Target Corporation Valuation – March 2019 #TGT

Company Profile (excerpt from Reuters): Target Corporation (Target), incorporated on February 11, 1902, is a general merchandise retailer selling products through its stores and digital channels. The Company’s general merchandise stores offer an edited food assortment, including perishables, dry grocery, dairy and frozen items. The Company’s digital channels include a range of general merchandise, including a range of items found in its stores, along with an assortment, such as additional sizes and colors sold only online. The Company’s owned brands include Archer Farms, Market Pantry, Sutton & Dodge, Art Class, Merona, Threshold, Ava & Viv, Pillowfort, up & up, Boots & Barkley, Room Essentials, Wine Cube, Cat & Jack, Simply Balanced, Wondershop, Embark, Smith & Hawken, Xhilaration, Gilligan & O’Malley, Sonia Kashuk, Knox Rose and Spritz.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TGT – 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 $40,036,461,292 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 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 27.42% Fail
6. Moderate PEmg Ratio PEmg < 20 14.51 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.60 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 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.10 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 $5.34
MG Growth Estimate 15.00%
MG Value $205.72
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $77.48
MG Value based on 0% Growth $45.42
Market Implied Growth Rate 3.01%
Current Price $77.54
% of Intrinsic Value 37.69%

Target 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 stability or growth over the last ten years, 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 $2.58 in 2016 to an estimated $5.34 for 2020. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.01% 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 Target Corporation revealed the company was trading above its Graham Number of $51.81. The company pays a dividend of $2.52 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.51, which was below the industry average of 27.69, 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 $-33.33.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$33.33
Graham Number $51.81
PEmg 14.51
Current Ratio 0.83
PB Ratio 3.60
Current Dividend $2.52
Dividend Yield 3.25%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2019
Total Current Assets $12,519,000,000
Total Current Liabilities $15,014,000,000
Long-Term Debt $10,223,000,000
Total Assets $41,290,000,000
Intangible Assets $699,000,000
Total Liabilities $29,993,000,000
Shares Outstanding (Diluted Average) 524,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.51
Jan2019 $5.51
Jan2018 $5.29
Jan2017 $4.69
Jan2016 $5.31
Jan2015 -$2.58
Jan2014 $3.07
Jan2013 $4.52
Jan2012 $4.28
Jan2011 $4.00
Jan2010 $3.30
Jan2009 $2.86
Jan2008 $3.33
Jan2007 $3.21
Jan2006 $2.71
Jan2005 $3.51
Jan2004 $1.76
Jan2003 $1.78
Jan2002 $1.21
Jan2001 $1.38
Jan2000 $1.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.34
Jan2019 $4.72
Jan2018 $3.94
Jan2017 $3.17
Jan2016 $2.58
Jan2015 $1.70
Jan2014 $3.84
Jan2013 $4.08
Jan2012 $3.76
Jan2011 $3.44
Jan2010 $3.14
Jan2009 $3.08
Jan2008 $3.09
Jan2007 $2.85
Jan2006 $2.51
Jan2005 $2.25
Jan2004 $1.57

Recommended Reading:

Other ModernGraham posts about the company

Target Corp Valuation – June 2018 $TGT
Target Corp Valuation – March 2017 $TGT
Target Corp Valuation – August 2016 $TGT
Target Corporation Stock Analysis – 2015 Update $TGT
17 Companies in the Spotlight This Week – June 21, 2014

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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.

Tegna Inc Valuation – August 2018 $TGNA

Company Profile (excerpt from Reuters): Tegna Inc., incorporated on February 23, 1972, includes a portfolio of media and digital businesses that provide content. The Company operates through TEGNA Media (Media Segment) and TEGNA Digital (Digital Segment) segments. As of December 31, 2016, the Company’s media business included 46 television stations operating in 38 markets and offers television programming and digital content.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TGNA – 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 $2,477,588,762 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.93 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -17.50% Fail
6. Moderate PEmg Ratio PEmg < 20 6.43 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.28 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 1.93 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 12.94 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 $1.83
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $26.48
MG Value based on 0% Growth $15.52
Market Implied Growth Rate -1.03%
Current Price $11.75
% of Intrinsic Value N/A

GANNETT CO INC. Common Stock 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. The Enterprising Investor has concerns regarding the level of debt relative to the net 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 $2.74 in 2014 to an estimated $1.83 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.03% annual earnings loss 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 GANNETT CO INC. Common Stock revealed the company was trading below its Graham Number of $12.75. The company pays a dividend of $0.35 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 6.43, which was below the industry average of 38.97, 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 $-16.27.

