximately 180 manufacturing and distribution facilities and had operations in over 50 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AVY – 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 $8,116,923,152 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.00 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 -599.19% Fail
6. Moderate PEmg Ratio PEmg < 20 23.58 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.92 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 1.00 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2,158.83 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.98
MG Growth Estimate 11.25%
MG Value $123.25
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $57.66
MG Value based on 0% Growth $33.80
Market Implied Growth Rate 7.54%
Current Price $93.75
% of Intrinsic Value 76.06%

Avery Dennison Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings 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. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.27 in 2014 to an estimated $3.98 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 7.54% 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 Avery Dennison Corp revealed the company was trading above its Graham Number of $38.74. The company pays a dividend of $1.76 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 23.58, which was below the industry average of 26.19, 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 $-20.07.

Avery Dennison 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) -$20.07
Graham Number $38.74
PEmg 23.58
Current Ratio 1.00
PB Ratio 7.92
Current Dividend $1.76
Dividend Yield 1.88%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,358,800,000
Total Current Liabilities $2,358,200,000
Long-Term Debt $1,295,300,000
Total Assets $5,181,900,000
Intangible Assets $1,101,700,000
Total Liabilities $4,134,800,000
Shares Outstanding (Diluted Average) 88,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.61
Dec2017 $3.13
Dec2016 $3.54
Dec2015 $2.95
Dec2014 $2.56
Dec2013 $2.13
Dec2012 $2.08
Dec2011 $1.78
Dec2010 $2.97
Dec2009 -$7.21
Dec2008 $2.70
Dec2007 $3.07
Dec2006 $3.72
Dec2005 $2.26
Dec2004 $2.78
Dec2003 $2.67
Dec2002 $2.59
Dec2001 $2.47
Dec2000 $2.84
Dec1999 $2.13
Dec1998 $2.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.98
Dec2017 $3.06
Dec2016 $2.90
Dec2015 $2.49
Dec2014 $2.27
Dec2013 $1.54
Dec2012 $0.98
Dec2011 $0.51
Dec2010 $0.26
Dec2009 -$0.42
Dec2008 $2.95
Dec2007 $3.02
Dec2006 $2.93
Dec2005 $2.54
Dec2004 $2.68
Dec2003 $2.60
Dec2002 $2.52

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Avery Dennison Corp Valuation – March 2018 $AVY
Avery Dennison Corp Valuation – June 2016 $AVY
Avery Dennison Corporation Annual Valuation – 2015 $AVY
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ModernGraham Valuation: Avery Dennison Corp (AVY)

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Multi-Color Corp Valuation – August 2018 $LABL
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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.

Paychex Inc Valuation – January 2019 $PAYX

Company Profile (excerpt from Reuters): Paychex, Inc., incorporated on April 26, 1979, is a provider of integrated human capital management (HCM) solutions for payroll, human resource (HR), retirement and insurance services for small- to medium-sized businesses in the United States. The Company also has operations in Germany. The Company offers services, including Payroll processing, Human Resource Services and Accounting and Financial Services. As of May 31, 2016, the Company serviced approximately 605,000 payroll clients. It offers a portfolio of HCM services and products that allows its clients to meet their payroll and HR needs. Its payroll-related ancillary services and human resource service (HRS) offerings often leverage the information gathered in the base payroll processing service, allowing it to provide outsourcing services covering the HCM spectrum. It also offers professional employer organization (PEO) services and provides insurance offerings through the Paychex Insurance Agency, Inc. (PIA).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PAYX – 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 $23,793,370,427 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.23 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 79.53% Pass
6. Moderate PEmg Ratio PEmg < 20 26.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.86 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.47
MG Growth Estimate 7.07%
MG Value $56.02
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $35.86
MG Value based on 0% Growth $21.02
Market Implied Growth Rate 9.12%
Current Price $66.16
% of Intrinsic Value 118.10%

Paychex, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high 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 Overvalued after growing its EPSmg (normalized earnings) from $1.68 in 2015 to an estimated $2.47 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Paychex, Inc. revealed the company was trading above its Graham Number of $18.85. The company pays a dividend of $2.06 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.75, which was above the industry average of 26.19. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.97.

