//www.

Colgate-Palmolive Co Valuation – March 2019 #CL

Company Profile (excerpt from Reuters): Colgate-Palmolive Company (Colgate), incorporated on July 25, 1923, is a consumer products company. The Company operates in two product segments: Oral, Personal and Home Care, and Pet Nutrition. The Oral, Personal and Home Care product segment is operated through five geographic segments, which include North America, Latin America, Europe, Asia Pacific and Africa/Eurasia. It is engaged in oral care business with toothpaste and manual toothbrush brands around the world. The Company’s oral care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate Max Fresh, Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer, Colgate Optic White and Colgate Luminous White toothpastes, Colgate 360 degree and Colgate Slim Soft manual toothbrushes and Colgate Optic White, Colgate Total and Colgate Plax mouthwashes. Colgate’s Oral Care business also includes pharmaceutical products for dentists and other oral health professionals.

CL Chart

CL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CL – 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 $57,098,959,614 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.14 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 7.02% Fail
6. Moderate PEmg Ratio PEmg < 20 26.06 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 291.66 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 1.14 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 14.06 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.54
MG Growth Estimate 3.00%
MG Value $36.88
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $36.88
MG Value based on 0% Growth $21.62
Market Implied Growth Rate 8.78%
Current Price $66.27
% of Intrinsic Value 179.68%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.12 in 2015 to an estimated $2.54 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.78% 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 Colgate-Palmolive Company revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.66 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 26.06, which was below the industry average of 62.84, 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 $-9.42.

Colgate-Palmolive Company receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.42
Graham Number $0.00
PEmg 26.06
Current Ratio 1.14
PB Ratio 291.66
Current Dividend $1.66
Dividend Yield 2.50%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,793,000,000
Total Current Liabilities $3,341,000,000
Long-Term Debt $6,354,000,000
Total Assets $12,161,000,000
Intangible Assets $4,167,000,000
Total Liabilities $11,964,000,000
Shares Outstanding (Diluted Average) 867,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.67
Dec2018 $2.75
Dec2017 $2.28
Dec2016 $2.72
Dec2015 $1.52
Dec2014 $2.36
Dec2013 $2.38
Dec2012 $2.57
Dec2011 $2.47
Dec2010 $2.16
Dec2009 $2.19
Dec2008 $1.83
Dec2007 $1.60
Dec2006 $1.23
Dec2005 $1.22
Dec2004 $1.17
Dec2003 $1.23
Dec2002 $1.10
Dec2001 $0.95
Dec2000 $0.85
Dec1999 $0.74

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.54
Dec2018 $2.43
Dec2017 $2.26
Dec2016 $2.27
Dec2015 $2.12
Dec2014 $2.41
Dec2013 $2.41
Dec2012 $2.36
Dec2011 $2.19
Dec2010 $1.96
Dec2009 $1.78
Dec2008 $1.52
Dec2007 $1.34
Dec2006 $1.20
Dec2005 $1.17
Dec2004 $1.12
Dec2003 $1.05

Recommended Reading:

Other ModernGraham posts about the company

Colgate-Palmolive Co Valuation – June 2018 $CL
Colgate-Palmolive Co. Valuation – April 2017 $CL
Colgate-Palmolive Co Valuation – January 2016 Update $CL
32 Companies in the Spotlight This Week – 12/6/14
Colgate-Palmolive Annual Valuation – 2014 $CL

Other ModernGraham posts about related companies

Coty Inc Valuation – March 2019 #COTY
Signet Jewelers Ltd Valuation – March 2019 #SIG
Church & Dwight Co Inc Valuation – February 2019 $CHD
International Flavors & Fragrances Inc Valuation – January 2019 $IFF
Estee Lauder Companies Inc Valuation – December 2018 $EL
Proctor & Gamble Co Valuation – November 2018 $PG
Johnson & Johnson Valuation – November 2018 $JNJ
Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP

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.

