Nielsen Holdings PLC Valuation – March 2019 #NLSN

Company Profile (excerpt from Reuters): Nielsen Holdings plc, incorporated on February 4, 2015, is a performance management company. The Company provides to clients an understanding of what consumers watch and what they buy and how those choices intersect. The Company’s segments include what consumers buy (Buy), consisting principally of market research information and analytical services, and what consumers watch and listen to (Watch), consisting principally of television, radio, online and mobile audience and advertising measurement services and corresponding analytics.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NLSN – 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 $8,413,430,517 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.21 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 -98.61% Fail
6. Moderate PEmg Ratio PEmg < 20 88.32 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.76 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 1.21 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 23.93 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 $0.27
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $3.89
MG Value based on 0% Growth $2.28
Market Implied Growth Rate 39.91%
Current Price $23.67
% of Intrinsic Value N/A

Nielsen Holdings PLC does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings 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 $1.28 in 2015 to an estimated $0.27 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 39.91% 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 Nielsen Holdings PLC revealed the company was trading above its Graham Number of $12.16. The company pays a dividend of $1.39 per share, for a yield of 5.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 88.32, which was above the industry average of 17.84. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.53.

Nielsen Holdings PLC scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.53
Graham Number $12.16
PEmg 88.32
Current Ratio 1.21
PB Ratio 2.76
Current Dividend $1.39
Dividend Yield 5.87%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,003,000,000
Total Current Liabilities $1,657,000,000
Long-Term Debt $8,280,000,000
Total Assets $15,179,000,000
Intangible Assets $12,011,000,000
Total Liabilities $12,136,000,000
Shares Outstanding (Diluted Average) 355,195,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.82
Dec2018 -$2.00
Dec2017 $1.20
Dec2016 $1.39
Dec2015 $1.54
Dec2014 $1.00
Dec2013 $1.94
Dec2012 $0.75
Dec2011 $0.23
Dec2010 $0.46
Dec2009 -$1.79
Dec2008 -$2.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.27
Dec2018 $0.20
Dec2017 $1.34
Dec2016 $1.38
Dec2015 $1.28
Dec2014 $1.06
Dec2013 $0.83
Dec2012 -$0.01
Dec2011 -$0.51
Dec2010 -$0.85
Dec2009 -$1.29
Dec2008 -$0.87

Recommended Reading:

Other ModernGraham posts about the company

Nielsen Holdings PLC Valuation – June 2018 $NLSN
10 Best Stocks for Value Investors This Week – 7/22/17
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Nielsen NV Valuation – August 2016 $NLSN
Nielsen NV Analysis – July 2015 Update $NLSN

Other ModernGraham posts about related companies

Interpublic Group of Companies Inc Valuation – March 2019 #IPG
Omnicom Group Inc Valuation – February 2019 $OMC
Nielsen Holdings PLC Valuation – June 2018 $NLSN
Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG

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.

Nielsen Holdings PLC Valuation – June 2018 $NLSN

Company Profile (excerpt from Reuters): Nielsen Holdings plc, incorporated on February 4, 2015, is a performance management company. The Company provides to clients an understanding of what consumers watch and what they buy and how those choices intersect. The Company’s segments include what consumers buy (Buy), consisting principally of market research information and analytical services, and what consumers watch and listen to (Watch), consisting principally of television, radio, online and mobile audience and advertising measurement services and corresponding analytics.

NLSN Chart

NLSN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of NLSN – 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 $11,032,301,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.23 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 -471.82% Fail
6. Moderate PEmg Ratio PEmg < 20 22.12 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.43 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 1.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 19.50 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 $1.37
MG Growth Estimate 4.35%
MG Value $23.56
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $19.87
MG Value based on 0% Growth $11.65
Market Implied Growth Rate 6.81%
Current Price $30.31
% of Intrinsic Value 128.62%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.06 in 2014 to an estimated $1.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.81% 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 Nielsen Holdings PLC revealed the company was trading above its Graham Number of $20.06. The company pays a dividend of $1.33 per share, for a yield of 4.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.12, which was above the industry average of 18.83. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-28.55.