Paychex, 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) $1.97
Graham Number $18.85
PEmg 26.75
Current Ratio 1.23
PB Ratio 9.86
Current Dividend $2.06
Dividend Yield 3.11%
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 11/1/2018
Total Current Assets $5,290,000,000
Total Current Liabilities $4,306,800,000
Long-Term Debt $0
Total Assets $7,002,400,000
Intangible Assets $938,600,000
Total Liabilities $4,577,900,000
Shares Outstanding (Diluted Average) 361,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.80
May2018 $2.58
May2017 $2.25
May2016 $2.09
May2015 $1.85
May2014 $1.71
May2013 $1.56
May2012 $1.51
May2011 $1.42
May2010 $1.32
May2009 $1.48
May2008 $1.56
May2007 $1.35
May2006 $1.22
May2005 $0.97
May2004 $0.80
May2003 $0.78
May2002 $0.73
May2001 $0.68
May2000 $0.51
May1999 $0.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.47
May2018 $2.24
May2017 $2.01
May2016 $1.84
May2015 $1.68
May2014 $1.57
May2013 $1.48
May2012 $1.45
May2011 $1.42
May2010 $1.41
May2009 $1.41
May2008 $1.31
May2007 $1.13
May2006 $0.98
May2005 $0.84
May2004 $0.75
May2003 $0.68

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Paychex Inc Valuation – June 2016 $PAYX
Paychex Inc. Valuation – November 2015 Update $PAYX
Paychex Inc. Analysis – August 2015 Update $PAYX
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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.

Fleetcor Technologies Inc Valuation – January 2019 $FLT

Company Profile (excerpt from Reuters): FleetCor Technologies, Inc., incorporated on February 3, 1998, is a provider of workforce payment products. The Company offers fuel card payments product solutions, corporate payments products, toll products, lodging cards and gift cards. The Company operates through two segments: North America and International. The Company’s products are sold to businesses, retailers, oil companies and marketers, and government entities. The Company’s payment programs enable its customers to manage and control their commercial payments, card programs and employee spending. The Company also provides a suite of fleet related and workforce payment products, including mobile telematics services, fleet maintenance management and employee benefit and transportation related payments. As of December 31, 2016, its products were used in 53 countries around the world, with its primary geographies in the United States, Brazil and the United Kingdom.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FLT – 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 $15,931,247,424 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.24 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -43.58% Fail
6. Moderate PEmg Ratio PEmg < 20 105.76 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 14.96 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.24 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.12 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 $1.76
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $25.46
MG Value based on 0% Growth $14.93
Market Implied Growth Rate 48.63%
Current Price $185.72
% of Intrinsic Value N/A

FleetCor Technologies, 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 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 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 $3.21 in 2014 to an estimated $1.76 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 48.63% 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 FleetCor Technologies, Inc. revealed the company was trading above its Graham Number of $29.9. The company pays a dividend of $0.76 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 105.76, which was above the industry average of 25.74. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.95.

FleetCor Technologies, 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) -$4.95
Graham Number $29.90
PEmg 105.76
Current Ratio 2.24
PB Ratio 14.96
Current Dividend $0.76
Dividend Yield 0.41%
Number of Consecutive Years of Dividend Growth 11

