ResMed Inc Valuation – March 2019 #RMD

Company Profile (excerpt from Reuters): ResMed Inc., incorporated on March 31, 1994, is a holding company. The Company is engaged in the development, manufacturing, distribution and marketing of medical devices and cloud-based software applications that diagnose, treat and manage respiratory disorders, including sleep disordered breathing (SDB), chronic obstructive pulmonary disease (COPD), neuromuscular disease and other diseases. SDB includes obstructive sleep apnea (OSA) and other respiratory disorders that occur during sleep. The Company’s cloud-based software digital health applications, along with its devices, are designed to provide connected care to improve patient outcomes. The Company offers a treatment, nasal Continuous Positive Airway Pressure (CPAP), for OSA. CPAP systems deliver pressurized air, typically through a nasal mask, to prevent collapse of the upper airway during sleep. Its manufacturing operations are located in Australia, Singapore, Malaysia, France and the United States.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of RMD – 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 $14,454,671,393 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.44 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 74.20% Pass
6. Moderate PEmg Ratio PEmg < 20 39.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.46 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.44 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.89 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.57
MG Growth Estimate 2.51%
MG Value $34.82
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $37.32
MG Value based on 0% Growth $21.88
Market Implied Growth Rate 15.38%
Current Price $101.06
% of Intrinsic Value 290.28%

ResMed Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.2 in 2015 to an estimated $2.57 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.38% 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 ResMed Inc. revealed the company was trading above its Graham Number of $31.42. The company pays a dividend of $1.4 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 39.26, which was below the industry average of 53.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.82.

ResMed 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) -$5.82
Graham Number $31.42
PEmg 39.26
Current Ratio 2.44
PB Ratio 7.46
Current Dividend $1.40
Dividend Yield 1.39%
Number of Consecutive Years of Dividend Growth 6

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,063,539,000
Total Current Liabilities $436,443,000
Long-Term Debt $1,185,500,000
Total Assets $3,859,816,000
Intangible Assets $2,243,971,000
Total Liabilities $1,903,772,000
Shares Outstanding (Diluted Average) 144,349,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.04
Jun2018 $2.19
Jun2017 $2.40
Jun2016 $2.49
Jun2015 $2.47
Jun2014 $2.39
Jun2013 $2.10
Jun2012 $1.71
Jun2011 $1.44
Jun2010 $1.23
Jun2009 $0.95
Jun2008 $0.70
Jun2007 $0.43
Jun2006 $0.58
Jun2005 $0.46
Jun2004 $0.41
Jun2003 $0.33
Jun2002 $0.28
Jun2001 $0.09
Jun2000 $0.17
Jun1999 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.57
Jun2018 $2.36
Jun2017 $2.42
Jun2016 $2.36
Jun2015 $2.20
Jun2014 $1.97
Jun2013 $1.67
Jun2012 $1.37
Jun2011 $1.12
Jun2010 $0.90
Jun2009 $0.70
Jun2008 $0.55
Jun2007 $0.46
Jun2006 $0.46
Jun2005 $0.37
Jun2004 $0.30
Jun2003 $0.23

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Other ModernGraham posts about the company

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

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Disclaimer:

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

Universal Health Services Inc Valuation – April 2019 #UHS

Company Profile (excerpt from Reuters): Universal Health Services, Inc. is a holding company. The Company’s principal business is owning and operating, through its subsidiaries, acute care hospitals and outpatient facilities, and behavioral healthcare facilities. The Company’s segments include Acute Care Hospital Services, Behavioral Health Services and Other. As of August 1, 2018, the Company owned and/or operated more than 326 inpatient facilities, and 32 outpatient and other facilities, located in 37 states, Washington, District of Columbia, the United Kingdom, Puerto Rico and the United States Virgin Islands. The Company’s hospitals provide a range of services, such as oncology, diagnostic care, coronary care, pediatric services, pharmacy services and/or behavioral health services. As of February 28, 2017, its acute care facilities located in the United States included 26 inpatient acute care hospitals; four free-standing emergency departments, and four outpatient surgery/cancer care centers and one surgical hospital.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of UHS – April 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 $12,167,567,641 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 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 136.21% Pass
6. Moderate PEmg Ratio PEmg < 20 15.96 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 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 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.05 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.40
MG Growth Estimate 7.49%
MG Value $197.22
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $121.76
MG Value based on 0% Growth $71.38
Market Implied Growth Rate 3.73%
Current Price $134.03
% of Intrinsic Value 67.96%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.6 in 2015 to an estimated $8.4 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.73% 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 Universal Health Services, Inc. Class B revealed the company was trading above its Graham Number of $112.47. The company pays a dividend of $0.4 per share, for a yield of 0.3% Its PEmg (price over earnings per share – ModernGraham) was 15.96, which was below the industry average of 47.79, 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 $-41.66.