Nielsen Holdings PLC scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.55
Graham Number $20.06
PEmg 22.12
Current Ratio 1.23
PB Ratio 2.43
Current Dividend $1.33
Dividend Yield 4.39%
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 3/1/2018
Total Current Assets $2,264,000,000
Total Current Liabilities $1,839,000,000
Long-Term Debt $8,286,000,000
Total Assets $16,923,000,000
Intangible Assets $13,606,000,000
Total Liabilities $12,465,000,000
Shares Outstanding (Diluted Average) 357,274,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.50
Dec2017 $1.20
Dec2016 $1.39
Dec2015 $1.54
Dec2014 $1.00
Dec2013 $1.94
Dec2012 $0.75
Dec2011 $0.23
Dec2010 $0.46
Dec2009 -$1.79
Dec2008 -$2.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.37
Dec2017 $1.34
Dec2016 $1.38
Dec2015 $1.28
Dec2014 $1.06
Dec2013 $0.83
Dec2012 -$0.01
Dec2011 -$0.51
Dec2010 -$0.85
Dec2009 -$1.29
Dec2008 -$0.87

Recommended Reading:

Other ModernGraham posts about the company

10 Best Stocks for Value Investors This Week – 7/22/17
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Nielsen NV Valuation – August 2016 $NLSN
Nielsen NV Analysis – July 2015 Update $NLSN
17 Companies in the Spotlight This Week – 7/19/14

Other ModernGraham posts about related companies

Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Omnicon Group Inc Valuation – July 2016 $OMC
Nielsen NV Analysis – July 2015 Update $NLSN
Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG

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.

Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN

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 Nielsen N.V. Ordinary Shares (NLSN) fares in the ModernGraham valuation model.

NLSN Chart

NLSN data by YCharts

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ModernGraham Valuation of NLSN – 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 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,938,359,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.29 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 -248.73% Fail
6. Moderate PEmg Ratio PEmg < 20 20.33 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.40 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 1.29 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.92
MG Growth Estimate 15.00%
MG Value $73.84
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $27.81
MG Value based on 0% Growth $16.30
Market Implied Growth Rate 5.91%
Current Price $38.99
% of Intrinsic Value 52.80%

Nielsen N.V. Ordinary Shares 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 or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the low current ratio.  As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.83 in 2013 to an estimated $1.92 for 2017.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.91% 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 Nielsen N.V. Ordinary Shares revealed the company was trading above its Graham Number of $27.5.  The company pays a dividend of $1.21 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 20.33, which was below the industry average of 24.68, 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 $-28.15.

Nielsen N.V. Ordinary Shares performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$28.15
Graham Number $27.50
PEmg 20.33
Current Ratio 1.29
PB Ratio 3.40
Current Dividend $1.21
Dividend Yield 3.10%
Number of Consecutive Years of Dividend Growth 4

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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
Total Current Assets $2,101,000,000
Total Current Liabilities $1,635,000,000
Long-Term Debt $0
Total Assets $16,332,000,000
Intangible Assets $13,298,000,000
Total Liabilities $12,209,000,000
Shares Outstanding (Diluted Average) 359,055,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.93
Dec2016 $1.39
Dec2015 $1.54
Dec2014 $1.00
Dec2013 $1.94
Dec2012 $0.75
Dec2011 $0.23
Dec2010 $0.46
Dec2009 -$1.79
Dec2008 -$2.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.92
Dec2016 $1.38
Dec2015 $1.28
Dec2014 $1.06
Dec2013 $0.83
Dec2012 -$0.01
Dec2011 -$0.51
Dec2010 -$0.85
Dec2009 -$1.29
Dec2008 -$0.87

Recommended Reading:

Other ModernGraham posts about the company

Nielsen NV Analysis – July 2015 Update $NLSN
17 Companies in the Spotlight This Week – 7/19/14
Nielsen N.V. Annual Valuation – 2014 $NLSN

Other ModernGraham posts about related companies

Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Omnicon Group Inc Valuation – July 2016 $OMC
Nielsen NV Analysis – July 2015 Update $NLSN
Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG
Nielsen N.V. Annual Valuation – 2014 $NLSN
Interpublic Group of Companies (IPG) Annual Valuation – 2014

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.

