IPG Photonics Corp Valuation – March 2019 #IPGP

Company Profile (excerpt from Reuters): IPG Photonics Corporation, incorporated on December 2, 1998, is a developer and manufacturer of a line of fiber lasers, fiber amplifiers, diode lasers, laser systems and optical accessories that are used for various applications. The Company offers a line of lasers and amplifiers, which are used in materials processing, communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company offers laser-based systems for certain markets and applications. The Company also makes packaged diodes, direct diode lasers, laser systems and communications components and systems. Its products are designed to be used as general-purpose energy or light sources.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPGP – 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 $8,167,270,375 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 7.35 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 192.91% Pass
6. Moderate PEmg Ratio PEmg < 20 26.55 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.77 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 7.35 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.03 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 $5.81
MG Growth Estimate 8.87%
MG Value $152.43
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $84.23
MG Value based on 0% Growth $49.37
Market Implied Growth Rate 9.02%
Current Price $154.21
% of Intrinsic Value 101.17%

IPG Photonics Corporation 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.65 in 2015 to an estimated $5.81 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 9.02% 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 IPG Photonics Corporation revealed the company was trading above its Graham Number of $67.5. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 26.55, which was below the industry average of 35.5, 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 $26.65.

IPG Photonics 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) $26.65
Graham Number $67.50
PEmg 26.55
Current Ratio 7.35
PB Ratio 3.77
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 $1,805,424,000
Total Current Liabilities $245,774,000
Long-Term Debt $41,707,000
Total Assets $2,574,450,000
Intangible Assets $187,861,000
Total Liabilities $368,215,000
Shares Outstanding (Diluted Average) 53,919,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.86
Dec2018 $7.38
Dec2017 $6.36
Dec2016 $4.85
Dec2015 $4.53
Dec2014 $3.79
Dec2013 $2.97
Dec2012 $2.81
Dec2011 $2.41
Dec2010 $1.13
Dec2009 $0.12
Dec2008 $0.79
Dec2007 $0.65
Dec2006 $0.26
Dec2005 $0.16
Dec2004 $0.01
Dec2003 -$0.93
Dec2002 -$2.13
Dec2001 -$2.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.81
Dec2018 $5.98
Dec2017 $5.02
Dec2016 $4.17
Dec2015 $3.65
Dec2014 $3.01
Dec2013 $2.38
Dec2012 $1.87
Dec2011 $1.28
Dec2010 $0.67
Dec2009 $0.43
Dec2008 $0.51
Dec2007 $0.26
Dec2006 -$0.13
Dec2005 -$0.56
Dec2004 -$0.96
Dec2003 -$1.31

Recommended Reading:

Other ModernGraham posts about the company

IPG Photonics Corp Valuation – June 2018 $IPGP
5 Undervalued Stocks for Value Investors with a High Beta – January 2017
IPG Photonics Corp Valuation – Initial Coverage $IPGP

Other ModernGraham posts about related companies

Amphenol Corp Valuation – March 2019 #APH
Xilinx Inc Valuation – March 2019 #XLNX
Western Digital Corp Valuation – March 2019 #WDC
Texas Instruments Inc Valuation – March 2019 #TXN
Qualcomm Inc Valuation – March 2019 #QCOM
Ametek Inc Valuation – March 2019 #AME
Advanced Micro Devices Inc Valuation – February 2019 $AMD
Qorvo Inc Valuation – February 2019 $QRVO
FLIR Systems Inc Valuation – February 2019 $FLIR
NetApp Inc Valuation – February 2019 $NTAP

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.

S&P Global Inc Valuation – March 2019 #SPGI

Company Profile (excerpt from Reuters): S&P Global Inc., formerly McGraw Hill Financial Inc., incorporated on December 29, 1925, is a provider of ratings, benchmarks, analytics and data to the capital and commodity markets around the world. The Company operates through three segments: Ratings, Market and Commodities Intelligence, and S&P Dow Jones Indices (Indices). The Company provides ratings related to new issuance of corporate and government debt instruments, and structured finance debt instruments; bank loan ratings; and corporate credit estimates, which are intended, based on an abbreviated analysis, to provide an indication of its opinion regarding creditworthiness of a company, which does not have a Ratings credit rating. The Company serves its customers through a range of products and services available through both third party and its distribution channels. The Company’s subsidiary, CRISIL Limited (CRISIL), is a global analytical company and a provider of ratings, data and research, analytics and solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPGI – 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 $48,772,834,606 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.37 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 211.84% Pass
6. Moderate PEmg Ratio PEmg < 20 26.10 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 72.20 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 1.37 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.76 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 $7.52
MG Growth Estimate 15.00%
MG Value $289.39
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $108.99
MG Value based on 0% Growth $63.89
Market Implied Growth Rate 8.80%
Current Price $196.20
% of Intrinsic Value 67.80%

