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Kopin Corp Valuation – August 2018 $KOPN

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KOPN – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $174,487,354 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.90 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -327.66% Fail
6. Moderate PEmg Ratio PEmg < 20 -6.63 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.48 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 6.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

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

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.21 in 2014 to an estimated $-0.34 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Kopin Corporation revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -6.63, which was below the industry average of 53.7, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.71.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $0.71
Graham Number $0.00
PEmg -6.63
Current Ratio 6.90
PB Ratio 2.48
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $64,125,000
Total Current Liabilities $9,290,000
Long-Term Debt $0
Total Assets $79,343,000
Intangible Assets $2,210,000
Total Liabilities $11,494,000
Shares Outstanding (Diluted Average) 73,917,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

Other ModernGraham posts about the company

Kopin Corporation Valuation – Initial Coverage $KOPN

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Semtech Corp Valuation – August 2018 $SMTC
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Coherent Inc Valuation – August 2018 $COHR
Teradata Corp Valuation – August 2018 $TDC
Silicon Laboratories Inc Valuation – August 2018 $SLAB
Itron Inc Valuation – July 2018 $ITRI
Celestica Inc Valuation – July 2018 $TSE-CLS
Ciena Corp Valuation – July 2018 $CIEN

Disclaimer:

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

Koppers Holdings Inc Valuation – March 2018 $KOP

Company Profile (obtained from Marketwatch): Koppers Holdings, Inc. operates as a holding company, which produces treated wood products, wood treatment chemicals and carbon compounds. It operates through three segments: Carbon Materials & Chemicals; Railroad and Utility Products & Services; and Performance Chemicals. The Carbon Materials & Chemicals segment manufactures carbon pitch naphthalene, phthalic anhydride, creosote and carbon black feedstock. The Railroad and Utility Products & Services segment sells treated and untreated wood products, manufactured products and services primarily to the railroad and public utility markets. The Performance Chemicals segment sells preservatives for residential and agricultural treated lumber that includes decking and fencing. The company was incorporated on November 18, 2004 and is headquartered in Pittsburgh, PA.

KOP Chart

KOP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KOP – March 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 $878,570,199 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.80 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 33.26% Fail
6. Moderate PEmg Ratio PEmg < 20 32.83 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.42 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.95 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 $1.29
MG Growth Estimate 4.45%
MG Value $22.46
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $18.71
MG Value based on 0% Growth $10.97
Market Implied Growth Rate 12.16%
Current Price $42.35
% of Intrinsic Value 188.59%

Koppers Holdings 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 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, 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 $0.99 in 2014 to an estimated $1.29 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.16% 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 Koppers Holdings Inc. revealed the company was trading above its Graham Number of $19.44. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 32.83, which was above the industry average of 31.55. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.72.

Koppers Holdings 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) -$26.72
Graham Number $19.44
PEmg 32.83
Current Ratio 1.80
PB Ratio 9.42
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $506,700,000
Total Current Liabilities $281,200,000
Long-Term Debt $665,600,000
Total Assets $1,200,200,000
Intangible Assets $317,800,000
Total Liabilities $1,100,300,000
Shares Outstanding (Diluted Average) 22,219,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.70
Dec2017 $1.32
Dec2016 $1.39
Dec2015 -$3.51
Dec2014 -$1.58
Dec2013 $1.94
Dec2012 $3.13
Dec2011 $1.77
Dec2010 $2.13
Dec2009 $0.91
Dec2008 $6.65
Dec2007 $3.03
Dec2006 $0.75
Dec2005 -$6.58
Dec2004 -$23.15
Dec2003 -$21.09
Dec2002 $1.19
Dec2001 $0.79

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.29
Dec2017 $0.03
Dec2016 -$0.32
Dec2015 -$0.67
Dec2014 $0.99
Dec2013 $2.18
Dec2012 $2.51
Dec2011 $2.43
Dec2010 $2.74
Dec2009 $2.34
Dec2008 $0.75
Dec2007 -$4.60
Dec2006 -$8.87
Dec2005 -$12.37
Dec2004 -$13.00
Dec2003 -$6.55
Dec2002 $0.61

Recommended Reading:

Other ModernGraham posts about the company

Koppers Holdings Inc Valuation – Initial Coverage $KOP

Other ModernGraham posts about related companies

Praxair Inc Valuation – March 2018 $PX
Ingevity Corp Valuation – March 2018 $NGVT
PolyOne Corp Valuation – March 2018 $POL
Green Plains Inc Valuation – March 2018 $GPRE
Eastman Chemical Co Valuation – March 2018 $EMN
LyondellBasell Industries NV Valuation – March 2018 $LYB
DowDuPont Inc Valuation – February 2018 $DWDP
Green Plains Inc Valuation – Initial Coverage $GPRE
PolyOne Corp Valuation – Initial Coverage $POL
Ingevity Corp Valuation – Initial Coverage $NGVT

Disclaimer:

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

Kopin Corporation Valuation – Initial Coverage $KOPN

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 Kopin Corporation (KOPN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Kopin Corporation is an inventor, developer, manufacturer and seller of wearable technologies, which include components and systems. It operates in two segments, which include Forth Dimension Displays Ltd. (FDD) and Kopin. FDD is the manufacturer of its reflective display products for test and simulation products. Kopin consists of Kopin Corporation, Kowon Technology Co. LTD (Kowon), Kopin Software Ltd. and eMDT America, Inc. (eMDT). The components that it sells consist of its active-matrix liquid crystal displays (AMLCD), liquid crystal on silicon (LCOS) displays, application specific integrated circuits (ASICs), backlights and optical lenses. Its transmissive AMLCDs and reflective LCOS micro-displays are manufactured in its facilities in United States and United Kingdom, provide either color or monochrome images, and are offered in various sizes and resolutions. Its ASICs, optical lenses and backlights are manufactured by third parties.

KOPN Chart

KOPN data by YCharts

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

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. 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.

Learn More About Premium Membership

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Downloadable PDF version of this valuation:

ModernGraham Valuation of KOPN – 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 $241,161,719 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.95 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 -565.22% Fail
6. Moderate PEmg Ratio PEmg < 20 -11.34 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.80 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 6.95 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg -$0.31
MG Growth Estimate -4.25%
MG Value $1.20
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$4.51
MG Value based on 0% Growth -$2.65
Market Implied Growth Rate -9.92%
Current Price $3.53
% of Intrinsic Value 294.15%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.02 in 2012 to an estimated $-0.31 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 Kopin Corporation revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -11.34, which was below the industry average of 28.12, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $1.2.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.20
Graham Number $0.00
PEmg -11.34
Current Ratio 6.95
PB Ratio 2.80
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $90,354,000
Total Current Liabilities $12,993,000
Long-Term Debt $0
Total Assets $94,285,000
Intangible Assets $870,000
Total Liabilities $13,491,000
Shares Outstanding (Diluted Average) 64,048,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.39
Dec2015 -$0.23
Dec2014 -$0.45
Dec2013 -$0.08
Dec2012 -$0.29
Dec2011 $0.05
Dec2010 $0.13
Dec2009 $0.29
Dec2008 $0.04
Dec2007 -$0.10
Dec2006 -$0.03
Dec2005 $0.15
Dec2004 -$0.22
Dec2003 -$0.14
Dec2002 -$0.46
Dec2001 -$0.34
Dec2000 $0.09
Dec1999 $0.01
Dec1998 -$0.06
Dec1997 -$0.14
Dec1996 -$0.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.31
Dec2015 -$0.25
Dec2014 -$0.21
Dec2013 -$0.06
Dec2012 -$0.02
Dec2011 $0.11
Dec2010 $0.11
Dec2009 $0.09
Dec2008 -$0.01
Dec2007 -$0.05
Dec2006 -$0.06
Dec2005 -$0.12
Dec2004 -$0.24
Dec2003 -$0.22
Dec2002 -$0.23
Dec2001 -$0.10
Dec2000 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Texas Instruments Inc Valuation – February 2017 $TXN
Knowles Corp Valuation – Initial Coverage $KN
Cree Inc Valuation – Initial Coverage $CREE
Cray Inc Valuation – Initial Coverage $CRAY
Kulicke and Soffa Industries Inc Valuation – Initial Coverage $KLIC
Keysight Technologies Inc Valuation – Initial Coverage $KEYS
Cohu Inc Valuation – Initial Coverage $COHU
Semtech Corporation Valuation – Initial Coverage $SMTC
Coherent Inc Valuation – Initial Coverage $COHR
Apple Inc Valuation – January 2017 $AAPL

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.