Universal Health Services, Inc. Class B performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$41.66
Graham Number $112.47
PEmg 15.96
Current Ratio 1.34
PB Ratio 2.27
Current Dividend $0.40
Dividend Yield 0.30%
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 $1,937,802,000
Total Current Liabilities $1,448,738,000
Long-Term Debt $3,935,187,000
Total Assets $11,265,480,000
Intangible Assets $3,844,628,000
Total Liabilities $5,799,687,000
Shares Outstanding (Diluted Average) 92,706,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.65
Dec2018 $8.31
Dec2017 $7.81
Dec2016 $7.14
Dec2015 $6.76
Dec2014 $5.42
Dec2013 $5.14
Dec2012 $4.53
Dec2011 $4.04
Dec2010 $2.34
Dec2009 $2.64
Dec2008 $1.96
Dec2007 $1.59
Dec2006 $2.28
Dec2005 $2.00
Dec2004 $1.38
Dec2003 $1.60
Dec2002 $1.37
Dec2001 $0.80
Dec2000 $0.75
Dec1999 $0.61

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.40
Dec2018 $7.54
Dec2017 $6.92
Dec2016 $6.25
Dec2015 $5.60
Dec2014 $4.78
Dec2013 $4.22
Dec2012 $3.54
Dec2011 $2.87
Dec2010 $2.24
Dec2009 $2.16
Dec2008 $1.89
Dec2007 $1.83
Dec2006 $1.87
Dec2005 $1.59
Dec2004 $1.32
Dec2003 $1.20

Recommended Reading:

Other ModernGraham posts about the company

Universal Health Services Inc Valuation – June 2018 $UHS
Universal Health Services Inc Valuation – August 2017 $UHS
Universal Health Services Inc Valuation – August 2016 $UHS
Universal Health Services Inc. Analysis – Initial Coverage $UHS

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ResMed Inc Valuation – March 2019 #RMD
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Disclaimer:

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

Dentsply Sirona Inc Valuation – March 2019 #XRAY

Company Profile (excerpt from Reuters): DENTSPLY SIRONA Inc., incorporated on February 15, 1983, is a manufacturer of professional dental products and technologies. The Company develops, manufactures, and markets solutions offering, including dental and oral health products, as well as other consumable medical devices. The Company operates through two segments: Dental and Healthcare Consumables, and Technologies. The dental industry encompasses the diagnosis, treatment and prevention of disease and ailments of the teeth, gums and supporting bone. The Company’s principal dental product categories are dental consumable products, dental laboratory products, dental specialty products and dental equipment. Additionally, the Company’s consumable medical device products are used for urological and surgical applications. These products are produced by the Company in the United States and internationally and are distributed throughout the world under various brand names, including ANKYLOS, AQUASIL ULTRA, ARTICADENT, ASTRA TECH, ATLANTIS, CALIBRA, CAULK, CAVITRON, CELTRA, CERAMCO, CERCON, CEREC, CEREC MCX, CITANEST, DAC, DELTON, DENTSPLY, DETREY, DYRACT, ESTHET.X, GALILEOS, INLAB, IN-OVATION, INTEGO, LOFRIC, MAILLEFER, MIDWEST, MTM, NUPRO, OMNICAM, ORAQIX, ORIGO, ORTHOPHOS, OSSEOSPEED, PALODENT PLUS, PEPGEN P-15, PORTRAIT, PRIME & BOND, PROFILE, PROGLIDER, PROTAPER, RECIPROC, RINN, SANI-TIP, SCHICK, SENSE, SENTALLOY, SINIUS, SIROLASER, SIRONA, SLIMLINE, STYLUS, SULTAN, SUREFIL, T1, T2, T3, T4, TENEO, THERMAFIL, TRIODENT MATRIX SYSTEMS, TRUBYTE, VIPI, WAVEONE, WELLSPECT, XENO, XIVE, XYLOCAINE and ZHERMACK.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of XRAY – 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 $10,991,254,694 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.86 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -259.30% Fail
6. Moderate PEmg Ratio PEmg < 20 -33.99 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.13 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.86 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.79 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.45
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$21.01
MG Value based on 0% Growth -$12.31
Market Implied Growth Rate -21.24%
Current Price $49.24
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.02 in 2015 to an estimated $-1.45 for 2019. 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 DENTSPLY SIRONA Inc revealed the company was trading above its Graham Number of $33.67. The company pays a dividend of $0.35 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was -33.99, which was below the industry average of 53.13, 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 $-7.49.