Martin Marietta Materials Inc Valuation – February 2019 $MLM

Company Profile (excerpt from Reuters): Martin Marietta Materials, Inc., incorporated on November 12, 1993, is a supplier of aggregates products (crushed stone, sand, and gravel) used for the construction of infrastructure, nonresidential, and residential projects. Aggregates products are also used for railroad ballast and in agricultural, utility and environmental applications. The Company’s Aggregates business operates through three segments: the Mid-America Group, Southeast Group and West Group. The Company’s business is categorized into Aggregates Business, Cement Business and Magnesia Specialties Business. Its Cement business is reported through the Cement segment. Its Magnesia Specialties business manufactures and markets magnesia-based chemical products used in industrial, agricultural, and environmental applications, and dolomitic lime sold to customers in the steel industry. Its Aggregates business consists of mining, processing, and selling granite, limestone, sand and gravel. Its Aggregates business also includes aggregates-related downstream product lines (including its building materials, such as asphalt products, ready mixed concrete, and road paving construction services). It is also a supplier of cement, ready mixed concrete, and asphalt and paving services. Its Cement business produces Portland and specialty cements.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MLM – 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 $11,875,000,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.74 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 377.76% Pass
6. Moderate PEmg Ratio PEmg < 20 22.98 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.42 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 1.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.72 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 $8.27
MG Growth Estimate 15.00%
MG Value $318.32
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $119.89
MG Value based on 0% Growth $70.28
Market Implied Growth Rate 7.24%
Current Price $190.00
% of Intrinsic Value 59.69%

Martin Marietta Materials, 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 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 $3.04 in 2015 to an estimated $8.27 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.24% 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 Martin Marietta Materials, Inc. revealed the company was trading above its Graham Number of $123.79. The company pays a dividend of $1.84 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 22.98, which was above the industry average of 20.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-51.44.

Martin Marietta Materials, 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) -$51.44
Graham Number $123.79
PEmg 22.98
Current Ratio 1.74
PB Ratio 2.42
Current Dividend $1.84
Dividend Yield 0.97%
Number of Consecutive Years of Dividend Growth 3

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 $1,365,816,000
Total Current Liabilities $786,750,000
Long-Term Debt $2,730,439,000
Total Assets $9,551,419,000
Intangible Assets $2,900,400,000
Total Liabilities $4,602,007,000
Shares Outstanding (Diluted Average) 62,918,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.60
Dec2018 $7.43
Dec2017 $11.25
Dec2016 $6.63
Dec2015 $4.29
Dec2014 $2.71
Dec2013 $2.61
Dec2012 $1.83
Dec2011 $1.78
Dec2010 $2.10
Dec2009 $1.91
Dec2008 $4.18
Dec2007 $6.06
Dec2006 $5.29
Dec2005 $4.08
Dec2004 $2.66
Dec2003 $1.91
Dec2002 $1.77
Dec2001 $2.19
Dec2000 $2.39
Dec1999 $2.68

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.27
Dec2018 $7.56
Dec2017 $6.91
Dec2016 $4.37
Dec2015 $3.04
Dec2014 $2.34
Dec2013 $2.12
Dec2012 $2.04
Dec2011 $2.50
Dec2010 $3.21
Dec2009 $3.94
Dec2008 $4.79
Dec2007 $4.73
Dec2006 $3.76
Dec2005 $2.83
Dec2004 $2.20
Dec2003 $2.04

Recommended Reading:

Other ModernGraham posts about the company

Martin Marietta Materials Inc Valuation – May 2018 $MLM
Martin Marietta Materials Inc Valuation – December 2016 $MLM
Martin Marietta Materials Inc Valuation – August 2016 $MLM
Martin Marietta Materials Inc Valuation – February 2016 Update $MLM
Martin Marietta Materials Inc. Valuation – October 2015 Update $MLM

Other ModernGraham posts about related companies

Lennar Corp Valuation – February 2019 $LEN
Vulcan Materials Co Valuation – February 2019 $VMC
PulteGroup Inc Valuation – January 2019 $PHM
Sherwin-Williams Co Valuation – January 2019 $SHW
Johnson Controls International PC Valuation – January 2019 $JCI
Cummins Inc Valuation – January 2019 $CMI
Flowserve Corp Valuation – January 2019 $FLS
Home Depot Inc Valuation – November 2018 $HD
Cavco Industries Inc Valuation – September 2018 $CVCO
LGI Homes Inc Valuation – September 2018 $LGIH

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.

Illumina Inc Valuation – February 2019 $ILMN

Company Profile (excerpt from Reuters): Illumina, Inc. (Illumina), incorporated on May 16, 2000, is a provider of sequencing- and array-based solutions for genetic analysis. The Company operates through two segments: Core Illumina and the consolidated variable interest entities (VIEs), which include the activities of GRAIL, Inc. (GRAIL) and Helix Holdings I, LLC (Helix). Core Illumina consists of its core operations. Core Illumina’s products and services serve customers in the research, clinical and applied markets, and enable the adoption of a range of genomic solutions. GRAIL is engaged in developing a blood test for early-stage cancer detection. Helix was established to enable individuals to explore their genetic information by providing sequencing and database services for consumers through third-party partners.