Nielsen NV Valuation – August 2016 $NLSN

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 – August 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 Nielsen NV (NLSN) fares in the ModernGraham valuation model.

NLSN Chart

NLSN data by YCharts

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

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of NLSN – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $18,753,505,400 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.84 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -205.91% Fail
6. Moderate PEmg Ratio PEmg < 20 32.35 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.47 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.84 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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

NLSN value chart August 2016

EPSmg $1.63
MG Growth Estimate 15.00%
MG Value $62.60
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $23.58
MG Value based on 0% Growth $13.82
Market Implied Growth Rate 11.92%
Current Price $52.60
% of Intrinsic Value 84.02%

Nielsen N.V. Ordinary Shares does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $-0.01 in 2012 to an estimated $1.63 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 11.92% 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 Nielsen N.V. Ordinary Shares revealed the company was trading above its Graham Number of $23.89. The company pays a dividend of $1.15 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 32.35, which was above the industry average of 29.04. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-25.9.

Nielsen N.V. Ordinary Shares scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

NLSN charts August 2016

Net Current Asset Value (NCAV) -$25.90
Graham Number $23.89
PEmg 32.35
Current Ratio 0.84
PB Ratio 4.47
Current Dividend $1.15
Dividend Yield 2.19%
Number of Consecutive Years of Dividend Growth 4

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2016
Total Current Assets $2,035,000,000
Total Current Liabilities $2,415,000,000
Long-Term Debt $0
Total Assets $15,718,000,000
Intangible Assets $12,834,000,000
Total Liabilities $11,443,000,000
Shares Outstanding (Diluted Average) 363,217,000

Earnings Per Share History

Next Fiscal Year Estimate $2.12
Dec2015 $1.54
Dec2014 $1.00
Dec2013 $1.94
Dec2012 $0.75
Dec2011 $0.23
Dec2010 $0.46
Dec2009 -$1.79
Dec2008 -$2.61

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.63
Dec2015 $1.28
Dec2014 $1.06
Dec2013 $0.83
Dec2012 -$0.01
Dec2011 -$0.51
Dec2010 -$0.85
Dec2009 -$1.29
Dec2008 -$0.87

Recommended Reading:

Other ModernGraham posts about the company

Nielsen NV Analysis – July 2015 Update $NLSN
17 Companies in the Spotlight This Week – 7/19/14
Nielsen N.V. Annual Valuation – 2014 $NLSN

Other ModernGraham posts about related companies

Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Omnicon Group Inc Valuation – July 2016 $OMC
Nielsen NV Analysis – July 2015 Update $NLSN
Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG
Nielsen N.V. Annual Valuation – 2014 $NLSN
Interpublic Group of Companies (IPG) Annual Valuation – 2014

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.

Nielsen NV Analysis – July 2015 Update $NLSN

logoBenjamin 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 5 Most Undervalued Companies for the Defensive Investor – June 2015.  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 Nielsen NV (NLSN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Nielsen N.V. (Nielsen), formerly Nielsen Holdings N.V., is an information and measurement company. The Company is engaged in providing clients with an understanding of consumers and consumer behavior. The Company delivers media and marketing information, and analytics on a global and local basis. Nielsen operates through two business segments: Buy and Watch. The Company’s Buy segment provides consumer purchasing measurement and analytics. Its Watch segment provides media audience measurement and analytics. Nielsen offers its clients the ability to activate in real-time Nielsen audience insights as well as various consumer segments from over 200 data providers. The Company offers its services to various clients, such as The Coca-Cola Company, NBC Universal, Nestle S.A., The Procter & Gamble Company, Twenty-First Century Fox Inc. and the Unilever Group.