DENTSPLY SIRONA Inc scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.49
Graham Number $33.67
PEmg -33.99
Current Ratio 1.86
PB Ratio 2.13
Current Dividend $0.35
Dividend Yield 0.71%
Number of Consecutive Years of Dividend Growth 8

Useful Links:

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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 $1,888,000,000
Total Current Liabilities $1,013,300,000
Long-Term Debt $1,564,900,000
Total Assets $8,687,000,000
Intangible Assets $5,851,600,000
Total Liabilities $3,554,000,000
Shares Outstanding (Diluted Average) 222,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.19
Dec2018 -$4.51
Dec2017 -$6.76
Dec2016 $1.94
Dec2015 $1.76
Dec2014 $2.24
Dec2013 $2.16
Dec2012 $2.18
Dec2011 $1.70
Dec2010 $1.82
Dec2009 $1.83
Dec2008 $1.87
Dec2007 $1.68
Dec2006 $1.41
Dec2005 $0.28
Dec2004 $1.55
Dec2003 $1.09
Dec2002 $0.93
Dec2001 $0.77
Dec2000 $0.65
Dec1999 $0.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.45
Dec2018 -$2.53
Dec2017 -$0.94
Dec2016 $2.00
Dec2015 $2.02
Dec2014 $2.11
Dec2013 $2.01
Dec2012 $1.91
Dec2011 $1.78
Dec2010 $1.79
Dec2009 $1.65
Dec2008 $1.49
Dec2007 $1.27
Dec2006 $1.06
Dec2005 $0.90
Dec2004 $1.14
Dec2003 $0.89

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Disclaimer:

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

McKesson Corp Valuation – March 2019 #MCK

Company Profile (excerpt from Reuters): McKesson Corporation, incorporated on July 7, 1994, is a healthcare supply chain management solutions, retail pharmacy, community oncology and specialty care, and healthcare information technology company. The Company provides medicines, medical products and healthcare services by partnering with pharmaceutical manufacturers, providers, pharmacies, governments and other organizations in healthcare. It operates through two segments: McKesson Distribution Solutions and McKesson Technology Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MCK – 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 $23,379,630,473 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.02 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 109.07% Pass
6. Moderate PEmg Ratio PEmg < 20 13.60 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.53 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 1.02 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.51 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.96
MG Growth Estimate 8.57%
MG Value $229.80
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $129.91
MG Value based on 0% Growth $76.15
Market Implied Growth Rate 2.55%
Current Price $121.88
% of Intrinsic Value 53.04%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.7 in 2015 to an estimated $8.96 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.55% 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 McKesson Corporation revealed the company was trading above its Graham Number of $92.59. The company pays a dividend of $1.3 per share, for a yield of 1.1% Its PEmg (price over earnings per share – ModernGraham) was 13.6, which was below the industry average of 53.13, 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 $-68.22.