ILMN Chart

ILMN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ILMN – 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 $44,073,541,076 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.49 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 543.51% Pass
6. Moderate PEmg Ratio PEmg < 20 57.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.85 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 0.33 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.21
MG Growth Estimate 15.00%
MG Value $200.56
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $75.54
MG Value based on 0% Growth $44.28
Market Implied Growth Rate 24.53%
Current Price $299.82
% of Intrinsic Value 149.49%

Illumina, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. 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 $2.04 in 2015 to an estimated $5.21 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 24.53% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Illumina, Inc. revealed the company was trading above its Graham Number of $60.58. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 57.55, which was above the industry average of 51.18. Finally, the company was trading above its Net Current Asset Value (NCAV) of $9.05.

Illumina, 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) $9.05
Graham Number $60.58
PEmg 57.55
Current Ratio 2.49
PB Ratio 11.85
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,490,000,000
Total Current Liabilities $1,804,000,000
Long-Term Debt $890,000,000
Total Assets $6,959,000,000
Intangible Assets $1,016,000,000
Total Liabilities $3,114,000,000
Shares Outstanding (Diluted Average) 152,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.38
Dec2018 $5.56
Dec2017 $4.92
Dec2016 $3.07
Dec2015 $3.10
Dec2014 $2.37
Dec2013 $0.90
Dec2012 $1.13
Dec2011 $0.62
Dec2010 $0.87
Dec2009 $0.53
Dec2008 $0.30
Dec2007 -$2.57
Dec2006 $0.41
Dec2005 -$0.26
Dec2004 -$0.09
Dec2003 -$0.43
Dec2002 -$0.66
Dec2001 -$0.42
Dec2000 -$0.69
Dec1999 -$1.96

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.21
Dec2018 $4.35
Dec2017 $3.45
Dec2016 $2.52
Dec2015 $2.04
Dec2014 $1.40
Dec2013 $0.88
Dec2012 $0.81
Dec2011 $0.41
Dec2010 $0.18
Dec2009 -$0.22
Dec2008 -$0.54
Dec2007 -$0.84
Dec2006 -$0.05
Dec2005 -$0.31
Dec2004 -$0.37
Dec2003 -$0.62

Recommended Reading:

Other ModernGraham posts about the company

Illumina Inc Valuation – April 2018 $ILMN
Illumina Inc Valuation – Initial Coverage $ILMN

Other ModernGraham posts about related companies

Cerner Corp Valuation – February 2019 $CERN
HCA Healthcare Inc Valuation – February 2019 $HCA
Stryker Corp Valuation – February 2019 $SYK
Align Technology Inc Valuation – February 2019 $ALGN
Quest Diagnostics Inc Valuation – February 2019 $DGX
AmerisourceBergen Corp Valuation – February 2019 $ABC
Abiomed Inc Valuation – February 2019 $ABMD
Laboratory Corp of America Holdings Inc Valuation – January 2019 $LH
Intuitive Surgical Inc Valuation – January 2019 $ISRG
PerkinElmer Inc Valuation – January 2019 $PKI

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.

PerkinElmer Inc Valuation – January 2019 $PKI

Company Profile (excerpt from Reuters): PerkinElmer, Inc., incorporated on November 13, 1947, is a provider of products, services and solutions to the diagnostics, research, environmental, industrial and laboratory services markets. The Company operates through two segments: Discovery & Analytical Solutions and Diagnostics.

PKI Chart

PKI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PKI – 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 $9,611,049,769 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.70 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 79.56% Pass
6. Moderate PEmg Ratio PEmg < 20 36.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.75 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 1.70 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.93 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 $2.34
MG Growth Estimate 14.11%
MG Value $86.06
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $33.98
MG Value based on 0% Growth $19.92
Market Implied Growth Rate 14.19%
Current Price $86.40
% of Intrinsic Value 100.39%

PerkinElmer, 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.21 in 2014 to an estimated $2.34 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 14.19% 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 PerkinElmer, Inc. revealed the company was trading above its Graham Number of $36.57. The company pays a dividend of $0.28 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was 36.87, which was below the industry average of 52.7, 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 $-19.01.