Koppers Holdings Inc Valuation – Initial Coverage $KOP

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 Koppers Holdings Inc (KOP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Koppers Holdings Inc. is an integrated global provider of treated wood products, wood treatment chemicals and carbon compounds. The Company operates through three business segments: Railroad and Utility Products and Services (RUPS), Carbon Materials and Chemicals (CMC) and Performance Chemicals (PC). The Railroad and Utility Products and Services segment sells treated and untreated wood products, rail joint bars and services primarily to the railroad industry and treated wood products to the utility industry. Its utility products include transmission and distribution poles and pilings. The Carbon Materials and Chemicals segment is primarily a manufacturer of creosote, carbon pitch, naphthalene, phthalic anhydride and carbon black feedstock. The Performance Chemicals segment develops, manufactures, and markets wood preservation chemicals and wood treatment technologies and services a range of markets including infrastructure, residential and commercial construction and agriculture.

KOP Chart

KOP data by YCharts

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

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

Learn More About Premium Membership

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

Downloadable PDF version of this valuation:

ModernGraham Valuation of KOP – 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 $874,184,790 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.57 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 -135.88% Fail
6. Moderate PEmg Ratio PEmg < 20 -120.82 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 44.67 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 1.57 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.98 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 -$0.35
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$5.14
MG Value based on 0% Growth -$3.01
Market Implied Growth Rate -64.66%
Current Price $42.85
% of Intrinsic Value N/A

Koppers Holdings 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, 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 $2.51 in 2012 to an estimated $-0.35 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 Koppers Holdings Inc. revealed the company was trading above its Graham Number of $5.34. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -120.82, which was below the industry average of 22.46, 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 $-30.03.

Koppers Holdings 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) -$30.03
Graham Number $5.34
PEmg -120.82
Current Ratio 1.57
PB Ratio 44.67
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $445,000,000
Total Current Liabilities $283,800,000
Long-Term Debt $642,000,000
Total Assets $1,100,800,000
Intangible Assets $334,300,000
Total Liabilities $1,080,500,000
Shares Outstanding (Diluted Average) 21,163,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.29
Dec2015 -$3.51
Dec2014 -$1.58
Dec2013 $1.94
Dec2012 $3.13
Dec2011 $1.77
Dec2010 $2.13
Dec2009 $0.91
Dec2008 $6.65
Dec2007 $3.03
Dec2006 $0.75
Dec2005 -$6.58
Dec2004 -$23.15
Dec2003 -$21.09
Dec2002 $1.19
Dec2001 $0.79

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.35
Dec2015 -$0.67
Dec2014 $0.99
Dec2013 $2.18
Dec2012 $2.51
Dec2011 $2.43
Dec2010 $2.74
Dec2009 $2.34
Dec2008 $0.75
Dec2007 -$4.60
Dec2006 -$8.87
Dec2005 -$12.37
Dec2004 -$13.00
Dec2003 -$6.55
Dec2002 $0.61
Dec2001 $0.26

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

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Compass Minerals International Inc Valuation – Initial Coverage $CMP
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Innospec Inc Valuation – Initial Coverage $IOSP
Chemtrade Logistics Income Fund Valuation – Initial Coverage $TSE:CHE.UN
Albemarle Corporation Valuation – August 2016 $ALB
Air Products & Chemicals Inc Valuation – August 2016 $APD
Ashland Inc Valuation – July 2016 $ASH
FMC Corporation Valuation – July 2016 $FMC

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.