McKesson Corporation performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$68.22
Graham Number $92.59
PEmg 13.60
Current Ratio 1.02
PB Ratio 2.53
Current Dividend $1.30
Dividend Yield 1.07%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $38,319,000,000
Total Current Liabilities $37,424,000,000
Long-Term Debt $7,616,000,000
Total Assets $61,011,000,000
Intangible Assets $14,439,000,000
Total Liabilities $51,622,000,000
Shares Outstanding (Diluted Average) 195,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.85
Mar2018 $0.32
Mar2017 $22.73
Mar2016 $9.70
Mar2015 $6.27
Mar2014 $5.41
Mar2013 $5.59
Mar2012 $5.59
Mar2011 $4.57
Mar2010 $4.62
Mar2009 $2.95
Mar2008 $3.32
Mar2007 $2.99
Mar2006 $2.38
Mar2005 -$0.53
Mar2004 $2.19
Mar2003 $1.88
Mar2002 $1.43
Mar2001 -$0.17
Mar2000 $2.55
Mar1999 $0.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.96
Mar2018 $9.30
Mar2017 $12.51
Mar2016 $7.11
Mar2015 $5.70
Mar2014 $5.33
Mar2013 $5.08
Mar2012 $4.62
Mar2011 $3.99
Mar2010 $3.55
Mar2009 $2.75
Mar2008 $2.46
Mar2007 $1.94
Mar2006 $1.44
Mar2005 $0.96
Mar2004 $1.66
Mar2003 $1.33

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ResMed Inc Valuation – March 2019 #RMD
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Disclaimer:

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

IDEXX Laboratories Inc Valuation – March 2019 #IDXX

Company Profile (excerpt from Reuters): IDEXX Laboratories, Inc., incorporated on December 19, 1983, develops, manufactures and distributes products and provides services primarily for the companion animal veterinary, livestock and poultry, dairy and water testing markets. The Company also sells a line of portable electrolytes and blood gas analyzers for the human point-of-care medical diagnostics market. Its segments include diagnostic and information technology-based products and services for the veterinary market, which the Company refers to as the Companion Animal Group (CAG); water quality products (Water); diagnostic products and services for livestock and poultry health, which the Company refers to as Livestock, Poultry and Dairy (LPD), and Other operating segment, which combines and presents products for the human point-of-care medical diagnostics market (OPTI Medical) with its pharmaceutical product line and its out-licensing arrangements. Its primary products and services are point-of-care veterinary diagnostic products, comprising instruments, consumables and rapid assay test kits; veterinary reference laboratory diagnostic and consulting services; practice management and diagnostic imaging systems and services used by veterinarians; biological materials testing, laboratory diagnostic instruments and services used by the biomedical research community; diagnostic, health-monitoring products for livestock, poultry and dairy; products that test water for certain microbiological contaminants, and point-of-care electrolytes and blood gas analyzers used in the human point-of-care medical diagnostics market.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IDXX – 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 $19,330,932,847 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.85 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 185.34% Pass
6. Moderate PEmg Ratio PEmg < 20 60.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -2,138.74 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.85 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.17 Fail
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 $3.74
MG Growth Estimate 15.00%
MG Value $144.09
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $54.27
MG Value based on 0% Growth $31.81
Market Implied Growth Rate 25.79%
Current Price $224.86
% of Intrinsic Value 156.05%

IDEXX Laboratories, 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 PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.81 in 2015 to an estimated $3.74 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 25.79% 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 IDEXX Laboratories, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 60.08, which was above the industry average of 53.13. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.16.

IDEXX Laboratories, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$10.16
Graham Number $0.00
PEmg 60.08
Current Ratio 0.85
PB Ratio -2,138.74
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 $654,172,000
Total Current Liabilities $770,444,000
Long-Term Debt $601,348,000
Total Assets $1,537,349,000
Intangible Assets $256,314,000
Total Liabilities $1,546,582,000
Shares Outstanding (Diluted Average) 87,819,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.67
Dec2018 $4.26
Dec2017 $2.94
Dec2016 $2.44
Dec2015 $2.05
Dec2014 $1.79
Dec2013 $1.74
Dec2012 $1.59
Dec2011 $1.39
Dec2010 $1.19
Dec2009 $1.01
Dec2008 $0.94
Dec2007 $0.73
Dec2006 $0.71
Dec2005 $0.58
Dec2004 $0.55
Dec2003 $0.40
Dec2002 $0.33
Dec2001 $0.27
Dec2000 $0.26
Dec1999 $0.21

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.74
Dec2018 $3.08
Dec2017 $2.40
Dec2016 $2.06
Dec2015 $1.81
Dec2014 $1.64
Dec2013 $1.51
Dec2012 $1.33
Dec2011 $1.15
Dec2010 $0.99
Dec2009 $0.86
Dec2008 $0.76
Dec2007 $0.65
Dec2006 $0.57
Dec2005 $0.48
Dec2004 $0.41
Dec2003 $0.32

Recommended Reading:

Other ModernGraham posts about the company

IDEXX Laboratories Inc Valuation – June 2018 $IDXX
IDEXX Laboratories Inc Valuation – Initial Coverage $IDXX

Other ModernGraham posts about related companies

Hologic Inc Valuation – March 2019 #HOLX
Mettler-Toledo International Inc Valuation – March 2019 #MTD
DaVita Inc Valuation – March 2019 #DVA
Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX

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.