PerkinElmer, 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) -$19.01
Graham Number $36.57
PEmg 36.87
Current Ratio 1.70
PB Ratio 3.75
Current Dividend $0.28
Dividend Yield 0.32%
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 9/1/2018
Total Current Assets $1,165,495,000
Total Current Liabilities $686,752,000
Long-Term Debt $1,882,502,000
Total Assets $5,862,355,000
Intangible Assets $4,144,464,000
Total Liabilities $3,289,886,000
Shares Outstanding (Diluted Average) 111,747,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.62
Dec2017 $2.64
Dec2016 $2.12
Dec2015 $1.87
Dec2014 $1.39
Dec2013 $1.47
Dec2012 $0.61
Dec2011 $0.07
Dec2010 $3.31
Dec2009 $0.73
Dec2008 $1.07
Dec2007 $1.09
Dec2006 $0.95
Dec2005 $2.04
Dec2004 $0.74
Dec2003 $0.41
Dec2002 -$1.21
Dec2001 $0.32
Dec2000 $0.89
Dec1999 $0.29
Dec1998 $1.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.34
Dec2017 $2.10
Dec2016 $1.72
Dec2015 $1.37
Dec2014 $1.21
Dec2013 $1.16
Dec2012 $1.05
Dec2011 $1.27
Dec2010 $1.72
Dec2009 $1.01
Dec2008 $1.16
Dec2007 $1.15
Dec2006 $0.98
Dec2005 $0.82
Dec2004 $0.22
Dec2003 $0.02
Dec2002 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

PerkinElmer Inc Valuation – March 2018 $PKI
9 Best Stocks For Value Investors This Week – 7/8/16
PerkinElmer Inc Valuation – July 2016 $PKI
PerkinElmer Inc Valuation – January 2016 Update $PKI
PerkinElmer Inc. Analysis – October 2015 Update $PKI

Other ModernGraham posts about related companies

Zimmer Biomet Holdings Inc Valuation – January 2019 $ZBH
Henry Schein Inc Valuation – January 2019 $HSIC
Medtronic PLC Valuation – January 2019 $MDT
UnitedHealth Group Inc Valuation – November 2018 $UNH
Luminex Corp Valuation – October 2018 $LMNX
LHC Group Inc Valuation – September 2018 $LHCG
Chartwell Retirement Residences Valuation – August 2018 $TSE:CSH.UN
STERIS PLC Valuation – August 2018 $STE
CryoLife Inc Valuation – August 2018 $CRY
Charles River Laboratories International Inc Valuation – August 2018 $CRL

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.

Helmerich & Payne Inc Valuation – January 2019 $HP

Company Profile (excerpt from Reuters): Helmerich & Payne, Inc., incorporated on February 29, 1944, is engaged in contract drilling of oil and gas wells for others. The Company operates in the contract drilling industry. The Company’s contract drilling business consists of three segments: U.S. Land, Offshore and International Land. The Company is also engaged in the ownership, development and operation of commercial real estate and the research and development of rotary steerable technology. Its real estate investments are located within Tulsa, Oklahoma, and include a shopping center containing approximately 441,000 leasable square feet, multi-tenant industrial warehouse properties containing approximately one million leasable square feet and approximately 210 acres of undeveloped real estate. The Company’s subsidiaries include Helmerich & Payne International Drilling Co. and Helmerich & Payne de Venezuela, C.A.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HP – 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 $5,825,900,373 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.96 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 -63.64% Fail
6. Moderate PEmg Ratio PEmg < 20 39.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.34 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 2.96 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.67 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $19.72
MG Value based on 0% Growth $11.56
Market Implied Growth Rate 15.39%
Current Price $53.43
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.34 in 2015 to an estimated $1.36 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.39% 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 Helmerich & Payne, Inc. revealed the company was trading above its Graham Number of $26.06. The company pays a dividend of $2.81 per share, for a yield of 5.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 39.29, which was below the industry average of 41.28, 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 $-6.54.

Helmerich & Payne, 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) -$6.54
Graham Number $26.06
PEmg 39.29
Current Ratio 2.96
PB Ratio 1.34
Current Dividend $2.81
Dividend Yield 5.26%
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 9/1/2018
Total Current Assets $1,115,550,000
Total Current Liabilities $377,168,000
Long-Term Debt $493,968,000
Total Assets $6,214,867,000
Intangible Assets $137,984,000
Total Liabilities $1,832,132,000
Shares Outstanding (Diluted Average) 109,534,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.75
Sep2018 $4.37
Sep2017 -$1.20
Sep2016 -$0.54
Sep2015 $3.85
Sep2014 $6.44
Sep2013 $6.79
Sep2012 $5.34
Sep2011 $3.99
Sep2010 $1.45
Sep2009 $3.31
Sep2008 $4.34
Sep2007 $4.27
Sep2006 $2.77
Sep2005 $0.62
Sep2004 $0.05
Sep2003 $0.09
Sep2002 $0.27
Sep2001 $0.79
Sep2000 $0.82
Sep1999 $0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.36
Sep2018 $1.97
Sep2017 $1.54
Sep2016 $3.40
Sep2015 $5.34
Sep2014 $5.65
Sep2013 $4.90
Sep2012 $3.86
Sep2011 $3.24
Sep2010 $2.99
Sep2009 $3.53
Sep2008 $3.22
Sep2007 $2.30
Sep2006 $1.13
Sep2005 $0.32
Sep2004 $0.25
Sep2003 $0.40