S&P Global Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the high 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 Undervalued after growing its EPSmg (normalized earnings) from $2.68 in 2015 to an estimated $7.52 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.8% 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 S&P Global Inc revealed the company was trading above its Graham Number of $22.47. The company pays a dividend of $2 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 26.1, which was above the industry average of 21.22. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.54.

S&P Global 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) -$20.54
Graham Number $22.47
PEmg 26.10
Current Ratio 1.37
PB Ratio 72.20
Current Dividend $2.00
Dividend Yield 1.02%
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 $3,604,000,000
Total Current Liabilities $2,629,000,000
Long-Term Debt $3,662,000,000
Total Assets $9,458,000,000
Intangible Assets $5,059,000,000
Total Liabilities $8,774,000,000
Shares Outstanding (Diluted Average) 251,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.88
Dec2018 $7.73
Dec2017 $5.78
Dec2016 $7.94
Dec2015 $4.21
Dec2014 -$0.42
Dec2013 $4.91
Dec2012 $1.53
Dec2011 $3.00
Dec2010 $2.65
Dec2009 $2.33
Dec2008 $2.51
Dec2007 $2.94
Dec2006 $2.40
Dec2005 $2.21
Dec2004 $1.96
Dec2003 $1.79
Dec2002 $1.48
Dec2001 $0.96
Dec2000 $1.03
Dec1999 $1.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.52
Dec2018 $6.24
Dec2017 $5.16
Dec2016 $4.44
Dec2015 $2.68
Dec2014 $2.05
Dec2013 $3.15
Dec2012 $2.32
Dec2011 $2.70
Dec2010 $2.56
Dec2009 $2.50
Dec2008 $2.53
Dec2007 $2.44
Dec2006 $2.12
Dec2005 $1.88
Dec2004 $1.62
Dec2003 $1.39

Recommended Reading:

Other ModernGraham posts about the company

S&P Global Inc Valuation – May 2018 $SPGI
S&P Global Inc Valuation – Initial Coverage $SPGI

Other ModernGraham posts about related companies

Equifax Inc Valuation – March 2019 #EFX
CME Group Inc Valuation – March 2019 #CME
Northern Trust Corp Valuation – March 2019 #NTRS
Affiliated Managers Group Inc Valuation – February 2019 $AMG
Bank of New York Mellon Corp Valuation – February 2019 $BK
Western Union Co Valuation – February 2019 $WU
Raymond James Financial Valuation – February 2019 $RJF
Nasdaq Inc Valuation – February 2019 $NDAQ
E*Trade Financial Corp Valuation – January 2019 $ETFC
Marsh & McLennan Companies Inc Valuation – January 2019 $MMC

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 – 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.

PPG Industries Inc Valuation – February 2019 $PPG

Company Profile (excerpt from Reuters): PPG Industries, Inc., incorporated on August 24, 1883, manufactures and distributes a range of coatings and specialty materials. The Company has two segments: Performance Coatings and Industrial Coatings. The Company’s geographical segments include the United States, Canada, Western Europe, Latin America, Central and Eastern Europe, the Middle East, Africa and Asia Pacific. The Company’s brands include PPG, GLIDDEN, COMEX, OLYMPIC, DULUX (in Canada), SIKKENS, PPG PITTSBURGH PAINTS, MULCO, FLOOD, LIQUID NAILS, SICO, CIL, RENNER, TAUBMANS, WHITE KNIGHT, BRISTOL, HOMAX, SIGMA, HISTOR, SEIGNEURIE, GUITTET, PEINTURES GAUTHIER, RIPOLIN, JOHNSTONE’S, LEYLAND, PRIMALEX, DEKORAL, TRILAK, PROMINENT PAINTS, GORI and BONDEX.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PPG – 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 $26,373,508,919 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.36 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 102.28% Pass
6. Moderate PEmg Ratio PEmg < 20 20.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.66 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 1.36 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.75 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 $5.51
MG Growth Estimate -2.43%
MG Value $20.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $79.90
MG Value based on 0% Growth $46.84
Market Implied Growth Rate 5.90%
Current Price $111.80
% of Intrinsic Value 558.89%

PPG Industries, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $6.58 in 2015 to an estimated $5.51 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.9% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into PPG Industries, Inc. revealed the company was trading above its Graham Number of $51.51. The company pays a dividend of $1.86 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 20.29, which was below the industry average of 22.8, 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 $-22.2.