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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion - PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 - FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years - FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years - FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 - FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 - FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years - PASS
  4. Dividend Record – currently pays a dividend - PASS
  5. Earnings growth – EPSmg greater than 5 years ago - PASS

Valuation Summary

Key Data:

Recent Price $45.77
MG Value $62.91
MG Opinion Undervalued
Value Based on 3% Growth $23.69
Value Based on 0% Growth $13.89
Market Implied Growth Rate 9.76%
Net Current Asset Value (NCAV) -$22.79
PEmg 28.01
Current Ratio 1.44
PB Ratio 3.60

Balance Sheet – March 2015

Current Assets $2,065,000,000
Current Liabilities $1,438,000,000
Total Debt $7,159,000,000
Total Assets $15,388,000,000
Intangible Assets $12,377,000,000
Total Liabilities $10,620,000,000
Outstanding Shares 375,400,000

Earnings Per Share

2015 (estimate) $2.59
2014 $1.00
2013 $1.94
2012 $0.75
2011 $0.24
2010 $0.00
2009 -$1.79
2008 -$2.61

Earnings Per Share – ModernGraham

2015 (estimate) $1.63
2014 $1.03
2013 $0.78
2012 -$0.10
2011 -$0.63
2010 -$1.00

Dividend History

Conclusion:

Nielsen NV does not qualify for either the Defensive Investor and the Enterprising Investor.  The Defensive Investor is concerned with the low current ratio, the short history as a publicly traded company, and the high PEmg and PB ratios.  The Enterprising Investor is concerned with the level of debt relative to the current assets.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities or proceed with a speculative attitude.  As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $0.63 in 2011 to an estimated gain of $1.63 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.76% 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 well above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Nielsen NV (NLSN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

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.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

[/level-mg-stocks-screens-subscriber]

 

 

Nielsen N.V. Annual Valuation – 2014 $NLSN

logoBenjamin 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 5 Undervalued Companies for the Defensive Investor Near 52 Week Lows.  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 specific look at how Nielsen (NLSN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Nielsen NV, formerly Nielsen Holdings NV, is a Netherlands-based company engaged in information and measurement services. The Company, together with its subsidiaries, delivers media and marketing information, and analytics on a global and local basis. It operates in two segments: Buy segment and Watch segment. The Company’s Buy segment provides retail transactional measurement data, consumer behavior information and analytics primarily to businesses in the consumer packaged goods industry. Its Watch segment provides viewership data and analytics primarily to the media and advertising industries across television, online and mobile screens. Nielsen Holdings NV operates in approximately 100 countries. In July 2014, ITWP Acquisitions Limited, parent company of Toluna,announced the acquisition of Harris Interactive SAS in France, Harris Interactive AG in Germany and Harris Interactive UK (Harris Interactive Europe) from Nielsen NV.
NLSN Chart

NLSN data by YCharts

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 1/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – FAIL
  3. Earnings Stability – positive earnings per share for at least 10 straight years - FAIL
  4. Dividend Record – has paid a dividend for at least 10 straight years - FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – FAIL
  6. Moderate PEmg ratio – PEmg is less than 20 - FAIL
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – FAIL

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 3/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 - FAIL
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – FAIL
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $48.67
MG Value $50.90
MG Opinion Fairly Valued
Value Based on 3% Growth $19.17
Value Based on 0% Growth $11.24
Market Implied Growth Rate 14.16%
Net Current Asset Value (NCAV) -$20.65
PEmg 36.82
Current Ratio 1.26
PB Ratio 3.23

Balance Sheet – 3/31/2014

Current Assets $1,933,000,000
Current Liabilities $1,531,000,000
Total Debt $6,461,000,000
Total Assets $15,473,000,000
Intangible Assets $12,629,000,000
Total Liabilities $9,757,000,000
Outstanding Shares 378,920,000