Recommended Reading:

Other ModernGraham posts about the company

Helmerich & Payne Inc Valuation – March 2018 $HP
Helmerich & Payne Inc Valuation – June 2016 $HP
Helmerich & Payne Inc Valuation – November 2015 Update $HP
Dividend Growth Stocks for the Intelligent Investor – November 2015
10 Undervalued Companies for the Defensive Dividend Stock Investor – November 2015

Other ModernGraham posts about related companies

Williams Companies Inc Valuation – January 2019 $WMB
Exxon Mobil Corp Valuation – November 2018 $XOM
Chevron Corp Valuation – November 2018 $CVX
Cenovus Energy Inc Valuation – October 2018 $TSE-CVE
CNX Resources Corp Valuation – September 2018 $CNX
Carbo Ceramics Inc Valuation – August 2018 $CRR
Murphy Oil Corp Valuation – August 2018 $MUR
Suncor Energy Inc Valuation – August 2018 $TSE:SU
Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO

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.

Lockheed Martin Corp Valuation – January 2019 $LMT

Company Profile (excerpt from Reuters): Lockheed Martin Corporation, incorporated on August 29, 1994, is a security and aerospace company. The Company is engaged in the research, design, development, manufacture, integration and sustainment of technology systems, products and services. The Company operates through four segments: Aeronautics; Missiles and Fire Control (MFC); Rotary and Mission Systems (RMS), and Space Systems. The Company also provides a range of management, engineering, technical, scientific, logistics, system integration and cybersecurity services. Its main areas of focus are in defense, space, intelligence and homeland security. The Company serves both the United States and international customers with products and services that have defense, civil and commercial applications, with its principal customers being agencies of the United States Government.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LMT – 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 $74,735,778,537 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.11 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 80.05% Pass
6. Moderate PEmg Ratio PEmg < 20 19.56 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 75.23 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 1.11 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.15 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 $13.44
MG Growth Estimate 6.44%
MG Value $287.46
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $194.94
MG Value based on 0% Growth $114.27
Market Implied Growth Rate 5.53%
Current Price $262.92
% of Intrinsic Value 91.46%

Lockheed Martin Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high 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 Fairly Valued after growing its EPSmg (normalized earnings) from $9.41 in 2014 to an estimated $13.44 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 5.53% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Lockheed Martin Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $7.46 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.56, which was below the industry average of 47.17, 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 $-96.39.

Lockheed Martin 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) -$96.39
Graham Number $0.00
PEmg 19.56
Current Ratio 1.11
PB Ratio 75.23
Current Dividend $7.46
Dividend Yield 2.84%
Number of Consecutive Years of Dividend Growth 15

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 $16,859,000,000
Total Current Liabilities $15,204,000,000
Long-Term Debt $13,486,000,000
Total Assets $45,495,000,000
Intangible Assets $14,358,000,000
Total Liabilities $44,493,000,000
Shares Outstanding (Diluted Average) 286,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $17.50
Dec2017 $6.89
Dec2016 $17.49
Dec2015 $11.46
Dec2014 $11.21
Dec2013 $9.13
Dec2012 $8.36
Dec2011 $7.81
Dec2010 $7.81
Dec2009 $7.64
Dec2008 $7.86
Dec2007 $7.10
Dec2006 $5.80
Dec2005 $4.10
Dec2004 $2.83
Dec2003 $2.34
Dec2002 $1.11
Dec2001 -$2.45
Dec2000 -$1.29
Dec1999 $0.99
Dec1998 $2.63

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $13.44
Dec2017 $11.36
Dec2016 $12.90
Dec2015 $10.27
Dec2014 $9.41
Dec2013 $8.39
Dec2012 $7.97
Dec2011 $7.74
Dec2010 $7.55
Dec2009 $7.11
Dec2008 $6.41
Dec2007 $5.27
Dec2006 $3.98
Dec2005 $2.57
Dec2004 $1.38
Dec2003 $0.48
Dec2002 -$0.23