Hologic Inc Valuation – March 2019 #HOLX

Company Profile (excerpt from Reuters): Hologic, Inc., incorporated on January 18, 1990, is a developer, manufacturer and supplier of diagnostics products, medical imaging systems and surgical products with an emphasis on women’s health. The Company operates through four segments: Diagnostics, Breast Health, GYN Surgical and Skeletal Health. The Company sells and services its products through a combination of direct sales and service personnel and a network of independent distributors and sales representatives.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of HOLX – 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 $13,730,000,796 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.30 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 6528.57% Pass
6. Moderate PEmg Ratio PEmg < 20 33.53 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.36 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 1.30 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 8.66 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.41
MG Growth Estimate 15.00%
MG Value $54.13
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $20.39
MG Value based on 0% Growth $11.95
Market Implied Growth Rate 12.51%
Current Price $47.14
% of Intrinsic Value 87.09%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $-0.7 in 2015 to an estimated $1.41 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 12.51% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Hologic, Inc. revealed the company was trading above its Graham Number of $22.04. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 33.53, which was below the industry average of 53.13, 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 $-11.51.

Hologic, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.51
Graham Number $22.04
PEmg 33.53
Current Ratio 1.30
PB Ratio 5.36
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 $1,401,900,000
Total Current Liabilities $1,077,700,000
Long-Term Debt $2,807,900,000
Total Assets $6,931,500,000
Intangible Assets $4,965,100,000
Total Liabilities $4,537,100,000
Shares Outstanding (Diluted Average) 272,372,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.40
Sep2018 -$0.40
Sep2017 $2.64
Sep2016 $1.16
Sep2015 $0.45
Sep2014 $0.06
Sep2013 -$4.36
Sep2012 -$0.28
Sep2011 $0.59
Sep2010 -$0.24
Sep2009 -$8.64
Sep2008 -$1.57
Sep2007 $0.86
Sep2006 $0.28
Sep2005 $0.32
Sep2004 $0.15
Sep2003 $0.04
Sep2002 $0.00
Sep2001 -$0.34
Sep2000 -$0.31
Sep1999 -$0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.41
Sep2018 $0.87
Sep2017 $1.00
Sep2016 -$0.08
Sep2015 -$0.70
Sep2014 -$1.14
Sep2013 -$2.02
Sep2012 -$1.24
Sep2011 -$1.75
Sep2010 -$2.56
Sep2009 -$3.07
Sep2008 -$0.19
Sep2007 $0.45
Sep2006 $0.21
Sep2005 $0.13
Sep2004 -$0.01
Sep2003 -$0.10

Recommended Reading:

Other ModernGraham posts about the company

Hologic Inc Valuation – June 2018 $HOLX
Hologic Inc Valuation – Initial Coverage $HOLX

Other ModernGraham posts about related companies

Mettler-Toledo International Inc Valuation – March 2019 #MTD
DaVita Inc Valuation – March 2019 #DVA
Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC

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.

Mettler-Toledo International Inc Valuation – March 2019 #MTD

Company Profile (excerpt from Reuters): Mettler-Toledo International Inc., incorporated on December 6, 1991, is a supplier of precision instruments and services. The Company operates through five segments: U.S. Operations, Swiss Operations, Western European Operations, Chinese Operations and Other. The Company manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications. The Company is also a provider of analytical instruments for use in life science, reaction engineering and real-time analytic systems used in drug and chemical compound development, and process analytics instruments used for in-line measurement in production processes. In addition, the Company is also a supplier of end-of-line inspection systems used in production and packaging for food, pharmaceutical and other industries. The Company serves food and beverage producers; food retailers; chemical, specialty chemicals and cosmetics companies, and the transportation and logistics industry, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MTD – 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 $17,570,648,912 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.42 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 134.87% Pass
6. Moderate PEmg Ratio PEmg < 20 38.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 30.56 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.42 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.16 Fail
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 $18.41
MG Growth Estimate 10.18%
MG Value $531.23
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $266.95
MG Value based on 0% Growth $156.49
Market Implied Growth Rate 14.96%
Current Price $707.41
% of Intrinsic Value 133.17%

Mettler-Toledo International 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 PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $10.97 in 2015 to an estimated $18.41 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.96% 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 Mettler-Toledo International Inc. revealed the company was trading above its Graham Number of $109.73. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 38.42, which was below the industry average of 53.13, 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 $-38.56.