PPG Industries, 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) -$22.20
Graham Number $51.51
PEmg 20.29
Current Ratio 1.36
PB Ratio 5.66
Current Dividend $1.86
Dividend Yield 1.66%
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 $5,961,000,000
Total Current Liabilities $4,373,000,000
Long-Term Debt $4,365,000,000
Total Assets $16,015,000,000
Intangible Assets $6,042,000,000
Total Liabilities $11,283,000,000
Shares Outstanding (Diluted Average) 239,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.11
Dec2018 $5.47
Dec2017 $6.18
Dec2016 $3.27
Dec2015 $5.14
Dec2014 $7.52
Dec2013 $11.13
Dec2012 $3.03
Dec2011 $3.44
Dec2010 $2.32
Dec2009 $1.02
Dec2008 $1.63
Dec2007 $2.52
Dec2006 $2.14
Dec2005 $1.75
Dec2004 $1.98
Dec2003 $1.45
Dec2002 -$0.21
Dec2001 $1.15
Dec2000 $1.79
Dec1999 $1.62

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.51
Dec2018 $5.31
Dec2017 $5.70
Dec2016 $5.65
Dec2015 $6.58
Dec2014 $6.69
Dec2013 $5.58
Dec2012 $2.63
Dec2011 $2.35
Dec2010 $1.85
Dec2009 $1.68
Dec2008 $2.00
Dec2007 $2.12
Dec2006 $1.75
Dec2005 $1.45
Dec2004 $1.27
Dec2003 $1.00

Recommended Reading:

Other ModernGraham posts about the company

PPG Industries Inc Valuation – May 2018 $PPG
PPG Industries Inc Valuation – January 2017 $PPG
5 Companies for Enterprising Investors Near 52 Week Lows – January 2017
Best Dividend Paying Stocks for Dividend Growth Investors – December 2016
5 Companies for Enterprising Investors Near 52 Week Lows – December 2016

Other ModernGraham posts about related companies

Celanese Corporation Valuation – February 2019 $CE
Ecolab Inc Valuation – January 2019 $ECL
FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG

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.

Simon Property Group Inc Valuation – January 2019 $SPG

Company Profile (excerpt from Reuters): Simon Property Group, Inc., incorporated on March 10, 1998, is a self-administered and self-managed real estate investment trust (REIT). The Company owns, develops and manages retail real estate properties, which consist primarily of malls, Premium Outlets and The Mills. Simon Property Group, L.P. (Operating Partnership), is the Company’s partnership subsidiary that owns all of its real estate properties and other assets. As of December 31, 2016, the Company owned or held an interest in 206 income-producing properties in the United States, which consisted of 108 malls, 67 Premium Outlets, 14 Mills, four lifestyle centers, and 13 other retail properties in 37 states and Puerto Rico. As of December 31, 2016, it had redevelopment and expansion projects, including the addition of anchors, big box tenants, and restaurants, underway at 27 properties in the United States and it had one outlet and one other retail project under development. Internationally, as of December 31, 2016, it had ownership interests in nine Premium Outlets in Japan, three Premium Outlets in South Korea, two Premium Outlets in Canada, one Premium Outlet in Mexico, and one Premium Outlet in Malaysia. As of December 31, 2016, it also owned an interest in six Designer Outlet properties in Europe and one Designer Outlet property in Canada. As of December 31, 2016, it also had four international outlet properties under development. As of December 31, 2016, it owned a 20.3% equity stake in Klepierre SA, or Klepierre, a real estate company, which owns, or has an interest in, shopping centers located in 16 countries in Europe.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPG – 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 $55,118,563,758 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.51 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 195.02% Pass
6. Moderate PEmg Ratio PEmg < 20 26.85 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 13.65 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 0.51 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -17.11 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.41
MG Growth Estimate 7.96%
MG Value $156.47
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $92.90
MG Value based on 0% Growth $54.46
Market Implied Growth Rate 9.17%
Current Price $172.00
% of Intrinsic Value 109.93%

Simon Property 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 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 $4.19 in 2014 to an estimated $6.41 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 9.17% 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 Simon Property Group Inc revealed the company was trading above its Graham Number of $44.34. The company pays a dividend of $7.15 per share, for a yield of 4.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.85, which was below the industry average of 70.5, 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 $-83.3.