KLA-Tencor Corp Valuation – January 2019 $KLAC

Company Profile (excerpt from Reuters): KLA-Tencor Corporation (KLA-Tencor), incorporated on July 9, 1975, is a supplier of process control and yield management solutions for the semiconductor and related nanoelectronics industries. The Company’s products are also used in a number of other high technology industries, including the light emitting diode (LED) and data storage industries, as well as general materials research. Its products and services are used by bare wafer, integrated circuit (IC), lithography reticle (reticle or mask) and disk manufacturers around the world. These customers turn to the Company for inline wafer and IC defect monitoring, review and classification; reticle defect inspection and metrology; packaging and interconnect inspection; critical dimension (CD) metrology; pattern overlay metrology; film thickness, surface topography and composition measurements; measurement of in-chamber process conditions, wafer shape and stress metrology; computational lithography tools, and overall yield and fab-wide data management and analysis systems. The Company’s inspection and metrology products and related offerings are categorized in various groups, including Chip Manufacturing, Wafer Manufacturing, Reticle Manufacturing, LED, Power Device and Compound Semiconductor Manufacturing, Data Storage Media/Head Manufacturing, Microelectromechanical Systems (MEMS) Manufacturing, and General Purpose/Lab Applications. It also provides refurbished KLA-Tencor tools as service and support for its products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KLAC – 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 $15,698,720,555 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.45 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 91.67% Pass
6. Moderate PEmg Ratio PEmg < 20 16.29 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.10 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 3.45 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 $6.22
MG Growth Estimate 14.02%
MG Value $227.47
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $90.25
MG Value based on 0% Growth $52.90
Market Implied Growth Rate 3.90%
Current Price $101.39
% of Intrinsic Value 44.57%

KLA-Tencor Corp qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.22 in 2015 to an estimated $6.22 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.9% 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 above the price.

At the time of valuation, further research into KLA-Tencor Corp revealed the company was trading above its Graham Number of $45.4. The company pays a dividend of $2.52 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.29, which was below the industry average of 33.25, 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 $2.84.

KLA-Tencor Corp performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.84
Graham Number $45.40
PEmg 16.29
Current Ratio 3.45
PB Ratio 10.10
Current Dividend $2.52
Dividend Yield 2.49%
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 $4,521,044,000
Total Current Liabilities $1,310,930,000
Long-Term Debt $2,237,890,000
Total Assets $5,645,109,000
Intangible Assets $385,557,000
Total Liabilities $4,077,740,000
Shares Outstanding (Diluted Average) 156,083,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.82
Jun2018 $5.10
Jun2017 $5.88
Jun2016 $4.49
Jun2015 $2.24
Jun2014 $3.47
Jun2013 $3.21
Jun2012 $4.44
Jun2011 $4.66
Jun2010 $1.23
Jun2009 -$3.07
Jun2008 $1.95
Jun2007 $2.61
Jun2006 $1.86
Jun2005 $2.21
Jun2004 $1.05
Jun2003 $0.48
Jun2002 $1.10
Jun2001 $0.34
Jun2000 $1.32
Jun1999 $0.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.22
Jun2018 $4.70
Jun2017 $4.28
Jun2016 $3.51
Jun2015 $3.22
Jun2014 $3.60
Jun2013 $3.15
Jun2012 $2.69
Jun2011 $1.70
Jun2010 $0.45
Jun2009 $0.41
Jun2008 $2.08
Jun2007 $1.98
Jun2006 $1.56
Jun2005 $1.28
Jun2004 $0.83
Jun2003 $0.70

Recommended Reading:

Other ModernGraham posts about the company

KLA-Tencor Corp Valuation – March 2018 $KLAC
KLA-Tencor Corp Valuation – July 2016 $KLAC
KLA-Tencor Corp Valuation – January 2016 Update $KLAC
KLA-Tencor Corporation Analysis – September 2015 Update $KLAC
10 Undervalued Companies for the Enterprising Dividend Stock Investor – August 2015

Other ModernGraham posts about related companies

TE Connectivity Ltd Valuation – January 2019 $TEL
NVIDIA Corp Valuation – January 2019 $NVDA
Seagate Technology PLC Valuation – January 2019 $STX
Corning Inc Valuation – January 2019 $GLW
HP Inc Valuation – December 2018 $HPQ
Intel Corp Valuation – November 2018 $INTC
Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN

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.

TE Connectivity Ltd Valuation – January 2019 $TEL

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TEL – 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 $26,914,447,325 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 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 124.33% Pass
6. Moderate PEmg Ratio PEmg < 20 13.42 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.54 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 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.70 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.85
MG Growth Estimate 5.69%
MG Value $116.24
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $84.78
MG Value based on 0% Growth $49.70
Market Implied Growth Rate 2.46%
Current Price $78.46
% of Intrinsic Value 67.50%

TE Connectivity Ltd qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.24 in 2015 to an estimated $5.85 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.46% 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 TE Connectivity Ltd revealed the company was trading above its Graham Number of $62.63. The company pays a dividend of $1.68 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.42, which was below the industry average of 33.25, 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 $-9.59.