Earnings Per Share

2014 (estimate) $2.40
2013 $1.14
2012 $0.75
2011 $0.24
2010 $0.54
2009 -$1.57
2008 -$1.39

Earnings Per Share – ModernGraham

2014 (estimate) $1.32
2013 $0.60
2012 $0.12
2011 -$0.28
2010 -$0.52
2009 -$0.89

Dividend History

NLSN Dividend Chart

NLSN Dividend data by YCharts

Conclusion:

Nielsen is not suitable for either the Defensive Investor or the Enterprising Investor.  In fact, the only thing the Defensive Investor likes about the company is the fact that it has a market cap greater than $2 billion.  The Enterprising Investor has significant concerns with the level of debt relative to the current assets.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities.  As for a valuation, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from a loss of $0.52 in 2010 to an estimated gain of $1.32 for 2014.  This level of earnings growth supports the market’s implied estimate of 14.16% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Nielsen N.V. (NLSN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Nielsen N.V. (NLSN) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Interpublic Group of Companies Inc Valuation – March 2019 #IPG

Company Profile (excerpt from Reuters): The Interpublic Group of Companies, Inc., incorporated on September 18, 1930, is a global advertising and marketing services company. The Company specializes in consumer advertising, digital marketing, communications planning and media buying, public relations and specialized communications disciplines. It operates in two segments: Integrated Agency Networks (IAN) and Constituency Management Group (CMG). Its agencies offer customized marketing programs for clients that range in scale from global marketers to regional and local clients. IAN consists of McCann Worldgroup, FCB, MullenLowe Group, IPG Mediabrands, its digital specialist agencies and its domestic integrated agencies. CMG consists of its specialist marketing services offerings. It has three global networks: McCann Worldgroup, Foote, Cone & Belding (FCB) and MullenLowe Group, which provide integrated, advertising and marketing solutions for clients. Its global media services companies include UM and Initiative, which operate under the IPG Mediabrands umbrella. It also has a range of global specialized communications assets, as well as domestic integrated and digital agencies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPG – 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 $8,852,999,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.01 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 92.92% Pass
6. Moderate PEmg Ratio PEmg < 20 15.12 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.69 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 1.01 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 62.04 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 $1.52
MG Growth Estimate 8.39%
MG Value $38.43
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $22.05
MG Value based on 0% Growth $12.93
Market Implied Growth Rate 3.31%
Current Price $23.00
% of Intrinsic Value 59.84%

Interpublic Group of Companies 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, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.98 in 2015 to an estimated $1.52 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.31% 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 Interpublic Group of Companies Inc revealed the company was trading above its Graham Number of $15.16. The company pays a dividend of $0.84 per share, for a yield of 3.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.12, which was below the industry average of 17.84, 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 $-12.81.

Interpublic Group of Companies 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) -$12.81
Graham Number $15.16
PEmg 15.12
Current Ratio 1.01
PB Ratio 3.69
Current Dividend $0.84
Dividend Yield 3.65%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $8,182,900,000
Total Current Liabilities $8,123,900,000
Long-Term Debt $3,660,200,000
Total Assets $15,620,300,000
Intangible Assets $5,970,700,000
Total Liabilities $13,187,500,000
Shares Outstanding (Diluted Average) 390,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.64
Dec2018 $1.59
Dec2017 $1.40
Dec2016 $1.48
Dec2015 $1.09
Dec2014 $1.12
Dec2013 $0.61
Dec2012 $0.94
Dec2011 $0.99
Dec2010 $0.47
Dec2009 $0.19
Dec2008 $0.52
Dec2007 $0.26
Dec2006 -$0.19
Dec2005 -$0.68
Dec2004 -$1.34
Dec2003 -$1.40
Dec2002 $0.04
Dec2001 -$1.65
Dec2000 $0.89
Dec1999 $1.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.52
Dec2018 $1.42
Dec2017 $1.27
Dec2016 $1.15
Dec2015 $0.98
Dec2014 $0.89
Dec2013 $0.73
Dec2012 $0.73
Dec2011 $0.58
Dec2010 $0.33
Dec2009 $0.18
Dec2008 $0.02
Dec2007 -$0.37
Dec2006 -$0.70
Dec2005 -$0.97
Dec2004 -$0.97
Dec2003 -$0.59