Simon Property 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) -$83.30
Graham Number $44.34
PEmg 26.85
Current Ratio 0.51
PB Ratio 13.65
Current Dividend $7.15
Dividend Yield 4.16%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,418,448,000
Total Current Liabilities $2,802,649,000
Long-Term Debt $23,678,264,000
Total Assets $31,079,693,000
Intangible Assets $0
Total Liabilities $27,182,192,000
Shares Outstanding (Diluted Average) 309,294,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.45
Dec2017 $6.24
Dec2016 $5.87
Dec2015 $5.88
Dec2014 $4.52
Dec2013 $4.24
Dec2012 $4.72
Dec2011 $3.48
Dec2010 $2.10
Dec2009 $1.05
Dec2008 $1.87
Dec2007 $1.95
Dec2006 $2.19
Dec2005 $1.82
Dec2004 $1.44
Dec2003 $1.65
Dec2002 $1.99
Dec2001 $0.85
Dec2000 $1.08
Dec1999 $0.97
Dec1998 $1.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.41
Dec2017 $5.71
Dec2016 $5.31
Dec2015 $4.87
Dec2014 $4.19
Dec2013 $3.72
Dec2012 $3.19
Dec2011 $2.31
Dec2010 $1.76
Dec2009 $1.65
Dec2008 $1.92
Dec2007 $1.90
Dec2006 $1.86
Dec2005 $1.64
Dec2004 $1.50
Dec2003 $1.46
Dec2002 $1.31

Recommended Reading:

Other ModernGraham posts about the company

Simon Property Group Inc Valuation – March 2018 $SPG
Simon Property Group Inc Valuation – June 2016 $SPG
Simon Property Group Annual Valuation – 2015 $SPG
10 Companies in the Spotlight This Week – 12/28/13
ModernGraham Valuation: Simon Property Group (SPG)

Other ModernGraham posts about related companies

Crown Castle International Corp Valuation – January 2019 $CCI
Welltower Inc Valuation – January 2019 $WELL
Boston Properties Inc Valuation – January 2019 $BXP
AvalonBay Communities Inc Valuation – December 2018 $AVB
Weyerhaeuser Co Valuation – December 2018 $WY
Alexandria Real Estate Equities Inc Valuation – November 2018 $ARE
LaSalle Hotel Properties Valuation – September 2018 $LHO
Cousins Properties Inc Valuation – September 2018 $CUZ
Cominar Real Estate Investment Trust Valuation – September 2018 $TSE:CUF.UN
CareTrust REIT Inc Valuation – August 2018 $CTRE

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.

Progressive Corp Valuation – January 2019 $PGR

Company Profile (excerpt from Reuters): The Progressive Corporation, incorporated on February 4, 1965, is an insurance holding company. The Company’s insurance subsidiaries and affiliates provide personal and commercial automobile and property insurance, other specialty property-casualty insurance and related services. The Company operates through the Personal Lines, Commercial Lines and Property segments. It also offers vehicle insurance products that protect its customers against losses due to collision and physical damage to their motor vehicles, uninsured and underinsured bodily injury, and liability to others for personal injury or property damage arising out of the use of those vehicles. The Company’s property insurance products protect its customers against losses due to damages to their structure or possessions within the structure, as well as liability for accidents occurring in the structure or on the property. Its non-insurance subsidiaries and affiliates generally support the Company’s insurance and investment operations. The Company operates its vehicle businesses and property business in the United States. The Company also sells personal auto physical damage and auto property damage liability insurance in Australia.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PGR – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $34,408,800,000 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 96.23% Pass
5. Moderate PEmg Ratio PEmg < 20 18.83 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.92 Fail
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.13
MG Growth Estimate 10.46%
MG Value $92.18
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $45.44
MG Value based on 0% Growth $26.64
Market Implied Growth Rate 5.16%
Current Price $59.00
% of Intrinsic Value 64.00%