TE Connectivity Ltd performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.59
Graham Number $62.63
PEmg 13.42
Current Ratio 1.41
PB Ratio 2.54
Current Dividend $1.68
Dividend Yield 2.14%
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 $6,199,000,000
Total Current Liabilities $4,410,000,000
Long-Term Debt $3,037,000,000
Total Assets $20,386,000,000
Intangible Assets $7,388,000,000
Total Liabilities $9,555,000,000
Shares Outstanding (Diluted Average) 350,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.55
Sep2018 $7.27
Sep2017 $4.70
Sep2016 $5.44
Sep2015 $5.89
Sep2014 $4.27
Sep2013 $3.02
Sep2012 $2.59
Sep2011 $2.81
Sep2010 $2.41
Sep2009 -$7.11
Sep2008 $3.67
Sep2007 -$1.11
Sep2006 $2.40
Sep2005 $2.30
Sep2004 $1.53
Sep2003 -$0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.85
Sep2018 $5.83
Sep2017 $4.97
Sep2016 $4.81
Sep2015 $4.24
Sep2014 $3.28
Sep2013 $2.11
Sep2012 $1.39
Sep2011 $0.57
Sep2010 -$0.35
Sep2009 -$1.14
Sep2008 $1.82
Sep2007 $0.90
Sep2006 $1.66
Sep2005 $1.08
Sep2004 $0.39
Sep2003 -$0.15

Recommended Reading:

Other ModernGraham posts about the company

TE Connectivity Ltd Valuation – March 2018 $TEL
9 Best Stocks For Value Investors This Week – 6/24/16
TE Connectivity Ltd Valuation – June 2016 $TEL
13 Best Stocks For Value Investors This Week – 12/12/15
TE Connectivity Ltd Valuation – December 2015 Update $TEL

Other ModernGraham posts about related companies

NVIDIA Corp Valuation – January 2019 $NVDA
Seagate Technology PLC Valuation – January 2019 $STX
Corning Inc Valuation – January 2019 $GLW
HP Inc Valuation – December 2018 $HPQ
Intel Corp Valuation – November 2018 $INTC
Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN

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.

NVIDIA Corp Valuation – January 2019 $NVDA

Company Profile (excerpt from Reuters): Nvidia Corporation, incorporated on February 24, 1998, focuses on personal computer (PC) graphics, graphics processing unit (GPU) and also on artificial intelligence (AI). The Company provides service to its customers through PC, mobile and cloud architectures. The Company operates through two segments: GPU and Tegra Processor, which are based on a single underlying architecture. The Company’s processor has created platforms that address four markets: Gaming, Professional Visualization, Datacenter, and Automotive. The Company’s GPU product brands are aimed at specialized markets, including GeForce for gamers; Quadro for designers; Tesla and DGX for AI data scientists and big data researchers, and GRID for cloud-based visual computing users. The Company’s Tegra brand integrates an entire computer onto a single chip, and incorporates GPUs and multi-core central processing units (CPUs) to drive supercomputing for mobile gaming and entertainment devices, as well as autonomous robots, drones and cars. NVIDIA has evolved the GPU into a computer brain at the intersection of virtual reality, high performance computing, or high-performance computing (HPC) and artificial intelligence.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NVDA – 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 $87,473,996,276 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.08 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 1039.20% Pass
6. Moderate PEmg Ratio PEmg < 20 33.34 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.46 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 7.08 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.20 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 $4.30
MG Growth Estimate 15.00%
MG Value $165.60
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $62.37
MG Value based on 0% Growth $36.56
Market Implied Growth Rate 12.42%
Current Price $143.40
% of Intrinsic Value 86.59%

