Leggett & Platt Inc Valuation – March 2019 #LEG

Company Profile (excerpt from Reuters): Leggett & Platt, Incorporated, incorporated on February 23, 1901, is a diversified manufacturer that conceives, designs and produces a range of engineered components and products found in homes, offices and automobiles. The Company operates in four segments: Residential Furnishings, Commercial Products, Industrial Materials and Specialized Products. The Company’s brands include ComfortCore, Mira-Coil, VertiCoil, Quantum, Nanocoil, Softech, Lura-Flex, Superlastic and Active Support Technology, which includes mattress innersprings; Semi-Flex, which includes box spring components and foundations; Spuhl, which includes mattress innerspring manufacturing machines; Wall Hugger, which includes recliner chair mechanisms; Super Sagless, which includes motion and sofa sleeper mechanisms; No-Sag, which includes wire forms used in seating; LPSense, which includes capacitive sensing; Hanes, which includes fabric materials; Schukra, Pullmaflex and Flex-O-Lator, which includes automotive seating products, and Gribetz and Porter, which includes quilting and sewing machines.

LEG Chart

LEG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LEG – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,419,827,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.87 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 77.12% Pass
6. Moderate PEmg Ratio PEmg < 20 17.36 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.81 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 1.87 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.65 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 $2.38
MG Growth Estimate 8.74%
MG Value $61.86
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $34.54
MG Value based on 0% Growth $20.25
Market Implied Growth Rate 4.43%
Current Price $41.35
% of Intrinsic Value 66.84%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.51 in 2015 to an estimated $2.38 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.43% 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 Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $22.33. The company pays a dividend of $1.5 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.36, which was below the industry average of 26.43, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.2.

Leggett & Platt, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.20
Graham Number $22.33
PEmg 17.36
Current Ratio 1.87
PB Ratio 4.81
Current Dividend $1.50
Dividend Yield 3.63%
Number of Consecutive Years of Dividend Growth 20

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Yahoo Finance Seeking Alpha
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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,524,600,000
Total Current Liabilities $815,700,000
Long-Term Debt $1,167,800,000
Total Assets $3,382,000,000
Intangible Assets $1,012,500,000
Total Liabilities $2,224,400,000
Shares Outstanding (Diluted Average) 134,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.50
Dec2018 $2.26
Dec2017 $2.13
Dec2016 $2.76
Dec2015 $2.28
Dec2014 $0.68
Dec2013 $1.34
Dec2012 $1.70
Dec2011 $1.04
Dec2010 $1.15
Dec2009 $0.70
Dec2008 $0.62
Dec2007 -$0.06
Dec2006 $1.61
Dec2005 $1.30
Dec2004 $1.45
Dec2003 $1.05
Dec2002 $1.17
Dec2001 $0.94
Dec2000 $1.32
Dec1999 $1.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.38
Dec2018 $2.22
Dec2017 $2.08
Dec2016 $1.96
Dec2015 $1.51
Dec2014 $1.14
Dec2013 $1.31
Dec2012 $1.21
Dec2011 $0.87
Dec2010 $0.79
Dec2009 $0.69
Dec2008 $0.78
Dec2007 $0.93
Dec2006 $1.39
Dec2005 $1.25
Dec2004 $1.21
Dec2003 $1.12

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Best Dividend Paying Stocks for Dividend Growth Investors – February 2019
10 Best Dividend Paying Stocks for the Enterprising Investor – September 2018
Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Leggett & Platt Inc Valuation – June 2018 $LEG

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Leggett & Platt Inc Valuation – June 2018 $LEG
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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.