Recommended Reading:

Other ModernGraham posts about the company

Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG
16 Companies in the Spotlight this Week – 4/19/14

Other ModernGraham posts about related companies

Omnicom Group Inc Valuation – February 2019 $OMC
Nielsen Holdings PLC Valuation – June 2018 $NLSN
Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Omnicon Group Inc Valuation – July 2016 $OMC

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.

Omnicom Group Inc Valuation – February 2019 $OMC

Company Profile (excerpt from Reuters): Omnicom Group Inc., incorporated on November 17, 1944, is a holding company. The Company provides advertising, marketing and corporate communications services. The Company’s branded networks and agencies operate in all markets around the world and provide a range of services, which it groups into four disciplines: advertising, customer relationship management (CRM), public relations and specialty communications. The Company caters to various industry sectors, such as food and beverage, consumer products, pharmaceuticals and healthcare, financial services, technology, travel and entertainment, telecommunications and retail.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of OMC – 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 $17,390,625,258 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.87 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 76.17% Pass
6. Moderate PEmg Ratio PEmg < 20 15.68 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.95 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 0.87 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.56 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 $4.95
MG Growth Estimate 4.81%
MG Value $89.66
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $71.78
MG Value based on 0% Growth $42.08
Market Implied Growth Rate 3.59%
Current Price $77.60
% of Intrinsic Value 86.54%

Omnicom Group Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high 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 $3.75 in 2014 to an estimated $4.95 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 3.59% 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 Omnicom Group Inc. revealed the company was trading above its Graham Number of $38.01. The company pays a dividend of $2.25 per share, for a yield of 2.9%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 15.68, which was below the industry average of 17.11, 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 $-35.27.

Omnicom Group 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) -$35.27
Graham Number $38.01
PEmg 15.68
Current Ratio 0.87
PB Ratio 5.95
Current Dividend $2.25
Dividend Yield 2.90%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $11,575,300,000
Total Current Liabilities $13,280,100,000
Long-Term Debt $4,357,800,000
Total Assets $22,487,600,000
Intangible Assets $9,808,000,000
Total Liabilities $19,541,900,000
Shares Outstanding (Diluted Average) 225,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.65
Dec2017 $4.65
Dec2016 $4.78
Dec2015 $4.41
Dec2014 $4.24
Dec2013 $3.71
Dec2012 $3.61
Dec2011 $3.33
Dec2010 $2.70
Dec2009 $2.53
Dec2008 $3.14
Dec2007 $2.93
Dec2006 $2.50
Dec2005 $2.18
Dec2004 $1.94
Dec2003 $1.68
Dec2002 $1.54
Dec2001 $1.24
Dec2000 $1.31
Dec1999 $1.01
Dec1998 $0.79

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.95
Dec2017 $4.52
Dec2016 $4.35
Dec2015 $4.05
Dec2014 $3.75
Dec2013 $3.39
Dec2012 $3.18
Dec2011 $2.95
Dec2010 $2.76
Dec2009 $2.75
Dec2008 $2.75
Dec2007 $2.45
Dec2006 $2.13
Dec2005 $1.87
Dec2004 $1.65
Dec2003 $1.46
Dec2002 $1.29

Recommended Reading:

Other ModernGraham posts about the company

Omnicom Group Inc Valuation – April 2018 $OMC
Omnicon Group Inc Valuation – July 2016 $OMC
24 Companies in the Spotlight This Week – 3/28/15
Omnicom Group Inc. Annual Valuation – 2015 $OMC
17 Companies in the Spotlight This Week – 3/29/14

Other ModernGraham posts about related companies

Nielsen Holdings PLC Valuation – June 2018 $NLSN
Interpublic Group of Companies Inc Valuation – April 2018 $IPG
Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Omnicon Group Inc Valuation – July 2016 $OMC
Nielsen NV Analysis – July 2015 Update $NLSN

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.