Recommended Reading:

Other ModernGraham posts about the company

Lockheed Martin Corp Valuation – February 2018 $LMT
Lockheed Martin Corporation Valuation – June 2016 $LMT
34 Companies in the Spotlight This Week – 2/7/15
Lockheed Martin Corporation Annual Valuation – 2015 $LMT
14 Companies in the Spotlight This Week – 1/25/14

Other ModernGraham posts about related companies

United Technologies Corp Valuation – November 2018 $UTX
Boeing Co Valuation – November 2018 $BA
Axon Enterprises Inc Valuation – October 2018 $AAXN
Cubic Corp Valuation – September 2018 $CUB
KLX Inc Valuation – August 2018 $KLXI
Kaman Corp Valuation – August 2018 $KAMN
Raytheon Co Valuation – June 2018 $RTN
General Dynamics Corp Valuation – June 2018 $GD
TransDigm Group Inc Valuation – June 2018 $TDG
Northrop Grumman Corp Valuation – May 2018 $NOC

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.

Walmart Inc Valuation – November 2018 $WMT

Company Profile (excerpt from Reuters): Walmart Inc., formerly Wal-Mart Stores, Inc., incorporated on October 31, 1969, is engaged in the operation of retail, wholesale and other units in various formats around the world. The Company offers an assortment of merchandise and services at everyday low prices (EDLP). The Company operates through three segments: Walmart U.S., Walmart International and Sam’s Club. The Walmart U.S. segment includes the Company’s mass merchant concept in the United States operating under the Walmart brands, as well as digital retail. The Walmart International segment consists of the Company’s operations outside of the United States, including various retail Websites. The Sam’s Club segment includes the warehouse membership clubs in the United States, as well as samsclub.com. The Company operates approximately 11,600 stores under 59 banners in 28 countries and e-commerce Websites in 11 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WMT – November 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 $283,384,329,093 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 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 -6.14% Fail
6. Moderate PEmg Ratio PEmg < 20 23.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.58 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 0.81 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.65 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 Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.12
MG Growth Estimate -2.37%
MG Value $15.47
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $59.69
MG Value based on 0% Growth $34.99
Market Implied Growth Rate 7.51%
Current Price $96.84
% of Intrinsic Value 625.79%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.89 in 2015 to an estimated $4.12 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.51% 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 Walmart Inc revealed the company was trading above its Graham Number of $50.28. The company pays a dividend of $2.04 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 23.52, which was below the industry average of 28.23, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.41.

Walmart 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) -$26.41
Graham Number $50.28
PEmg 23.52
Current Ratio 0.81
PB Ratio 3.58
Current Dividend $2.04
Dividend Yield 2.11%
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 10/1/2018
Total Current Assets $69,446,000,000
Total Current Liabilities $85,751,000,000
Long-Term Debt $43,275,000,000
Total Assets $226,583,000,000
Intangible Assets $31,044,000,000
Total Liabilities $147,114,000,000
Shares Outstanding (Diluted Average) 2,941,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.26
Jan2018 $3.28
Jan2017 $4.38
Jan2016 $4.57
Jan2015 $5.05
Jan2014 $4.88
Jan2013 $5.02
Jan2012 $4.52
Jan2011 $4.47
Jan2010 $3.71
Jan2009 $3.39
Jan2008 $3.13
Jan2007 $2.71
Jan2006 $2.68
Jan2005 $2.41
Jan2004 $2.07
Jan2003 $1.79
Jan2002 $1.47
Jan2001 $1.40
Jan2000 $1.19
Jan1999 $0.99

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.12
Jan2018 $4.17
Jan2017 $4.67
Jan2016 $4.82
Jan2015 $4.89
Jan2014 $4.71
Jan2013 $4.49
Jan2012 $4.10
Jan2011 $3.76
Jan2010 $3.31
Jan2009 $3.02
Jan2008 $2.76
Jan2007 $2.50
Jan2006 $2.29
Jan2005 $2.00
Jan2004 $1.73
Jan2003 $1.49

Recommended Reading:

Other ModernGraham posts about the company

Walmart Inc Valuation – February 2018 $WMT
Wal-Mart Stores Inc Valuation – May 2016 $WMT
Dividend Growth Stocks for Intelligent Investors – February 2016
11 Best Stocks For Value Investors This Week – 11/21/15
Wal-Mart Stores Inc. Valuation – November 2015 Update $WMT

Other ModernGraham posts about related companies

Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK
Big 5 Sporting Goods Corp Valuation – June 2018 $BGFV
Amazon.com Inc Valuation – June 2018 $AMZN
Fossil Group Inc Valuation – June 2018 $FOSL
Costco Wholesale Corp Valuation – June 2018 $COST
Lumber Liquidators Holdings Inc Valuation – June 2018 $LL
CVS Health Corp Valuation – June 2018 $CVS
Target Corp Valuation – June 2018 $TGT
Stamps.com Inc Valuation – June 2018 $STMP

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.