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 $2,324,667,000
Total Current Liabilities $1,040,080,000
Long-Term Debt $1,436,746,000
Total Assets $4,605,064,000
Intangible Assets $1,399,632,000
Total Liabilities $2,974,337,000
Shares Outstanding (Diluted Average) 131,350,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.13
Dec2017 $0.02
Dec2016 $1.01
Dec2015 $1.93
Dec2014 $3.72
Dec2013 $3.41
Dec2012 $2.84
Dec2011 $2.55
Dec2010 $2.29
Dec2009 $2.53
Dec2008 $2.58
Dec2007 $1.49
Dec2006 $0.67
Dec2005 $0.10
Dec2004 $0.16
Dec2003 $0.27
Dec2002 $0.16
Dec2001 -$0.14
Dec2000 $0.12
Dec1999 $0.11
Dec1998 $0.41

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.76
Dec2017 $1.39
Dec2016 $2.24
Dec2015 $2.87
Dec2014 $3.21
Dec2013 $2.88
Dec2012 $2.59
Dec2011 $2.41
Dec2010 $2.20
Dec2009 $1.93
Dec2008 $1.42
Dec2007 $0.73
Dec2006 $0.33
Dec2005 $0.14
Dec2004 $0.15
Dec2003 $0.13
Dec2002 $0.08

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

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Pitney Bowes Inc Valuation – June 2018 $PBI

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.

TrueBlue Inc Valuation – October 2018 $TBI

Company Profile (excerpt from Reuters): TrueBlue, Inc., incorporated on March 18, 1985, is a provider of specialized workforce solutions. The Company is engaged in providing staffing, on-site workforce management and recruitment process outsourcing services. The Company operates through three segments: PeopleReady, PeopleManagement and PeopleScout. Its PeopleReady segment provides blue-collar contingent staffing through the PeopleReady service line. Its PeopleManagement segment provides primarily on-premise contingent staffing and on-premise management of those contingent staffing services through four segments: Staff Management a SMX (Staff Management), SIMOS Insourcing Solutions Corporation (SIMOS), Centerline and PlaneTechs. Its PeopleScout segment provides permanent employee recruitment process outsourcing (RPO) and management of outsourced labor service providers through two segments: PeopleScout and PeopleScout MSP. Through its subsidiary, TMP Holdings LTD, the Company provides employer branding and recruitment marketing solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TBI – October 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 $1,029,902,476 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.98 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 112.23% Pass
6. Moderate PEmg Ratio PEmg < 20 19.85 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.82 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 1.98 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.55 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 $1.28
MG Growth Estimate 2.08%
MG Value $16.16
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $18.52
MG Value based on 0% Growth $10.86
Market Implied Growth Rate 5.67%
Current Price $25.35
% of Intrinsic Value 156.84%

Trueblue 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 over the last ten years, and the poor dividend history. 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 $1.12 in 2014 to an estimated $1.28 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.67% 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 below the price.

At the time of valuation, further research into Trueblue Inc revealed the company was trading above its Graham Number of $24.52. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 19.85, which was below the industry average of 27.67, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.16.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.16
Graham Number $24.52
PEmg 19.85
Current Ratio 1.98
PB Ratio 1.82
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 $432,966,000
Total Current Liabilities $219,129,000
Long-Term Debt $117,199,000
Total Assets $1,124,220,000
Intangible Assets $341,455,000
Total Liabilities $560,919,000
Shares Outstanding (Diluted Average) 40,469,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.98
Dec2017 $1.34
Dec2016 -$0.37
Dec2015 $1.71
Dec2014 $1.59
Dec2013 $1.11
Dec2012 $0.84
Dec2011 $0.73
Dec2010 $0.46
Dec2009 $0.20
Dec2008 -$0.10
Dec2007 $1.44
Dec2006 $1.45
Dec2005 $1.18
Dec2004 $0.75
Dec2003 $0.41
Dec2002 $0.28
Dec2001 $0.23
Dec2000 $0.24
Dec1999 $0.53
Dec1998 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.28
Dec2017 $0.98
Dec2016 $0.85
Dec2015 $1.38
Dec2014 $1.12
Dec2013 $0.81
Dec2012 $0.59
Dec2011 $0.49
Dec2010 $0.48
Dec2009 $0.60
Dec2008 $0.85
Dec2007 $1.23
Dec2006 $1.02
Dec2005 $0.73
Dec2004 $0.46
Dec2003 $0.32
Dec2002 $0.30

Recommended Reading:

Other ModernGraham posts about the company

Trueblue Inc Valuation – Initial Coverage $TBI

Other ModernGraham posts about related companies

Convergys Corp Valuation – September 2018 $CVG
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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.