Interpublic Group of Companies Inc Valuation – April 2018 $IPG

Company Profile (excerpt from Reuters): The Interpublic Group of Companies, Inc., incorporated on September 18, 1930, is a global advertising and marketing services company. The Company specializes in consumer advertising, digital marketing, communications planning and media buying, public relations and specialized communications disciplines. It operates in two segments: Integrated Agency Networks (IAN) and Constituency Management Group (CMG). Its agencies offer customized marketing programs for clients that range in scale from global marketers to regional and local clients. IAN consists of McCann Worldgroup, FCB, MullenLowe Group, IPG Mediabrands, its digital specialist agencies and its domestic integrated agencies. CMG consists of its specialist marketing services offerings. It has three global networks: McCann Worldgroup, Foote, Cone & Belding (FCB) and MullenLowe Group, which provide integrated, advertising and marketing solutions for clients. Its global media services companies include UM and Initiative, which operate under the IPG Mediabrands umbrella. It also has a range of global specialized communications assets, as well as domestic integrated and digital agencies.

IPG Chart

IPG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPG – April 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 $9,221,632,723 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.97 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 176.97% Pass
6. Moderate PEmg Ratio PEmg < 20 16.50 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.27 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.97 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.00 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 $1.45
MG Growth Estimate 9.47%
MG Value $39.70
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $20.99
MG Value based on 0% Growth $12.30
Market Implied Growth Rate 4.00%
Current Price $23.88
% of Intrinsic Value 60.14%

Interpublic Group of Companies 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, poor dividend history, and the high PB ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.89 in 2014 to an estimated $1.45 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4% 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 Interpublic Group of Companies Inc revealed the company was trading above its Graham Number of $14.47. The company pays a dividend of $0.72 per share, for a yield of 3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.5, which was below the industry average of 20.1, 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 $-7.7.

Interpublic Group of Companies 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) -$7.70
Graham Number $14.47
PEmg 16.50
Current Ratio 0.97
PB Ratio 4.27
Current Dividend $0.72
Dividend Yield 3.02%
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 12/1/2017
Total Current Assets $7,464,100,000
Total Current Liabilities $7,678,200,000
Long-Term Debt $1,285,600,000
Total Assets $12,695,200,000
Intangible Assets $3,820,400,000
Total Liabilities $10,494,200,000
Shares Outstanding (Diluted Average) 393,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.62
Dec2017 $1.46
Dec2016 $1.49
Dec2015 $1.09
Dec2014 $1.12
Dec2013 $0.61
Dec2012 $0.94
Dec2011 $0.99
Dec2010 $0.47
Dec2009 $0.19
Dec2008 $0.52
Dec2007 $0.26
Dec2006 -$0.19
Dec2005 -$0.68
Dec2004 -$1.34
Dec2003 -$1.40
Dec2002 $0.04
Dec2001 -$1.65
Dec2000 $0.89
Dec1999 $1.11
Dec1998 $1.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.45
Dec2017 $1.29
Dec2016 $1.16
Dec2015 $0.98
Dec2014 $0.89
Dec2013 $0.73
Dec2012 $0.73
Dec2011 $0.58
Dec2010 $0.33
Dec2009 $0.18
Dec2008 $0.02
Dec2007 -$0.37
Dec2006 -$0.70
Dec2005 -$0.97
Dec2004 -$0.97
Dec2003 -$0.59
Dec2002 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG
16 Companies in the Spotlight this Week – 4/19/14
Interpublic Group of Companies (IPG) Annual Valuation – 2014

Other ModernGraham posts about related companies

Omnicom Group Inc Valuation – April 2018 $OMC
Nielsen N.V. Ordinary Shares Valuation – July 2017 $NLSN
Lamar Advertising Company Valuation – Initial Coverage $LAMR
Interpublic Group of Companies Inc Valuation – December 2016 $IPG
Nielsen NV Valuation – August 2016 $NLSN
Interpublic Group of Companies Inc Valuation – August 2016 $IPG
Omnicon Group Inc Valuation – July 2016 $OMC
Nielsen NV Analysis – July 2015 Update $NLSN
Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG
Nielsen N.V. Annual Valuation – 2014 $NLSN

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.