NVIDIA Corporation 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, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.9 in 2015 to an estimated $4.3 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 12.42% 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 NVIDIA Corporation revealed the company was trading above its Graham Number of $43.59. The company pays a dividend of $0.57 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 33.34, which was above the industry average of 33.25. Finally, the company was trading above its Net Current Asset Value (NCAV) of $11.53.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $11.53
Graham Number $43.59
PEmg 33.34
Current Ratio 7.08
PB Ratio 9.46
Current Dividend $0.57
Dividend Yield 0.40%
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 10/1/2018
Total Current Assets $11,386,000,000
Total Current Liabilities $1,608,000,000
Long-Term Debt $1,987,000,000
Total Assets $13,657,000,000
Intangible Assets $667,000,000
Total Liabilities $4,182,000,000
Shares Outstanding (Diluted Average) 625,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.85
Jan2018 $4.82
Jan2017 $2.57
Jan2016 $1.08
Jan2015 $1.12
Jan2014 $0.74
Jan2013 $0.90
Jan2012 $0.94
Jan2011 $0.43
Jan2010 -$0.12
Jan2009 -$0.05
Jan2008 $1.31
Jan2007 $0.77
Jan2006 $0.55
Jan2005 $0.17
Jan2004 $0.14
Jan2003 $0.18
Jan2002 $0.34
Jan2001 $0.21
Jan2000 $0.09
Jan1999 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.30
Jan2018 $2.71
Jan2017 $1.53
Jan2016 $0.99
Jan2015 $0.90
Jan2014 $0.72
Jan2013 $0.62
Jan2012 $0.48
Jan2011 $0.33
Jan2010 $0.35
Jan2009 $0.57
Jan2008 $0.78
Jan2007 $0.47
Jan2006 $0.30
Jan2005 $0.19
Jan2004 $0.20
Jan2003 $0.21

Recommended Reading:

Other ModernGraham posts about the company

NVIDIA Corp Valuation – March 2018 $NVDA
Nvidia Corporation Valuation – June 2016 $NVDA
NVIDIA Corporation Valuation – November 2015 Update $NVDA
The Best Stocks of the IT Hardware Industry – September 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15

Other ModernGraham posts about related companies

Seagate Technology PLC Valuation – January 2019 $STX
Corning Inc Valuation – January 2019 $GLW
HP Inc Valuation – December 2018 $HPQ
Intel Corp Valuation – November 2018 $INTC
Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE

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.

Seagate Technology PLC Valuation – January 2019 $STX

Company Profile (excerpt from Reuters): Seagate Technology public limited company, incorporated on January 22, 2010, is a provider of electronic data storage technology and solutions. The Company’s principal products are hard disk drives (HDDs). In addition to HDDs, the Company produces a range of electronic data storage products, including solid state hybrid drives (SSHDs), solid state drives (SSDs), peripheral component interconnect express (PCIe) cards and serial advanced technology architecture (SATA) controllers. Its storage technology portfolio also includes storage subsystems and high performance computing (HPC) solutions. Its products are designed for applications in enterprise servers and storage systems; client compute applications, where its products are designed primarily for desktop and mobile computing, and client non-compute applications, where its products are designed for a range of end user devices, such as digital video recorders (DVRs), personal data backup systems, portable external storage systems, digital media systems and surveillance systems.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of STX – 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 $10,915,705,965 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.42 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 6.16% Fail
6. Moderate PEmg Ratio PEmg < 20 10.48 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.03 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 1.42 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.21 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.64
MG Growth Estimate -3.76%
MG Value $3.53
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $52.77
MG Value based on 0% Growth $30.93
Market Implied Growth Rate 0.99%
Current Price $38.14
% of Intrinsic Value 1079.09%

Seagate Technology PLC does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, and the high PB ratio. 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 $4.86 in 2015 to an estimated $3.64 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 0.99% 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 Seagate Technology PLC revealed the company was trading above its Graham Number of $24.89. The company pays a dividend of $2.52 per share, for a yield of 6.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.48, which was below the industry average of 33.25, 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 $-10.99.

Seagate Technology PLC scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$10.99
Graham Number $24.89
PEmg 10.48
Current Ratio 1.42
PB Ratio 6.03
Current Dividend $2.52
Dividend Yield 6.61%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $4,523,000,000
Total Current Liabilities $3,175,000,000
Long-Term Debt $4,322,000,000
Total Assets $9,578,000,000
Intangible Assets $1,406,000,000
Total Liabilities $7,732,000,000
Shares Outstanding (Diluted Average) 292,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.75
Jun2018 $4.05
Jun2017 $2.58
Jun2016 $0.82
Jun2015 $5.26
Jun2014 $4.52
Jun2013 $4.81
Jun2012 $6.49
Jun2011 $1.09
Jun2010 $3.14
Jun2009 -$6.40
Jun2008 $2.36
Jun2007 $1.56
Jun2006 $1.60
Jun2005 $1.41
Jun2004 $1.06
Jun2003 $1.36
Jun2002 $0.36