Progressive Corp 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 PB ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.85 in 2014 to an estimated $3.13 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.16% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Progressive Corp revealed the company was trading above its Graham Number of $41.86. The company pays a dividend of $0.68 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 18.83, which was below the industry average of 30.63, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Progressive Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $41.86
PEmg 18.83
PB Ratio 2.92
Dividend Yield 1.15%
TTM Dividend $0.68
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
Long-Term Debt & Capital Lease Obligation $3,859,900,000
Total Assets $45,543,700,000
Intangible Assets $765,300,000
Total Liabilities $33,684,900,000
Shares Outstanding (Diluted Average) 586,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.88
Dec2017 $2.72
Dec2016 $1.76
Dec2015 $2.15
Dec2014 $2.15
Dec2013 $1.93
Dec2012 $1.48
Dec2011 $1.59
Dec2010 $1.61
Dec2009 $1.57
Dec2008 -$0.10
Dec2007 $1.65
Dec2006 $2.10
Dec2005 $1.74
Dec2004 $1.91
Dec2003 $1.42
Dec2002 $0.75
Dec2001 $0.46
Dec2000 $0.05
Dec1999 $0.33
Dec1998 $0.51

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.13
Dec2017 $2.22
Dec2016 $1.95
Dec2015 $1.98
Dec2014 $1.85
Dec2013 $1.68
Dec2012 $1.44
Dec2011 $1.37
Dec2010 $1.30
Dec2009 $1.22
Dec2008 $1.19
Dec2007 $1.81
Dec2006 $1.79
Dec2005 $1.50
Dec2004 $1.23
Dec2003 $0.79
Dec2002 $0.46

Recommended Reading:

Other ModernGraham posts about the company

Progressive Corp Valuation – February 2018 $PGR
Progressive Corporation Valuation – June 2016 $PGR
11 Best Stocks For Value Investors This Week – 11/21/15
Progressive Corp Valuation – November 2015 Update $PGR
The Best Companies of the Insurance Industry – October 2015

Other ModernGraham posts about related companies

Aon PLC Valuation – November 2018 $AON
Travelers Companies Inc Valuation – November 2018 $TRV
Stewart Information Services Corp Valuation – August 2018 $STC
Kemper Corp Valuation – August 2018 $KMPR
CNO Financial Group Inc Valuation – August 2018 $CNO
Sun Life Financial Inc Valuation – August 2018 $TSE-SLF
American Financial Group Inc Valuation – August 2018 $AFG
Selective Insurance Group Inc Valuation – July 2018 $SIGI
Genworth Financial Inc Valuation – June 2018 $GNW
Prudential Financial Inc Valuation – June 2018 $PRU

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.

Proctor & Gamble Co Valuation – November 2018 $PG

Company Profile (excerpt from Reuters): The Procter & Gamble Company, incorporated on May 5, 1905, is focused on providing branded consumer packaged goods to consumers around the world. The Company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care, and Baby, Feminine & Family Care. The Company sells its products in approximately 180 countries and territories primarily through mass merchandisers, grocery stores, membership club stores, drug stores, department stores, distributors, baby stores, specialty beauty stores, e-commerce, high-frequency stores and pharmacies.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PG – 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 $229,682,910,985 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.80 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 16.92% Fail
6. Moderate PEmg Ratio PEmg < 20 21.83 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.59 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 0.80 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.54 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 $4.22
MG Growth Estimate 3.61%
MG Value $66.43
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $61.26
MG Value based on 0% Growth $35.91
Market Implied Growth Rate 6.66%
Current Price $92.21
% of Intrinsic Value 138.80%

Procter & Gamble Co 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 $3.4 in 2015 to an estimated $4.22 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.66% 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 Procter & Gamble Co revealed the company was trading above its Graham Number of $45.2. The company pays a dividend of $2.79 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 21.83, which was below the industry average of 55.8, 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 $-16.3.