Allegion PLC Valuation – February 2019 $ALLE

Company Profile (excerpt from Reuters): Allegion Public Limited Company, incorporated on May 9, 2013, is a provider of security products and solutions. The Company offers a portfolio of mechanical and electronic security products across a range of brands. Its segments include Americas; Europe, Middle East, India and Africa (EMEIA), and Asia Pacific. Its products include door closers and controls; door and door frames (steel); electronic security products; electronic and biometric access control systems; exit devices; locks, locksets, portable locks and key systems; time, attendance and workforce productivity systems, and other accessories. The Company sells a range of security products and solutions for end users in commercial, institutional and residential facilities across the world, including into the education, healthcare, government, hospitality, commercial office and single and multi-family residential markets. As of December 31, 2016, it manufactured and sold mechanical and electronic security products and solutions in approximately 130 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALLE – 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 $8,399,205,187 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.79 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 40600.00% Pass
6. Moderate PEmg Ratio PEmg < 20 23.36 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.97 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 1.79 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.43 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 $3.81
MG Growth Estimate 15.00%
MG Value $146.61
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $55.22
MG Value based on 0% Growth $32.37
Market Implied Growth Rate 7.43%
Current Price $88.94
% of Intrinsic Value 60.67%

Allegion PLC is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.08 in 2015 to an estimated $3.81 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.43% 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 Allegion PLC revealed the company was trading above its Graham Number of $27.16. The company pays a dividend of $0.84 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 23.36, which was below the industry average of 24.89, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-12.84.

Allegion PLC performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.84
Graham Number $27.16
PEmg 23.36
Current Ratio 1.79
PB Ratio 12.97
Current Dividend $0.84
Dividend Yield 0.94%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $931,600,000
Total Current Liabilities $520,800,000
Long-Term Debt $1,409,500,000
Total Assets $2,810,200,000
Intangible Assets $1,430,100,000
Total Liabilities $2,156,200,000
Shares Outstanding (Diluted Average) 95,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.82
Dec2018 $4.54
Dec2017 $2.85
Dec2016 $2.36
Dec2015 $1.59
Dec2014 $1.80
Dec2013 $0.34

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.81
Dec2018 $3.08
Dec2017 $2.16
Dec2016 $1.62
Dec2015 $1.08
Dec2014 $0.69
Dec2013 $0.11

Recommended Reading:

Other ModernGraham posts about the company

5 Companies for Enterprising Investors Near 52 Week Lows – July 2018
Allegion PLC Valuation – May 2018 $ALLE
Allegion PLC Valuation – January 2017 $ALLE
Allegion PLC Valuation – August 2016 $ALLE
26 Best Stocks For Value Investors This Week – 2/6/16

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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.

Allegheny Technologies Inc Valuation – September 2018 $ATI

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ATI – September 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,426,092,997 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.87 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -273.09% Fail
6. Moderate PEmg Ratio PEmg < 20 -19.90 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.93 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.87 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.11 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$19.69
MG Value based on 0% Growth -$11.54
Market Implied Growth Rate -14.20%
Current Price $27.03
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $0.97 in 2014 to an estimated $-1.36 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Allegheny Technologies Incorporated revealed the company was trading above its Graham Number of $22.24. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -19.9, which was below the industry average of 68, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-8.4.

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

Stage 3: Information for Further Research

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

Useful Links:

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

Most Recent Balance Sheet Figures

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

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

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Allegheny Technologies Inc Valuation – March 2017 $ATI
Allegheny Technologies Inc. Valuation – November 2015 Update $ATI
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Allegheny Technologies Inc. Annual Valuation – 2014 $ATI
ModernGraham Valuation: Allegheny Technologies (ATI)

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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.

Legg Mason Inc Valuation – June 2018 $LM

Company Profile (excerpt from Reuters): Legg Mason, Inc., incorporated on January 13, 1981, is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. The Company offers its products and services directly and through various financial intermediaries. The Company has operations principally in the United States and the United Kingdom and also have offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LM – June 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 $2,972,262,474 Pass
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 Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 92.87% Pass
6. Moderate PEmg Ratio PEmg < 20 13.90 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.77 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 2.35 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.50
MG Growth Estimate 15.00%
MG Value $96.17
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $36.22
MG Value based on 0% Growth $21.23
Market Implied Growth Rate 2.70%
Current Price $34.73
% of Intrinsic Value 36.11%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.09 in 2015 to an estimated $2.5 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.7% 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 above the price.