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.64
Jun2018 $3.20
Jun2017 $3.05
Jun2016 $3.65
Jun2015 $4.86
Jun2014 $4.44
Jun2013 $3.54
Jun2012 $2.39
Jun2011 $0.34
Jun2010 $0.13
Jun2009 -$0.88
Jun2008 $1.78
Jun2007 $1.46
Jun2006 $1.33
Jun2005 $1.07
Jun2004 $0.79
Jun2003 $0.55

Recommended Reading:

Other ModernGraham posts about the company

Seagate Technology PLC Valuation – March 2018 $STX
10 Low PE Stock Picks for the Enterprising Investor – July 2017
10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017
5 Undervalued Stocks for Value Investors with a High Beta – February 2017
10 Best Dividend Paying Stocks for the Enterprising Investor – February 2017

Other ModernGraham posts about related companies

Corning Inc Valuation – January 2019 $GLW
HP Inc Valuation – December 2018 $HPQ
Intel Corp Valuation – November 2018 $INTC
Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY

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.

Corning Inc Valuation – January 2019 $GLW

Company Profile (excerpt from Reuters): Corning Incorporated (Corning), incorporated on December 24, 1936, is engaged in manufacturing specialty glass and ceramics. The Company’s segments include Display Technologies, Optical Communications, Environmental Technologies, Specialty Materials, Life Sciences and All Other. The Company provides glass for notebook computers, flat panel desktop monitors, liquid crystal display (LCD) televisions, and other information display applications; carrier network and enterprise network products for the telecommunications industry; ceramic substrates for gasoline and diesel engines in automotive and heavy duty vehicle markets; laboratory products for the scientific community and specialized polymer products for biotechnology applications; optical materials for the semiconductor industry and the scientific community, and other technologies. As of December 31, 2016, the Company had manufactured products at 98 plants in 17 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GLW – 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 $23,803,872,024 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.13 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 -27.31% Fail
6. Moderate PEmg Ratio PEmg < 20 25.88 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.98 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 2.13 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.44 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 $1.15
MG Growth Estimate -3.81%
MG Value $1.02
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $16.66
MG Value based on 0% Growth $9.76
Market Implied Growth Rate 8.70%
Current Price $29.76
% of Intrinsic Value 2923.15%

Corning 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 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 or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.54 in 2014 to an estimated $1.15 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.7% 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 Corning Incorporated revealed the company was trading above its Graham Number of $21.29. The company pays a dividend of $0.62 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 25.91, which was below the industry average of 33.25, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.22.

Corning 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) -$6.22
Graham Number $21.29
PEmg 25.91
Current Ratio 2.13
PB Ratio 1.98
Current Dividend $0.62
Dividend Yield 2.08%
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 $6,632,000,000
Total Current Liabilities $3,112,000,000
Long-Term Debt $5,056,000,000
Total Assets $26,392,000,000
Intangible Assets $3,239,000,000
Total Liabilities $12,414,000,000
Shares Outstanding (Diluted Average) 930,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.29
Dec2017 -$0.66
Dec2016 $3.23
Dec2015 $1.00
Dec2014 $1.73
Dec2013 $1.34
Dec2012 $1.09
Dec2011 $1.78
Dec2010 $2.25
Dec2009 $1.28
Dec2008 $3.32
Dec2007 $1.34
Dec2006 $1.16
Dec2005 $0.38
Dec2004 -$1.61
Dec2003 -$0.22
Dec2002 -$1.39
Dec2001 -$5.89
Dec2000 $0.49
Dec1999 $0.22
Dec1998 $0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.15
Dec2017 $1.16
Dec2016 $1.94
Dec2015 $1.33
Dec2014 $1.54
Dec2013 $1.48
Dec2012 $1.68
Dec2011 $1.98
Dec2010 $2.01
Dec2009 $1.76
Dec2008 $1.64
Dec2007 $0.60
Dec2006 $0.04
Dec2005 -$0.92
Dec2004 -$1.63
Dec2003 -$1.54
Dec2002 -$1.89

Recommended Reading:

Other ModernGraham posts about the company

Corning Inc Valuation – February 2018 $GLW
Corning Inc Valuation – May 2016 $GLW
Corning Inc Valuation – November 2015 Update $GLW
Corning Inc. Analysis – August 2015 Update $GLW
30 Companies in the Spotlight This Week – 5/23/15

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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.