Omnicom Group Inc Valuation – April 2018 $OMC

Company Profile (excerpt from Reuters): Omnicom Group Inc., incorporated on November 17, 1944, is a holding company. The Company provides advertising, marketing and corporate communications services. The Company’s branded networks and agencies operate in all markets around the world and provide a range of services, which it groups into four disciplines: advertising, customer relationship management (CRM), public relations and specialty communications. The Company caters to various industry sectors, such as food and beverage, consumer products, pharmaceuticals and healthcare, financial services, technology, travel and entertainment, telecommunications and retail.

OMC Chart

OMC data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of OMC – April 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 $16,733,549,221 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.93 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 71.96% Pass
6. Moderate PEmg Ratio PEmg < 20 14.76 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.33 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 0.93 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.95 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 $4.83
MG Growth Estimate 4.33%
MG Value $82.85
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $70.04
MG Value based on 0% Growth $41.06
Market Implied Growth Rate 3.13%
Current Price $71.27
% of Intrinsic Value 86.02%

Omnicom Group Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high 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 $3.75 in 2014 to an estimated $4.83 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 3.13% 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 Omnicom Group Inc. revealed the company was trading above its Graham Number of $36.78. The company pays a dividend of $2.25 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 14.76, which was below the industry average of 20.1, 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 $-35.28.

Omnicom Group 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) -$35.28
Graham Number $36.78
PEmg 14.76
Current Ratio 0.93
PB Ratio 6.33
Current Dividend $2.25
Dividend Yield 3.16%
Number of Consecutive Years of Dividend Growth 8

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $14,116,000,000
Total Current Liabilities $15,108,900,000
Long-Term Debt $4,912,900,000
Total Assets $24,931,200,000
Intangible Assets $9,705,900,000
Total Liabilities $22,316,100,000
Shares Outstanding (Diluted Average) 232,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.29
Dec2017 $4.65
Dec2016 $4.78
Dec2015 $4.41
Dec2014 $4.24
Dec2013 $3.71
Dec2012 $3.61
Dec2011 $3.33
Dec2010 $2.70
Dec2009 $2.53
Dec2008 $3.14
Dec2007 $2.93
Dec2006 $2.50
Dec2005 $2.18
Dec2004 $1.94
Dec2003 $1.68
Dec2002 $1.54
Dec2001 $1.24
Dec2000 $1.31
Dec1999 $1.01
Dec1998 $0.79

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.83
Dec2017 $4.52
Dec2016 $4.35
Dec2015 $4.05
Dec2014 $3.75
Dec2013 $3.39
Dec2012 $3.18
Dec2011 $2.95
Dec2010 $2.76
Dec2009 $2.75
Dec2008 $2.75
Dec2007 $2.45
Dec2006 $2.13
Dec2005 $1.87
Dec2004 $1.65
Dec2003 $1.46
Dec2002 $1.29

Recommended Reading:

Other ModernGraham posts about the company

Omnicon Group Inc Valuation – July 2016 $OMC
24 Companies in the Spotlight This Week – 3/28/15
Omnicom Group Inc. Annual Valuation – 2015 $OMC
17 Companies in the Spotlight This Week – 3/29/14
Omnicom Group Inc. (OMC) Annual Valuation – 2014

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Omnicon Group Inc Valuation – July 2016 $OMC
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Interpublic Group of Companies Inc. Annual Valuation – 2015 $IPG
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Interpublic Group of Companies (IPG) Annual Valuation – 2014

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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