Convergys Corp Valuation – September 2018 $CVG

Company Profile (excerpt from Reuters): Convergys Corporation, incorporated on July 2, 1996, is engaged in customer experience outsourcing. The Company’s geographical segments include North America and Rest of World. The Company offers services across industries, including communications and media, technology, financial services, retail, government and healthcare. The Company helps businesses to create customer experiences across multiple interaction channels, such as voice, chat, e-mail and interactive voice response.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CVG – 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 $2,237,035,640 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.49 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 138.55% Pass
6. Moderate PEmg Ratio PEmg < 20 18.30 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.78 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 2.49 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.41 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 $1.34
MG Growth Estimate 4.51%
MG Value $23.50
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $19.46
MG Value based on 0% Growth $11.41
Market Implied Growth Rate 4.90%
Current Price $24.56
% of Intrinsic Value 104.51%

Convergys Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.03 in 2014 to an estimated $1.34 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 4.9% 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 Convergys Corp revealed the company was trading above its Graham Number of $21.27. The company pays a dividend of $0.39 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 18.3, which was below the industry average of 28.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.27.

Convergys 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) -$1.27
Graham Number $21.27
PEmg 18.30
Current Ratio 2.49
PB Ratio 1.78
Current Dividend $0.39
Dividend Yield 1.59%
Number of Consecutive Years of Dividend Growth 6

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 $730,400,000
Total Current Liabilities $293,100,000
Long-Term Debt $177,900,000
Total Assets $2,204,700,000
Intangible Assets $1,206,500,000
Total Liabilities $854,400,000
Shares Outstanding (Diluted Average) 97,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.34
Dec2017 $1.22
Dec2016 $1.40
Dec2015 $1.61
Dec2014 $1.13
Dec2013 $0.56
Dec2012 $0.86
Dec2011 $2.72
Dec2010 -$0.43
Dec2009 -$0.63
Dec2008 -$0.75
Dec2007 $1.23
Dec2006 $1.17
Dec2005 $0.86
Dec2004 $0.77
Dec2003 $1.15
Dec2002 $0.88
Dec2001 $0.80
Dec2000 $1.09
Dec1999 $0.81
Dec1998 $0.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.34
Dec2017 $1.29
Dec2016 $1.25
Dec2015 $1.25
Dec2014 $1.03
Dec2013 $0.86
Dec2012 $0.79
Dec2011 $0.65
Dec2010 -$0.22
Dec2009 $0.05
Dec2008 $0.48
Dec2007 $1.07
Dec2006 $0.99
Dec2005 $0.89
Dec2004 $0.92
Dec2003 $0.98
Dec2002 $0.87

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks for Value Investors This Week – 3/26/17
Convergys Corp Valuation – Initial Coverage $CVG

Other ModernGraham posts about related companies

Strategic Education Inc Valuation – August 2018 $STRA
Multi-Color Corp Valuation – August 2018 $LABL
Korn/Ferry International Valuation – August 2018 $KFY
Kelly Services Inc Valuation – August 2018 $KELYA
Jack Henry & Associates Inc Valuation – August 2018 $JKHY
Dun & Bradstreet Corp Valuation – July 2018 $DNB
CoreLogic Inc Valuation – July 2018 $CLGX
Pitney Bowes Inc Valuation – June 2018 $PBI
United Rentals Inc Valuation – June 2018 $URI
Global Payments Inc Valuation – June 2018 $GPN

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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