At the time of valuation, further research into Legg Mason Inc revealed the company was trading below its Graham Number of $59.43. The company pays a dividend of $1.12 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.9, which was below the industry average of 22.96, 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 $-27.85.

Legg Mason Inc performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.85
Graham Number $59.43
PEmg 13.90
Current Ratio 1.96
PB Ratio 0.77
Current Dividend $1.12
Dividend Yield 3.22%
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 3/1/2018
Total Current Assets $1,928,382,000
Total Current Liabilities $982,042,000
Long-Term Debt $2,221,810,000
Total Assets $8,152,534,000
Intangible Assets $5,730,014,000
Total Liabilities $4,300,398,000
Shares Outstanding (Diluted Average) 85,179,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.47
Mar2018 $3.01
Mar2017 $2.18
Mar2016 -$0.25
Mar2015 $2.04
Mar2014 $2.33
Mar2013 -$2.65
Mar2012 $1.54
Mar2011 $1.63
Mar2010 $1.32
Mar2009 -$13.99
Mar2008 $1.86
Mar2007 $4.48
Mar2006 $8.80
Mar2005 $3.53
Mar2004 $2.65
Mar2003 $1.78
Mar2002 $1.45
Mar2001 $1.53
Mar2000 $1.51
Mar1999 $1.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.50
Mar2018 $1.96
Mar2017 $1.20
Mar2016 $0.68
Mar2015 $1.09
Mar2014 $0.68
Mar2013 -$0.90
Mar2012 -$0.53
Mar2011 -$1.36
Mar2010 -$1.73
Mar2009 -$1.86
Mar2008 $4.22
Mar2007 $5.02
Mar2006 $4.74
Mar2005 $2.53
Mar2004 $1.95
Mar2003 $1.56

Recommended Reading:

Other ModernGraham posts about the company

Legg Mason Inc Valuation – June 2016 $LM
Stocks Trading Below Their Graham Number – May 2016
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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.

Leggett & Platt Inc Valuation – June 2018 $LEG

Company Profile (excerpt from Reuters): Leggett & Platt, Incorporated, incorporated on February 23, 1901, is a diversified manufacturer that conceives, designs and produces a range of engineered components and products found in homes, offices and automobiles. The Company operates in four segments: Residential Furnishings, Commercial Products, Industrial Materials and Specialized Products. The Company’s brands include ComfortCore, Mira-Coil, VertiCoil, Quantum, Nanocoil, Softech, Lura-Flex, Superlastic and Active Support Technology, which includes mattress innersprings; Semi-Flex, which includes box spring components and foundations; Spuhl, which includes mattress innerspring manufacturing machines; Wall Hugger, which includes recliner chair mechanisms; Super Sagless, which includes motion and sofa sleeper mechanisms; No-Sag, which includes wire forms used in seating; LPSense, which includes capacitive sensing; Hanes, which includes fabric materials; Schukra, Pullmaflex and Flex-O-Lator, which includes automotive seating products, and Gribetz and Porter, which includes quilting and sewing machines.

LEG Chart

LEG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LEG – June 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,735,164,624 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.85 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 160.21% Pass
6. Moderate PEmg Ratio PEmg < 20 18.62 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.98 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 1.85 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.48 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 $2.35
MG Growth Estimate 15.00%
MG Value $90.32
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $34.02
MG Value based on 0% Growth $19.94
Market Implied Growth Rate 5.06%
Current Price $43.69
% of Intrinsic Value 48.37%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.14 in 2014 to an estimated $2.35 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.06% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $23.11. The company pays a dividend of $1.42 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 18.62, which was above the industry average of 17.71. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.