Mettler-Toledo International Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$38.56
Graham Number $109.73
PEmg 38.42
Current Ratio 1.42
PB Ratio 30.56
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 $1,045,860,000
Total Current Liabilities $734,434,000
Long-Term Debt $985,021,000
Total Assets $2,618,847,000
Intangible Assets $752,088,000
Total Liabilities $2,028,784,000
Shares Outstanding (Diluted Average) 25,491,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $22.60
Dec2018 $19.88
Dec2017 $14.24
Dec2016 $14.22
Dec2015 $12.48
Dec2014 $11.44
Dec2013 $9.96
Dec2012 $9.14
Dec2011 $8.21
Dec2010 $6.80
Dec2009 $5.03
Dec2008 $5.79
Dec2007 $4.70
Dec2006 $3.86
Dec2005 $2.52
Dec2004 $2.37
Dec2003 $2.11
Dec2002 $2.21
Dec2001 $1.68
Dec2000 $1.66
Dec1999 $1.16

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $18.41
Dec2018 $15.69
Dec2017 $13.22
Dec2016 $12.29
Dec2015 $10.97
Dec2014 $9.85
Dec2013 $8.64
Dec2012 $7.65
Dec2011 $6.64
Dec2010 $5.65
Dec2009 $4.84
Dec2008 $4.45
Dec2007 $3.56
Dec2006 $2.86
Dec2005 $2.30
Dec2004 $2.13
Dec2003 $1.93

Recommended Reading:

Other ModernGraham posts about the company

Mettler-Toledo International Inc Valuation – June 2018 $MTD
Mettler-Toledo International Inc Valuation – Initial Coverage $MTD

Other ModernGraham posts about related companies

DaVita Inc Valuation – March 2019 #DVA
Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT

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.

DaVita Inc Valuation – March 2019 #DVA

Company Profile (excerpt from Reuters): DaVita Inc., formerly DaVita HealthCare Partners Inc., incorporated on April 4, 1994, operates two divisions: DaVita Kidney Care (Kidney Care) and DaVita Medical Group (DMG). The Kidney Care division consists of the Company’s the United States dialysis and related lab services, its ancillary services and strategic initiatives, including its international operations, and its corporate administrative support. Its DMG division is a patient- and physician-focused integrated healthcare delivery and management company that provides medical services to members primarily through capitation contracts with some of the nation’s health plans. The Company’s segments include U.S. dialysis and related lab services, DMG, and Other-Ancillary services and strategic initiatives. Its U.S. dialysis and related lab services line of business provide kidney dialysis services in the United States for patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD). In addition, as of December 31, 2016, the Company operated or provided administrative services to 154 outpatient dialysis centers serving patients located in 11 countries outside of the United States.

Downloadable PDF version of this valuation:

ModernGraham Valuation of DVA – 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 $8,919,039,746 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.72 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 17.39% Fail
6. Moderate PEmg Ratio PEmg < 20 18.25 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.29 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 1.72 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.31 Fail
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 $2.94
MG Growth Estimate 3.21%
MG Value $43.95
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $42.70
MG Value based on 0% Growth $25.03
Market Implied Growth Rate 4.87%
Current Price $53.74
% of Intrinsic Value 122.29%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.43 in 2015 to an estimated $2.94 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.87% 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 Davita Inc revealed the company was trading above its Graham Number of $45.04. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 18.25, which was below the industry average of 53.13, 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 $-40.73.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$40.73
Graham Number $45.04
PEmg 18.25
Current Ratio 1.72
PB Ratio 2.29
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 $8,424,159,000
Total Current Liabilities $4,891,161,000
Long-Term Debt $8,172,847,000
Total Assets $19,110,252,000
Intangible Assets $6,960,806,000
Total Liabilities $15,201,854,000
Shares Outstanding (Diluted Average) 166,413,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.05
Dec2018 $0.92
Dec2017 $3.47
Dec2016 $4.29
Dec2015 $1.25
Dec2014 $3.33
Dec2013 $2.95
Dec2012 $2.74
Dec2011 $2.48
Dec2010 $1.97
Dec2009 $2.03
Dec2008 $1.77
Dec2007 $1.78
Dec2006 $1.37
Dec2005 $1.10
Dec2004 $1.08
Dec2003 $0.78
Dec2002 $0.61
Dec2001 $0.48
Dec2000 $0.05
Dec1999 -$0.60