Procter & Gamble Co receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.30
Graham Number $45.20
PEmg 21.83
Current Ratio 0.80
PB Ratio 4.59
Current Dividend $2.79
Dividend Yield 3.02%
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 $23,346,000,000
Total Current Liabilities $29,220,000,000
Long-Term Debt $20,779,000,000
Total Assets $118,440,000,000
Intangible Assets $69,144,000,000
Total Liabilities $65,936,000,000
Shares Outstanding (Diluted Average) 2,612,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.42
Jun2018 $3.67
Jun2017 $5.59
Jun2016 $3.69
Jun2015 $2.44
Jun2014 $4.01
Jun2013 $3.86
Jun2012 $3.66
Jun2011 $3.93
Jun2010 $4.11
Jun2009 $4.26
Jun2008 $3.64
Jun2007 $3.04
Jun2006 $2.64
Jun2005 $2.53
Jun2004 $2.20
Jun2003 $1.70
Jun2002 $1.55
Jun2001 $1.04
Jun2000 $1.17
Jun1999 $1.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.22
Jun2018 $4.04
Jun2017 $4.13
Jun2016 $3.44
Jun2015 $3.40
Jun2014 $3.90
Jun2013 $3.88
Jun2012 $3.90
Jun2011 $3.95
Jun2010 $3.82
Jun2009 $3.52
Jun2008 $3.04
Jun2007 $2.63
Jun2006 $2.32
Jun2005 $2.05
Jun2004 $1.71
Jun2003 $1.43

Recommended Reading:

Other ModernGraham posts about the company

Proctor & Gamble Co Valuation – February 2018 $PG
5 Overvalued Dow Components – February 2017
5 Overvalued Dow Components – December 2016
5 Overvalued Dow Components – July 2016
Proctor & Gamble Co Valuation – July 2016 $PG

Other ModernGraham posts about related companies

Inter Parfums Inc Valuation – July 2018 $IPAR
Service Corp International Valuation – July 2018 $SCI
Avon Products Inc Valuation – June 2018 $AVP
Colgate-Palmolive Co Valuation – June 2018 $CL
Coty Inc Valuation – May 2018 $COTY
Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL

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.

Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG

Company Profile (excerpt from Reuters): Crescent Point Energy Corp. (Crescent Point) is a Canada-based oil and gas exploration, development and production company. The Company is an oil and gas producer with assets consisting of light and medium oil and natural gas reserves in Western Canada and the United States. Its crude oil and natural gas properties and related assets are located in the provinces of Saskatchewan, Alberta, British Columbia and Manitoba, and the states of North Dakota, Montana, Colorado and Utah. The Company holds a portfolio of assets in the Canadian portion of the Williston Basin. It holds interest in the Bakken and Torquay resource plays in the Canadian portion of the Williston Basin. The southwest Saskatchewan region contains two focus resource plays that the Company is developing. These include Shaunavon resource play and Viking light oil resource play. The Company holds interest in the Uinta Basin resource play located in northeast Utah.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CPG – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $4,771,627,525 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.41 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 -329.73% Fail
6. Moderate PEmg Ratio PEmg < 20 -18.24 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.53 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 0.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -6.01 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 -$0.47
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth -$6.84
MG Value based on 0% Growth -$4.01
Market Implied Growth Rate -13.37%
Current Price $8.61
% of Intrinsic Value N/A

Crescent Point Energy Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, 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 $0.73 in 2014 to an estimated $-0.47 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Crescent Point Energy Corp revealed the company was trading below its Graham Number of $11.33. The company pays a dividend of $0.36 per share, for a yield of 4.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -18.24, which was below the industry average of 59.52, 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 $-12.23.

Crescent Point Energy Corp receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.23
Graham Number $11.33
PEmg -18.24
Current Ratio 0.41
PB Ratio 0.53
Current Dividend $0.36
Dividend Yield 4.18%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $490,900,000
Total Current Liabilities $1,186,200,000
Long-Term Debt $4,181,000,000
Total Assets $16,174,700,000
Intangible Assets $245,700,000
Total Liabilities $7,210,100,000
Shares Outstanding (Diluted Average) 549,279,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.34
Dec2017 -$0.23
Dec2016 -$1.81
Dec2015 -$1.82
Dec2014 $1.21
Dec2013 $0.37
Dec2012 $0.57
Dec2011 $0.72
Dec2010 $0.21
Dec2009 -$0.19
Dec2008 $3.71
Dec2007 -$0.32
Dec2006 $1.05
Dec2005 $1.12
Dec2004 $1.07
Dec2003 $0.50
Dec2002 $0.14
Dec2001 -$0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.47
Dec2017 -$0.74
Dec2016 -$0.76
Dec2015 -$0.09
Dec2014 $0.73
Dec2013 $0.43
Dec2012 $0.65
Dec2011 $0.73
Dec2010 $0.79
Dec2009 $1.08
Dec2008 $1.58
Dec2007 $0.57
Dec2006 $0.94
Dec2005 $0.78
Dec2004 $0.51
Dec2003 $0.20
Dec2002 $0.04