Leggett & Platt, Inc. performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.00
Graham Number $23.11
PEmg 18.62
Current Ratio 1.85
PB Ratio 4.98
Current Dividend $1.42
Dividend Yield 3.25%
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 3/1/2018
Total Current Assets $1,814,100,000
Total Current Liabilities $978,100,000
Long-Term Debt $1,239,000,000
Total Assets $3,692,400,000
Intangible Assets $1,038,500,000
Total Liabilities $2,496,100,000
Shares Outstanding (Diluted Average) 136,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.63
Dec2017 $2.13
Dec2016 $2.76
Dec2015 $2.28
Dec2014 $0.68
Dec2013 $1.34
Dec2012 $1.70
Dec2011 $1.04
Dec2010 $1.15
Dec2009 $0.70
Dec2008 $0.62
Dec2007 -$0.06
Dec2006 $1.61
Dec2005 $1.30
Dec2004 $1.45
Dec2003 $1.05
Dec2002 $1.17
Dec2001 $0.94
Dec2000 $1.32
Dec1999 $1.45
Dec1998 $1.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.35
Dec2017 $2.08
Dec2016 $1.96
Dec2015 $1.51
Dec2014 $1.14
Dec2013 $1.31
Dec2012 $1.21
Dec2011 $0.87
Dec2010 $0.79
Dec2009 $0.69
Dec2008 $0.78
Dec2007 $0.93
Dec2006 $1.39
Dec2005 $1.25
Dec2004 $1.21
Dec2003 $1.12
Dec2002 $1.18

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2017
Leggett & Platt Inc Valuation – March 2017 $LEG
Best Dividend Paying Stocks for Dividend Growth Investors – March 2017
Best Dividend Paying Stocks for Dividend Growth Investors – February 2017
Best Dividend Paying Stocks for Dividend Growth Investors – January 2017

Other ModernGraham posts about related companies

Clorox Co Valuation – May 2018 $CLX
Newell Brands Inc Valuation – March 2018 $NWL
La-Z-Boy Inc Valuation – Initial Coverage $LZB
Tupperware Brands Corp Valuation – Initial Coverage $TUP
Leggett & Platt Inc Valuation – March 2017 $LEG
Newell Brands Inc Valuation – February 2017 $NWL
Clorox Company Valuation – January 2017 $CLX
Select Comfort Corp Valuation – Initial Coverage $SCSS
Leggett & Platt Inc Valuation – August 2016 $LEG
National Presto Industries Inc Valuation – July 2016 $NPK

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.

Allegion PLC Valuation – May 2018 $ALLE

Company Profile (excerpt from Reuters): Allegion Public Limited Company, incorporated on May 9, 2013, is a provider of security products and solutions. The Company offers a portfolio of mechanical and electronic security products across a range of brands. Its segments include Americas; Europe, Middle East, India and Africa (EMEIA), and Asia Pacific. Its products include door closers and controls; door and door frames (steel); electronic security products; electronic and biometric access control systems; exit devices; locks, locksets, portable locks and key systems; time, attendance and workforce productivity systems, and other accessories. The Company sells a range of security products and solutions for end users in commercial, institutional and residential facilities across the world, including into the education, healthcare, government, hospitality, commercial office and single and multi-family residential markets. As of December 31, 2016, it manufactured and sold mechanical and electronic security products and solutions in approximately 130 countries.

ALLE Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ALLE – May 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 $7,259,699,628 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.78 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 317.62% Pass
6. Moderate PEmg Ratio PEmg < 20 25.49 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 16.00 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 1.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.21 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 $2.99
MG Growth Estimate 15.00%
MG Value $115.01
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $43.32
MG Value based on 0% Growth $25.39
Market Implied Growth Rate 8.50%
Current Price $76.15
% of Intrinsic Value 66.21%

Allegion PLC is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.45 in 2014 to an estimated $2.99 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.5% 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 Allegion PLC revealed the company was trading above its Graham Number of $20.15. The company pays a dividend of $0.64 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 25.49, which was below the industry average of 28.03, 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 $-14.3.