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.94
Dec2018 $2.48
Dec2017 $3.19
Dec2016 $3.01
Dec2015 $2.43
Dec2014 $2.91
Dec2013 $2.61
Dec2012 $2.36
Dec2011 $2.11
Dec2010 $1.88
Dec2009 $1.76
Dec2008 $1.55
Dec2007 $1.37
Dec2006 $1.11
Dec2005 $0.92
Dec2004 $0.76
Dec2003 $0.48

Recommended Reading:

Other ModernGraham posts about the company

DaVita Inc Valuation – June 2018 $DVA
Davita Inc Valuation – February 2017 $DVA
DaVita HealthCare Partners Inc Valuation – November 2015 Update $DVA
30 Companies in the Spotlight This Week – 11/15/14
DaVita Healthcare Partners Inc. Annual Valuation – 2014 $DVA

Other ModernGraham posts about related companies

Danaher Corp Valuation – March 2019 #DHR
Agilent Technologies Inc Valuation – March 2019 #A
ResMed Inc Valuation – March 2019 #RMD
Cooper Companies Inc Valuation – March 2019 #COO
Edwards Lifesciences Corp Valuation – March 2019 $EW
Boston Scientific Corporation Valuation – March 2019 $BSX
Baxter International Inc Valuation – March 2019 $BAX
Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX

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.

Danaher Corp Valuation – March 2019 #DHR

Company Profile (excerpt from Reuters): Danaher Corporation (Danaher), incorporated on October 3, 1986, designs, manufactures and markets professional, medical, industrial and commercial products and services. As of December 31, 2016, the Company’s research and development, manufacturing, sales, distribution, service and administrative facilities were located in over 60 countries. Danaher operates through four segments: Life Sciences; Diagnostics; Dental, and Environmental & Applied Solutions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DHR – 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 $91,024,671,224 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.47 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 29.20% Fail
6. Moderate PEmg Ratio PEmg < 20 31.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.22 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 1.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.30 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 $4.01
MG Growth Estimate 0.16%
MG Value $35.34
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $58.09
MG Value based on 0% Growth $34.05
Market Implied Growth Rate 11.69%
Current Price $127.68
% of Intrinsic Value 361.24%

Danaher Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 $3.96 in 2015 to an estimated $4.01 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.69% 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 Danaher Corporation revealed the company was trading above its Graham Number of $63.81. The company pays a dividend of $0.64 per share, for a yield of 0.5% Its PEmg (price over earnings per share – ModernGraham) was 31.87, which was below the industry average of 53.13, 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 $-17.6.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$17.60
Graham Number $63.81
PEmg 31.87
Current Ratio 1.47
PB Ratio 3.22
Current Dividend $0.64
Dividend Yield 0.50%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $7,093,800,000
Total Current Liabilities $4,841,500,000
Long-Term Debt $9,688,500,000
Total Assets $47,832,500,000
Intangible Assets $37,579,100,000
Total Liabilities $19,605,800,000
Shares Outstanding (Diluted Average) 711,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.50
Dec2018 $3.74
Dec2017 $3.53
Dec2016 $3.65
Dec2015 $4.74
Dec2014 $3.63
Dec2013 $3.80
Dec2012 $3.36
Dec2011 $3.11
Dec2010 $2.64
Dec2009 $1.73
Dec2008 $1.98
Dec2007 $2.10
Dec2006 $1.74
Dec2005 $1.38
Dec2004 $1.15
Dec2003 $0.84
Dec2002 $0.47
Dec2001 $0.50
Dec2000 $0.56
Dec1999 $0.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.01
Dec2018 $3.79
Dec2017 $3.84
Dec2016 $3.94
Dec2015 $3.96
Dec2014 $3.49
Dec2013 $3.25
Dec2012 $2.84
Dec2011 $2.49
Dec2010 $2.13
Dec2009 $1.85
Dec2008 $1.83
Dec2007 $1.65
Dec2006 $1.32
Dec2005 $1.03
Dec2004 $0.81
Dec2003 $0.61