Recommended Reading:

Other ModernGraham posts about the company

5 Overvalued Canadian Stocks for Intelligent Investors – March 2017
Crescent Point Energy Corp Valuation – Initial Coverage $TSE:CPG

Other ModernGraham posts about related companies

Kelt Exploration Ltd Valuation – August 2018 $TSE-KEL
Canadian Natural Resources Ltd Valuation – August 2018 $TSE:CNQ
SM Energy Co Valuation – August 2018 $SM
Surge Energy Inc Valuation – July 2018 $TSE:SGY
CIRCOR International Inc Valuation – July 2018 $CIR
SEACOR Holdings Inc Valuation – July 2018 $CKH
Inter Pipeline Ltd Valuation – July 2018 $TSE:IPL
World Fuel Services Corp Valuation – July 2018 $INT
Shawcor Ltd Valuation – July 2018 $TSE-SCL
Imperial Oil Ltd Valuation – July 2018 $IMO

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.

IPG Photonics Corp Valuation – June 2018 $IPGP

Company Profile (excerpt from Reuters): IPG Photonics Corporation, incorporated on December 2, 1998, is a developer and manufacturer of a line of fiber lasers, fiber amplifiers, diode lasers, laser systems and optical accessories that are used for various applications. The Company offers a line of lasers and amplifiers, which are used in materials processing, communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company offers laser-based systems for certain markets and applications. The Company also makes packaged diodes, direct diode lasers, laser systems and communications components and systems. Its products are designed to be used as general-purpose energy or light sources.

IPGP Chart

IPGP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPGP – 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 $13,261,465,405 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 9.54 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 432.79% Pass
6. Moderate PEmg Ratio PEmg < 20 39.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.35 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 9.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.03 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 $6.29
MG Growth Estimate 15.00%
MG Value $242.01
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $91.15
MG Value based on 0% Growth $53.43
Market Implied Growth Rate 15.40%
Current Price $246.98
% of Intrinsic Value 102.05%

IPG Photonics Corporation 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.01 in 2014 to an estimated $6.29 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 15.4% 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 within a margin of safety relative to the price.

At the time of valuation, further research into IPG Photonics Corporation revealed the company was trading above its Graham Number of $83.87. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 39.29, which was below the industry average of 55.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $27.4.

IPG Photonics 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) $27.40
Graham Number $83.87
PEmg 39.29
Current Ratio 9.54
PB Ratio 6.35
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 3/1/2018
Total Current Assets $1,864,886,000
Total Current Liabilities $195,560,000
Long-Term Debt $44,466,000
Total Assets $2,498,007,000
Intangible Assets $104,989,000
Total Liabilities $352,638,000
Shares Outstanding (Diluted Average) 55,182,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.29
Dec2017 $6.36
Dec2016 $4.85
Dec2015 $4.53
Dec2014 $3.79
Dec2013 $2.97
Dec2012 $2.81
Dec2011 $2.41
Dec2010 $1.13
Dec2009 $0.12
Dec2008 $0.79
Dec2007 $0.65
Dec2006 $0.26
Dec2005 $0.16
Dec2004 $0.01
Dec2003 -$0.93
Dec2002 -$2.13
Dec2001 -$2.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.29
Dec2017 $5.02
Dec2016 $4.17
Dec2015 $3.65
Dec2014 $3.01
Dec2013 $2.38
Dec2012 $1.87
Dec2011 $1.28
Dec2010 $0.67
Dec2009 $0.43
Dec2008 $0.51
Dec2007 $0.26
Dec2006 -$0.13
Dec2005 -$0.56
Dec2004 -$0.96
Dec2003 -$1.31
Dec2002 -$1.29

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Stocks for Value Investors with a High Beta – January 2017
IPG Photonics Corp Valuation – Initial Coverage $IPGP

Other ModernGraham posts about related companies

Micron Technology Inc Valuation – May 2018 $MU
Amphenol Corp Valuation – May 2018 $APH
Xilinx Inc Valuation – May 2018 $XLNX
Western Digital Corp Valuation – May 2018 $WDC
Texas Instruments Inc Valuation – May 2018 $TXN
Qualcomm Inc Valuation – May 2018 $QCOM
Advanced Micro Devices Inc Valuation – May 2018 $AMD
Ametek Inc Valuation – April 2018 $AME
Qorvo Inc Valuation – April 2018 $QRVO
FLIR Systems Inc Valuation – April 2018 $FLIR

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.