Allegion PLC performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$14.30
Graham Number $20.15
PEmg 25.49
Current Ratio 1.78
PB Ratio 16.00
Current Dividend $0.64
Dividend Yield 0.84%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $802,600,000
Total Current Liabilities $452,100,000
Long-Term Debt $1,474,100,000
Total Assets $2,628,100,000
Intangible Assets $1,423,800,000
Total Liabilities $2,172,100,000
Shares Outstanding (Diluted Average) 95,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.27
Dec2017 $2.85
Dec2016 $2.36
Dec2015 $1.59
Dec2014 $1.80
Dec2013 $0.34
Dec2012 $2.29
Dec2011 $2.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.99
Dec2017 $2.16
Dec2016 $1.77
Dec2015 $1.53
Dec2014 $1.45
Dec2013 $1.18
Dec2012 $1.37
Dec2011 $0.76

Recommended Reading:

Other ModernGraham posts about the company

Allegion PLC Valuation – January 2017 $ALLE
Allegion PLC Valuation – August 2016 $ALLE
26 Best Stocks For Value Investors This Week – 2/6/16
Allegion PLC Valuation – February 2016 Update $ALLE
15 Best Stocks For Value Investors This Week – 9/12/15

Other ModernGraham posts about related companies

Arconic Inc Valuation – April 2018 $ARNC
Rockwell Automation Inc Valuation – April 2018 $ROK
Roper Technologies Inc Valuation – April 2018 $ROP
Eaton Corp PLC Valuation – March 2018 $ETN
Fastenal Co Valuation – March 2018 $FAST
Deere & Co Valuation – March 2018 $DE
A.O. Smith Corp Valuation – March 2018 $AOS
Parker-Hannifin Corp Valuation – March 2018 $PH
Dover Corp Valuation – March 2018 $DOV
Ingersoll-Rand PLC Valuation – February 2018 $IR

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.

LegacyTexas Financial Group Inc Valuation – Initial Coverage $LTXB

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 – March 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 LegacyTexas Financial Group Inc (LTXB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): LegacyTexas Financial Group, Inc. is a bank holding company. LegacyTexas Bank (the Bank) is the Company’s principal operating subsidiary, which is a commercial bank that is focused on meeting the needs of businesses and consumers in the North Texas area. Its principal business consists of attracting retail deposits from general public and business community and investing those funds, along with borrowed funds, in commercial real estate loans, secured and unsecured commercial and industrial loans, as well as permanent loans secured by first and second mortgages on one- to four-family residences and consumer loans. Its Warehouse Purchase Program allows mortgage banking company customers to close one- to four-family real estate loans in their own name and manage its cash flow needs until the loans are sold to investors. It offers title services, as well as brokerage services for purchase and sale of non-deposit investment and insurance products through a third-party brokerage arrangement.

LTXB Chart

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ModernGraham Valuation of LTXB – July 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,805,433,977 Fail
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 893.22% Pass
5. Moderate PEmg Ratio PEmg < 20 21.28 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.97 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.77
MG Growth Estimate 15.00%
MG Value $68.27
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $25.71
MG Value based on 0% Growth $15.07
Market Implied Growth Rate 6.39%
Current Price $37.74
% of Intrinsic Value 55.28%

LegacyTexas Financial Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the  small size, insufficient earnings stability over the last ten years, and the high PEmg ratio. The Enterprising Investor has 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 Undervalued after growing its EPSmg (normalized earnings) from $0.79 in 2013 to an estimated $1.77 for 2017.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.39% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into LegacyTexas Financial Group Inc revealed the company was trading above its Graham Number of $30.53.  The company pays a dividend of $0.58 per share, for a yield of 1.5%  Its PEmg (price over earnings per share – ModernGraham) was 21.28, which was above the industry average of 20.84.

LegacyTexas Financial Group Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Graham Number $30.53
PEmg 21.28
PB Ratio 1.97
Dividend Yield 1.54%
TTM Dividend $0.58
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 3/1/2017
Long-Term Debt & Capital Lease Obligation $964,350,000
Total Assets $8,436,542,000
Intangible Assets $178,559,000
Total Liabilities $7,536,625,000
Shares Outstanding (Diluted Average) 47,060,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.24
Dec2016 $2.09
Dec2015 $1.53
Dec2014 $0.81
Dec2013 $0.83
Dec2012 $0.98
Dec2011 $0.81
Dec2010 $0.59
Dec2009 $0.10
Dec2008 -$0.10
Dec2007 $0.14
Dec2006 $0.06
Dec2005 $1.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.77
Dec2016 $1.44
Dec2015 $1.08
Dec2014 $0.83
Dec2013 $0.79
Dec2012 $0.67
Dec2011 $0.44
Dec2010 $0.23
Dec2009 $0.14
Dec2008 $0.21
Dec2007 $0.35
Dec2006 $0.40
Dec2005 $0.48