Recommended Reading:

Other ModernGraham posts about the company

Danaher Corp Valuation – May 2018 $DHR
Danaher Corporation Valuation – February 2017 $DHR
Danaher Corporation Valuation – November 2015 Update $DHR
Danaher Corporation Analysis – August 2015 Update $DHR
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Disclaimer:

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

Agilent Technologies Inc Valuation – March 2019 #A

Company Profile (excerpt from Reuters): Agilent Technologies, Inc., incorporated on May 4, 1999, provides application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. The Company serves the life sciences, diagnostics and applied chemical markets. The Company has three business segments: life sciences and applied markets business, diagnostics and genomics business, and Agilent CrossLab business. The life sciences and applied markets business segment brings together the Company’s analytical laboratory instrumentation and informatics. The Company’s diagnostics and genomics business segment includes the reagent partnership, pathology, companion diagnostics, genomics and the nucleic acid solutions businesses. The Company’s Agilent CrossLab business segment spans the entire lab with its consumables and services portfolio.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of A – 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 $24,759,898,745 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.39 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 -24.07% Fail
6. Moderate PEmg Ratio PEmg < 20 39.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.99 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.39 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.69 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 $1.96
MG Growth Estimate 0.62%
MG Value $19.11
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $28.45
MG Value based on 0% Growth $16.68
Market Implied Growth Rate 15.62%
Current Price $77.98
% of Intrinsic Value 407.98%

Agilent Technologies Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.88 in 2015 to an estimated $1.96 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 15.62% 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 Agilent Technologies Inc revealed the company was trading above its Graham Number of $31.39. The company pays a dividend of $0.6 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 39.75, which was below the industry average of 53.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.63.

Agilent Technologies 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) -$0.63
Graham Number $31.39
PEmg 39.75
Current Ratio 3.39
PB Ratio 4.99
Current Dividend $0.60
Dividend Yield 0.76%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $3,712,000,000
Total Current Liabilities $1,095,000,000
Long-Term Debt $1,798,000,000
Total Assets $8,952,000,000
Intangible Assets $3,699,000,000
Total Liabilities $3,916,000,000
Shares Outstanding (Diluted Average) 322,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.05
Oct2018 $0.97
Oct2017 $2.10
Oct2016 $1.40
Oct2015 $1.20
Oct2014 $1.62
Oct2013 $2.13
Oct2012 $3.27
Oct2011 $2.85
Oct2010 $1.94
Oct2009 -$0.09
Oct2008 $1.87
Oct2007 $1.57
Oct2006 $7.50
Oct2005 $0.65
Oct2004 $0.75
Oct2003 -$4.35
Oct2002 -$2.22
Oct2001 $0.38
Oct2000 $1.66
Oct1999 $1.35

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.96
Oct2018 $1.43
Oct2017 $1.67
Oct2016 $1.61
Oct2015 $1.88
Oct2014 $2.27
Oct2013 $2.40
Oct2012 $2.35
Oct2011 $1.80
Oct2010 $1.71
Oct2009 $1.83
Oct2008 $2.68
Oct2007 $2.46
Oct2006 $2.10
Oct2005 -$0.72
Oct2004 -$1.19
Oct2003 -$1.65

Recommended Reading:

Other ModernGraham posts about the company

Agilent Technologies Inc Valuation – May 2018 $A
Agilent Technologies Inc Valuation – February 2017 $A
Agilent Technologies Inc Valuation – August 2016 $A
Agilent Technologies Inc Valuation – February 2016
Agilent Technologies Inc. Valuation – October 2015 Update $A

Other ModernGraham posts about related companies

ResMed Inc Valuation – March 2019 #RMD
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Boston Scientific Corporation Valuation – March 2019 $BSX
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Centene Corp Valuation – March 2019 $CNC
Abbott Laboratories Valuation – February 2019 $ABT
Becton Dickinson and Co Valuation – February 2019 $BDX
IQVIA Holdings Inc Valuation – February 2019 $IQV
Thermo Fisher Scientific Inc Valuation – February 2019 $TMO

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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