HP Inc Valuation – December 2018 $HPQ

Company Profile (excerpt from Reuters): HP Inc., incorporated on February 11, 1998, is a provider of products, technologies, software, solutions and services to individual consumers, small- and medium-sized businesses (SMBs), and large enterprises, including customers in the government, health and education sectors. The Company provides personal computing and other access devices, imaging and printing products, and related technologies, solutions and services. The Company’s segments include Personal Systems, Printing and Corporate Investments. The Personal Systems segment provides Commercial personal computers (PCs), Consumer PCs, workstations, thin clients, Commercial tablets and mobility devices, retail point-of-sale (POS) systems, displays and other related accessories, software, support and services for the commercial and consumer markets. The Printing segment provides consumer and commercial printer hardware, supplies, media, solutions and services, as well as scanning devices. The Corporate Investments segment includes the operations of HP Labs and certain business incubation projects.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HPQ – December 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 $38,294,144,118 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.85 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 1043.33% Pass
6. Moderate PEmg Ratio PEmg < 20 10.43 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -58.12 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.85 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.21 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 $2.23
MG Growth Estimate 8.60%
MG Value $57.27
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $32.31
MG Value based on 0% Growth $18.94
Market Implied Growth Rate 0.97%
Current Price $23.24
% of Intrinsic Value 40.58%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.42 in 2015 to an estimated $2.23 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.97% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into HP Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.56 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.43, which was below the industry average of 36.27, 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 $-8.68.

HP 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) -$8.68
Graham Number $0.00
PEmg 10.43
Current Ratio 0.85
PB Ratio -58.12
Current Dividend $0.56
Dividend Yield 2.40%
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 10/1/2018
Total Current Assets $21,387,000,000
Total Current Liabilities $25,131,000,000
Long-Term Debt $4,524,000,000
Total Assets $34,622,000,000
Intangible Assets $5,968,000,000
Total Liabilities $35,261,000,000
Shares Outstanding (Diluted Average) 1,598,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.12
Oct2018 $3.26
Oct2017 $1.48
Oct2016 $1.43
Oct2015 $2.48
Oct2014 $2.62
Oct2013 $2.62
Oct2012 -$6.41
Oct2011 $3.32
Oct2010 $3.69
Oct2009 $3.14
Oct2008 $3.25
Oct2007 $2.68
Oct2006 $2.18
Oct2005 $0.82
Oct2004 $1.15
Oct2003 $0.83
Oct2002 -$0.36
Oct2001 $0.21
Oct2000 $1.80
Oct1999 $1.67

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.23
Oct2018 $2.27
Oct2017 $1.89
Oct2016 $1.58
Oct2015 $1.42
Oct2014 $0.98
Oct2013 $0.53
Oct2012 $0.12
Oct2011 $3.33
Oct2010 $3.22
Oct2009 $2.79
Oct2008 $2.42
Oct2007 $1.85
Oct2006 $1.26
Oct2005 $0.71
Oct2004 $0.68
Oct2003 $0.57

Recommended Reading:

Other ModernGraham posts about the company

HP Inc Valuation – February 2018 $HPQ
HP Inc Valuation – May 2016 $HPQ
58 Companies in the Spotlight This Week – 1/31/15
Hewlett-Packard Corporation Annual Valuation – 2015 $HPQ
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Other ModernGraham posts about related companies

Intel Corp Valuation – November 2018 $INTC
Apple Inc Valuation – November 2018 $AAPL
Littelfuse Inc Valuation – September 2018 $LFUS
CTS Corporation Valuation – August 2018 $CTS
Kopin Corp Valuation – August 2018 $KOPN
Knowles Corp Valuation – August 2018 $KN
Cree Inc Valuation – August 2018 $CREE
Cray Inc Valuation – August 2018 $CRAY
Kulicke & Soffa Industries Inc Valuation – August 2018 $KLIC
Keysight Technologies Inc Valuation – August 2018 $KEYS

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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