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

SunTrust Banks Inc Valuation – April 2017 $STI
Toronto-Dominion Bank Valuation – Initial Coverage $TSE:TD
Texas Capital Banchares Inc Valuation – Initial Coverage $TCBI
TCF Financial Corp Valuation – Initial Coverage $TCB
Canadian Western Bank Valuation – Initial Coverage $TSE:CWB
CVB Financial Corp Valuation – Initial Coverage $CVBF
Customers Bancorp Inc Valuation – Initial Coverage $CUBI
Comerica Inc Valuation – March 2017 $CMA
Sterling Bancorp Valuation – Initial Coverage $STL
S&T Bancorp Inc Valuation – Initial Coverage $STBA

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.

Leggett & Platt Inc Valuation – March 2017 $LEG

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 – March 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 Leggett & Platt Inc (LEG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Leggett & Platt, Incorporated is a manufacturer that conceives, designs and produces a range of engineered components and products found in homes, offices and automobiles. The Company operates in four segments: Residential Furnishings, Commercial Products, Industrial Materials and Specialized Products. Its brands include ComfortCore, Mira-Coil, VertiCoil, Quantum, Nanocoil, Lura-Flex and Active Support Technology, which includes mattress innersprings; Semi-Flex, which includes box spring components and foundations; Spuhl, which includes mattress innerspring manufacturing machines; Wall Hugger, which includes recliner chair mechanisms; Super Sagless, which includes motion and sofa sleeper mechanisms; No-Sag, which includes wire forms used in seating; LPSense, which includes capacitive sensing; Hanes, which includes fabric materials; Schukra, Pullmaflex and Flex-O-Lator, which includes automotive seating products, and Gribetz and Porter, which includes quilting and sewing machines.

LEG Chart

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ModernGraham Valuation of LEG – March 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 $6,663,320,747 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.88 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 209.31% Pass
6. Moderate PEmg Ratio PEmg < 20 22.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.42 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 1.88 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.55 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 $2.24
MG Growth Estimate 10.67%
MG Value $66.81
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $32.46
MG Value based on 0% Growth $19.03
Market Implied Growth Rate 6.94%
Current Price $50.09
% of Intrinsic Value 74.97%

Leggett & Platt, 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 level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.31 in 2013 to an estimated $2.24 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.94% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $21.87. The company pays a dividend of $1.34 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.37, which was below the industry average of 25.38, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.05.

Leggett & Platt, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.05
Graham Number $21.87
PEmg 22.37
Current Ratio 1.88
PB Ratio 6.42
Current Dividend $1.34
Dividend Yield 2.68%
Number of Consecutive Years of Dividend Growth 20

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $1,324,900,000
Total Current Liabilities $706,600,000
Long-Term Debt $956,200,000
Total Assets $2,984,100,000
Intangible Assets $956,200,000
Total Liabilities $1,892,500,000
Shares Outstanding (Diluted Average) 140,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.60
Dec2016 $2.76
Dec2015 $2.28
Dec2014 $0.68
Dec2013 $1.34
Dec2012 $1.70
Dec2011 $1.04
Dec2010 $1.15
Dec2009 $0.70
Dec2008 $0.62
Dec2007 -$0.06
Dec2006 $1.61
Dec2005 $1.30
Dec2004 $1.45
Dec2003 $1.05
Dec2002 $1.17
Dec2001 $0.94
Dec2000 $1.32
Dec1999 $1.45
Dec1998 $1.24
Dec1997 $1.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.24
Dec2016 $1.96
Dec2015 $1.51
Dec2014 $1.14
Dec2013 $1.31
Dec2012 $1.21
Dec2011 $0.87
Dec2010 $0.79
Dec2009 $0.69
Dec2008 $0.78
Dec2007 $0.93
Dec2006 $1.39
Dec2005 $1.25
Dec2004 $1.21
Dec2003 $1.12
Dec2002 $1.18
Dec2001 $1.19