Luminex Corp Valuation – October 2018 $LMNX

Company Profile (excerpt from Reuters): Luminex Corporation, incorporated on June 19, 1998, develops, manufactures and sells biological testing technologies with applications throughout the diagnostics, pharmaceutical and life sciences industries. The Company’s products are focused on the molecular diagnostic testing market, which includes human genetics, personalized medicine and infectious disease segments. The Company has a range of instruments using its xMAP technology, which includes its LUMINEX 100/200 systems offer 100-plex testing; the Company’s FLEXMAP 3D system is its high-throughput, 500-plex testing system, and its MAGPIX system provides 50-plex testing using imaging rather than flow cytometry. By using its xMAP technology, the end users are able to generate multiple simultaneous results per sample. The Company primarily serves the diagnostics, pharmaceutical and life sciences industries by marketing products, including its testing equipment and assays, to a range of testing laboratories.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LMNX – October 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,281,599,628 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.76 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 67.42% Pass
6. Moderate PEmg Ratio PEmg < 20 49.03 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.73 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 6.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.59
MG Growth Estimate 3.76%
MG Value $9.38
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $8.50
MG Value based on 0% Growth $4.98
Market Implied Growth Rate 20.26%
Current Price $28.73
% of Intrinsic Value 306.22%

Luminex Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.47 in 2014 to an estimated $0.59 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 20.26% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Luminex Corporation revealed the company was trading above its Graham Number of $10.65. The company pays a dividend of $0.24 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 49.03, which was below the industry average of 54.63, 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 $4.55.

Luminex 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) $4.55
Graham Number $10.65
PEmg 49.03
Current Ratio 6.76
PB Ratio 2.73
Current Dividend $0.24
Dividend Yield 0.84%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $245,843,000
Total Current Liabilities $36,381,000
Long-Term Debt $0
Total Assets $510,228,000
Intangible Assets $163,990,000
Total Liabilities $44,699,000
Shares Outstanding (Diluted Average) 44,246,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.50
Dec2017 $0.67
Dec2016 $0.32
Dec2015 $0.86
Dec2014 $0.93
Dec2013 $0.17
Dec2012 $0.30
Dec2011 $0.34
Dec2010 $0.12
Dec2009 $0.43
Dec2008 $0.08
Dec2007 -$0.08
Dec2006 $0.05
Dec2005 -$0.09
Dec2004 -$0.12
Dec2003 -$0.14
Dec2002 -$0.85
Dec2001 -$0.55
Dec2000 -$0.52
Dec1999 -$0.96
Dec1998 -$0.43

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.59
Dec2017 $0.62
Dec2016 $0.56
Dec2015 $0.63
Dec2014 $0.47
Dec2013 $0.25
Dec2012 $0.28
Dec2011 $0.24
Dec2010 $0.16
Dec2009 $0.15
Dec2008 $0.00
Dec2007 -$0.06
Dec2006 -$0.11
Dec2005 -$0.24
Dec2004 -$0.36
Dec2003 -$0.52
Dec2002 -$0.69

Recommended Reading:

Other ModernGraham posts about the company

Luminex Corp Valuation – Initial Coverage $LMNX

Other ModernGraham posts about related companies

LHC Group Inc Valuation – September 2018 $LHCG
Chartwell Retirement Residences Valuation – August 2018 $TSE:CSH.UN
STERIS PLC Valuation – August 2018 $STE
CryoLife Inc Valuation – August 2018 $CRY
Charles River Laboratories International Inc Valuation – August 2018 $CRL
Surmodics Inc Valuation – August 2018 $SRDX
Conmed Corp Valuation – August 2018 $CNMD
Invacare Corp Valuation – July 2018 $IVC
Select Medical Holdings Corp Valuation – July 2018 $SEM
Chemed Corp Valuation – July 2018 $CHE

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.