S&P Global Inc Valuation – May 2018 $SPGI

Company Profile (excerpt from Reuters): S&P Global Inc., formerly McGraw Hill Financial Inc., incorporated on December 29, 1925, is a provider of ratings, benchmarks, analytics and data to the capital and commodity markets around the world. The Company operates through three segments: Ratings, Market and Commodities Intelligence, and S&P Dow Jones Indices (Indices). The Company provides ratings related to new issuance of corporate and government debt instruments, and structured finance debt instruments; bank loan ratings; and corporate credit estimates, which are intended, based on an abbreviated analysis, to provide an indication of its opinion regarding creditworthiness of a company, which does not have a Ratings credit rating. The Company serves its customers through a range of products and services available through both third party and its distribution channels. The Company’s subsidiary, CRISIL Limited (CRISIL), is a global analytical company and a provider of ratings, data and research, analytics and solutions.

SPGI Chart

SPGI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPGI – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $49,724,596,372 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.05 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 178.20% Pass
6. Moderate PEmg Ratio PEmg < 20 30.46 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7,183.53 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 1.05 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 21.28 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 $6.49
MG Growth Estimate 15.00%
MG Value $249.84
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $94.10
MG Value based on 0% Growth $55.16
Market Implied Growth Rate 10.98%
Current Price $197.66
% of Intrinsic Value 79.11%

S&P Global Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the high 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.05 in 2014 to an estimated $6.49 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 10.98% 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 S&P Global Inc revealed the company was trading above its Graham Number of $23.11. The company pays a dividend of $1.64 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 30.46, which was above the industry average of 22.78. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.46.

S&P Global 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) -$20.46
Graham Number $23.11
PEmg 30.46
Current Ratio 1.05
PB Ratio 7,183.53
Current Dividend $1.64
Dividend Yield 0.83%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $3,284,000,000
Total Current Liabilities $3,135,000,000
Long-Term Debt $3,170,000,000
Total Assets $8,497,000,000
Intangible Assets $4,435,000,000
Total Liabilities $8,490,000,000
Shares Outstanding (Diluted Average) 254,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.48
Dec2017 $5.78
Dec2016 $7.94
Dec2015 $4.21
Dec2014 -$0.42
Dec2013 $4.91
Dec2012 $1.53
Dec2011 $3.00
Dec2010 $2.65
Dec2009 $2.33
Dec2008 $2.51
Dec2007 $2.94
Dec2006 $2.40
Dec2005 $2.21
Dec2004 $1.96
Dec2003 $1.79
Dec2002 $1.48
Dec2001 $0.96
Dec2000 $1.03
Dec1999 $1.07
Dec1998 $0.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.49
Dec2017 $5.16
Dec2016 $4.44
Dec2015 $2.68
Dec2014 $2.05
Dec2013 $3.15
Dec2012 $2.32
Dec2011 $2.70
Dec2010 $2.56
Dec2009 $2.50
Dec2008 $2.53
Dec2007 $2.44
Dec2006 $2.12
Dec2005 $1.88
Dec2004 $1.62
Dec2003 $1.39
Dec2002 $1.15

Recommended Reading:

Other ModernGraham posts about the company

S&P Global Inc Valuation – Initial Coverage $SPGI

Other ModernGraham posts about related companies

Equifax Inc Valuation – May 2018 $EFX
CME Group Inc Valuation – May 2018 $CME
Discover Financial Services Valuation – May 2018 $DFS
Affiliated Managers Group Inc Valuation – May 2018 $AMG
The Western Union Co Valuation – April 2018 $WU
Northern Trust Corp Valuation – April 2018 $NTRS
Nasdaq Inc Valuation – April 2018 $NDAQ
Leucadia National Corp Valuation – March 2018 $LUK
E*Trade Financial Corp Valuation – March 2018 $ETFC
Cboe Global Markets Inc Valuation – Initial Coverage $CBOE

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