Recommended Reading:

Other ModernGraham posts about the company

Leggett & Platt Inc Stock Valuation – February 2016 $LEG
15 Companies in the Spotlight This Week – 12/27/14
Leggett & Platt Inc. Annual Valuation – 2014 $LEG
17 Companies in the Spotlight This Week – 9/27/2014
Leggett & Platt Inc. Quarterly Valuation – September 2014 $LEG

Other ModernGraham posts about related companies

Newell Brands Inc Valuation – February 2017 $NWL
Clorox Company Valuation – January 2017 $CLX
Select Comfort Corp Valuation – Initial Coverage $SCSS
Leggett & Platt Inc Valuation – August 2016 $LEG
National Presto Industries Inc Valuation – July 2016 $NPK
Leggett & Platt Inc Stock Valuation – February 2016 $LEG
National Presto Industries Valuation – January 2016 Update $NPK
Newell Rubbermaid Inc. Valuation – October 2015 Update $NWL
National Presto Industries Inc. Valuation – October 2015 Update $NPK
Clorox Company Analysis – September 2015 Update $CLX

Disclaimer:

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

Allegheny Technologies Inc Valuation – March 2017 $ATI

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 Allegheny Technologies Inc (ATI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Allegheny Technologies Incorporated (ATI) is a specialty materials and components producer. The Company operates through two business segments: High Performance Materials & Components and Flat Rolled Products. ATI’s products include titanium and titanium alloys, nickel-based alloys and specialty steels, precision forgings, castings and machined components, zirconium and related alloys, precision and engineered stainless steel strip, and grain-oriented electrical steel. Its standard products include specialty stainless sheet and stainless steel plate. It is engaged in the production of titanium alloys, nickel-based and cobalt-based alloys and superalloys, and vacuum-melted specialty alloys used in the manufacture of components for both commercial and military jet engines, as well as replacement parts for those engines. It also produces titanium alloys, vacuum-melted specialty alloys and stainless alloys for use in commercial and military airframes, airframe components and missiles.

ATI Chart

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ModernGraham Valuation of ATI – March 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 $1,843,520,763 Fail
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 Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -235.62% Fail
6. Moderate PEmg Ratio PEmg < 20 -8.38 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.38 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.49 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.68 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 -$2.07
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$30.05
MG Value based on 0% Growth -$17.62
Market Implied Growth Rate -8.44%
Current Price $17.37
% of Intrinsic Value N/A

Allegheny Technologies Incorporated does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the 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 $1.37 in 2013 to an estimated $-2.07 for 2017. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Allegheny Technologies Incorporated revealed the company was trading above its Graham Number of $10.58. The company pays a dividend of $0.32 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was -8.38, which was below the industry average of 47.18, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-19.09.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.09
Graham Number $10.58
PEmg -8.38
Current Ratio 2.49
PB Ratio 1.38
Current Dividend $0.32
Dividend Yield 1.84%
Number of Consecutive Years of Dividend Growth 1

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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 12/1/2016
Total Current Assets $1,766,500,000
Total Current Liabilities $708,700,000
Long-Term Debt $1,771,900,000
Total Assets $5,170,000,000
Intangible Assets $641,900,000
Total Liabilities $3,814,800,000
Shares Outstanding (Diluted Average) 107,300,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.40
Dec2016 -$5.97
Dec2015 -$3.53
Dec2014 -$0.03
Dec2013 $1.44
Dec2012 $1.43
Dec2011 $1.97
Dec2010 $0.72
Dec2009 $0.32
Dec2008 $5.67
Dec2007 $7.26
Dec2006 $5.61
Dec2005 $3.59
Dec2004 $0.22
Dec2003 -$3.89
Dec2002 -$0.82
Dec2001 -$0.31
Dec2000 $1.60
Dec1999 $3.13
Dec1998 $2.43
Dec1997 $3.73