SLM Corp Valuation – July 2018 $SLM

Company Profile (excerpt from Reuters): SLM Corporation, incorporated on December 2, 2013, is a holding company. The Company’s primary business is to originate and service loans it makes to students and their families to finance the cost of their education. The Company is a saving, planning and paying for college company. It is engaged in originating and servicing Private Education Loans it makes to students and their families. The Company uses Private Education Loans to mean education loans to students or their families that are not made, insured or guaranteed by any state or federal government. The Company also operates Upromise, Inc. (Upromise), a consumer savings network that provides financial rewards on everyday purchases to help families save for college.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SLM – July 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,170,427,490 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -14.00% Fail
5. Moderate PEmg Ratio PEmg < 20 16.70 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.00 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 Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.71
MG Growth Estimate 2.65%
MG Value $9.81
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $10.31
MG Value based on 0% Growth $6.05
Market Implied Growth Rate 4.10%
Current Price $11.88
% of Intrinsic Value 121.09%

SLM Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding 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 $0.6 in 2014 to an estimated $0.71 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.1% 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 below the price.

At the time of valuation, further research into SLM Corp revealed the company was trading above its Graham Number of $10.39. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 16.7, which was below the industry average of 21.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $10.39
PEmg 16.70
PB Ratio 2.00
Dividend Yield 0.00%
TTM Dividend $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 3/1/2018
Long-Term Debt & Capital Lease Obligation $3,744,345,000
Total Assets $23,406,322,000
Intangible Assets $0
Total Liabilities $20,796,489,000
Shares Outstanding (Diluted Average) 438,977,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.00
Dec2017 $0.62
Dec2016 $0.53
Dec2015 $0.59
Dec2014 $0.42
Dec2013 $0.58
Dec2012 $0.45
Dec2011 $1.18
Dec2010 $0.94
Dec2009 $0.38
Dec2008 -$0.69
Dec2007 -$2.26
Dec2006 $2.63
Dec2005 $3.05
Dec2004 $4.04
Dec2003 $3.29
Dec2002 $1.64
Dec2001 $0.76
Dec2000 $0.92
Dec1999 $1.02
Dec1998 $0.98

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.71
Dec2017 $0.56
Dec2016 $0.53
Dec2015 $0.56
Dec2014 $0.60
Dec2013 $0.70
Dec2012 $0.66
Dec2011 $0.48
Dec2010 $0.15
Dec2009 $0.04
Dec2008 $0.37
Dec2007 $1.32
Dec2006 $3.05
Dec2005 $3.02
Dec2004 $2.71
Dec2003 $1.88
Dec2002 $1.13

Recommended Reading:

Other ModernGraham posts about the company

SLM Corp Valuation – December 2016 $SLM
SLM Corporation Analysis – August 2015 Update $SLM
5 Low PE Stocks for the Enterprising Investor – July 2015
5 Most Undervalued Companies for the Enterprising Investor – July 2015
5 Most Undervalued Companies for the Enterprising Investor – June 2015

Other ModernGraham posts about related companies

IGM Financial Inc Valuation – July 2018 $TSE-IGM
Main Street Capital Corp Valuation – July 2018 $MAIN
Legg Mason Inc Valuation – June 2018 $LM
T. Rowe Price Group Inc Valuation – June 2018 $TROW
Moody’s Corporation – June 2018 $MCO
Charles Schwab Corp Valuation – June 2018 $SCHW
Willis Towers Watson PLC Valuation – Initial Coverage June 2018 $WLTW
PayPal Holdings Inc Valuation – June 2018 $PYPL
Synchrony Financial Valuation – June 2018 $SYF
CBRE Group Inc Valuation – June 2018 $CBRE

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
Stocks Trading Below Their Graham Number – February 2016
10 Companies Benjamin Graham Would Invest In Today – February 2016
13 Best Stocks For Value Investors This Week – 12/12/15

Other ModernGraham posts about related companies

T. Rowe Price Group Inc Valuation – June 2018 $TROW
Moody’s Corporation – June 2018 $MCO
Charles Schwab Corp Valuation – June 2018 $SCHW
Willis Towers Watson PLC Valuation – Initial Coverage June 2018 $WLTW
PayPal Holdings Inc Valuation – June 2018 $PYPL
Synchrony Financial Valuation – June 2018 $SYF
CBRE Group Inc Valuation – June 2018 $CBRE
Franklin Resources Inc Valuation – May 2018 $BEN
S&P Global Inc Valuation – May 2018 $SPGI
Equifax Inc Valuation – May 2018 $EFX

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.

Back To Top