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.07
Dec2016 -$2.65
Dec2015 -$0.57
Dec2014 $0.97
Dec2013 $1.37
Dec2012 $1.57
Dec2011 $2.15
Dec2010 $2.80
Dec2009 $4.06
Dec2008 $5.44
Dec2007 $4.40
Dec2006 $2.30
Dec2005 $0.35
Dec2004 -$1.06
Dec2003 -$1.16
Dec2002 $0.54
Dec2001 $1.52

Recommended Reading:

Other ModernGraham posts about the company

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

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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.

Allegion PLC Valuation – January 2017 $ALLE

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 – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Allegion PLC (ALLE) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Allegion Public Limited Company is a provider of security products and solutions. The Company offers a portfolio of mechanical and electronic security products across a range of brands. It operates through three segments: Americas; Europe, the Middle East, India and Africa (EMEIA), and Asia Pacific. The Company’s products include door closers and controls, electronic security products, exit devices, time, attendance and workforce productivity systems, door and door frames (steel), electronic and biometric access control systems, locks, locksets and key systems, and other accessories. The Company sells its products and solutions under the brands, including CISA, AXA, Briton, Falcon, LCN, Interflex, Von Duprin, Schlage, Milre, PegaSys, SimonsVoss, aptiQ, IVES and Brio. It sells a range of security products and solutions for end users in commercial, institutional and residential facilities around the world, including into the education, healthcare, government and hospitality markets.

ALLE Chart

ALLE 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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of ALLE – January 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 $6,243,427,459 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 19366.67% Pass
6. Moderate PEmg Ratio PEmg < 20 36.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 41.76 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.86 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 $1.80
MG Growth Estimate 4.71%
MG Value $32.24
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $26.08
MG Value based on 0% Growth $15.29
Market Implied Growth Rate 13.94%
Current Price $65.42
% of Intrinsic Value 202.91%

Allegion PLC is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.37 in 2012 to an estimated $1.8 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.94% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Allegion PLC revealed the company was trading above its Graham Number of $9.34. The company pays a dividend of $0.46 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 36.37, which was above the industry average of 22.25. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.96.

Allegion PLC receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.96
Graham Number $9.34
PEmg 36.37
Current Ratio 1.86
PB Ratio 41.76
Current Dividend $0.46
Dividend Yield 0.70%
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 9/1/2016
Total Current Assets $802,300,000
Total Current Liabilities $432,300,000
Long-Term Debt $1,426,400,000
Total Assets $2,306,600,000
Intangible Assets $1,126,100,000
Total Liabilities $2,154,800,000
Shares Outstanding (Diluted Average) 96,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.45
Dec2015 $1.59
Dec2014 $1.80
Dec2013 $0.34
Dec2012 $2.29
Dec2011 $2.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.80
Dec2015 $1.53
Dec2014 $1.45
Dec2013 $1.18
Dec2012 $1.37
Dec2011 $0.76

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
Allegion PLC Valuation – February 2016 Update $ALLE
15 Best Stocks For Value Investors This Week – 9/12/15
Allegion PLC Analysis – September 2015 Update $ALLE
23 Companies to Research This Week – 9/13/14

Other ModernGraham posts about related companies

Caterpillar Inc Valuation – August 2016 $CAT
Regal Beloit Corp Valuation – August 2016 $RBC
Snap-on Incorporated Valuation – August 2016 $SNA
AGCO Corporation Valuation – August 2016 $AGCO
PACCAR Inc Valuation – August 2016 $PCAR
W.W. Grainger Inc Valuation – August 2016 $GWW
Allegion PLC Valuation – August 2016 $ALLE
Xylem Inc Valuation – August 2016 $XYL
Rockwell Automation Inc Valuation – July 2016 $ROK
Roper Technologies Inc Valuation – July 2016 $ROP

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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