GANNETT CO INC. Common Stock receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.27
Graham Number $12.75
PEmg 6.43
Current Ratio 1.93
PB Ratio 2.28
Current Dividend $0.35
Dividend Yield 2.98%
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 $502,878,000
Total Current Liabilities $260,937,000
Long-Term Debt $3,131,137,000
Total Assets $5,142,663,000
Intangible Assets $4,138,676,000
Total Liabilities $4,025,752,000
Shares Outstanding (Diluted Average) 216,515,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.56
Dec2017 $1.26
Dec2016 $1.99
Dec2015 $2.00
Dec2014 $4.58
Dec2013 $1.66
Dec2012 $1.79
Dec2011 $1.89
Dec2010 $2.43
Dec2009 $1.51
Dec2008 -$29.11
Dec2007 $4.52
Dec2006 $4.90
Dec2005 $5.06
Dec2004 $4.92
Dec2003 $4.46
Dec2002 $4.31
Dec2001 $3.03
Dec2000 $6.41
Dec1999 $3.40
Dec1998 $3.50

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.83
Dec2017 $2.07
Dec2016 $2.45
Dec2015 $2.58
Dec2014 $2.74
Dec2013 $1.83
Dec2012 -$0.15
Dec2011 -$2.00
Dec2010 -$3.68
Dec2009 -$5.36
Dec2008 -$6.52
Dec2007 $4.78
Dec2006 $4.85
Dec2005 $4.67
Dec2004 $4.52
Dec2003 $4.32
Dec2002 $4.21

Recommended Reading:

Other ModernGraham posts about the company

Tegna Inc Valuation – February 2017 $TGNA
Tegna Inc. Valuation – November 2015 Update $TGNA
10 Most Undervalued Companies for the Enterprising Investor – November 2015
10 Most Undervalued Companies for the Enterprising Investor – October 2015
10 Companies Benjamin Graham Would Invest In Today – October 2015

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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.

Capstead Mortgage Corp Valuation – July 2018 $CMO

Company Profile (excerpt from Reuters): Capstead Mortgage Corporation, incorporated on April 15, 1985, operates as a self-managed real estate investment trust (REIT). The Company manages a leveraged portfolio of residential mortgage pass-through securities consisting of relatively short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises, either Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac), or by an agency of the federal government, the Government National Mortgage Association (Ginnie Mae).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMO – July 2018

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $778,439,067 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -63.89% Fail
5. Moderate PEmg Ratio PEmg < 20 12.41 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.66 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.67
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $9.78
MG Value based on 0% Growth $5.73
Market Implied Growth Rate 1.95%
Current Price $8.37
% of Intrinsic Value N/A

CAPSTEAD Mtg Co/SH does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding 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 $1.33 in 2014 to an estimated $0.67 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.95% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into CAPSTEAD Mtg Co/SH revealed the company was trading below its Graham Number of $9.99. The company pays a dividend of $0.8 per share, for a yield of 9.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.41, which was below the industry average of 49.54, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

CAPSTEAD Mtg Co/SH receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Graham Number $9.99
PEmg 12.41
PB Ratio 0.66
Dividend Yield 9.56%
TTM Dividend $0.80
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
Long-Term Debt & Capital Lease Obligation $12,035,110,000
Total Assets $13,256,355,000
Intangible Assets $0
Total Liabilities $12,087,499,000
Shares Outstanding (Diluted Average) 92,121,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.43
Dec2017 $0.65
Dec2016 $0.70
Dec2015 $0.97
Dec2014 $1.33
Dec2013 $0.93
Dec2012 $1.50
Dec2011 $1.75
Dec2010 $1.52
Dec2009 $1.66
Dec2008 $1.93
Dec2007 $0.19
Dec2006 -$0.87
Dec2005 $1.96
Dec2004 $1.33
Dec2003 $2.60
Dec2002 $4.85
Dec2001 $5.68
Dec2000 -$6.59
Dec1999 $2.42
Dec1998 -$16.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.67
Dec2017 $0.84
Dec2016 $0.98
Dec2015 $1.18
Dec2014 $1.33
Dec2013 $1.37
Dec2012 $1.62
Dec2011 $1.59
Dec2010 $1.30
Dec2009 $1.12
Dec2008 $0.87
Dec2007 $0.57
Dec2006 $1.17
Dec2005 $2.55
Dec2004 $2.42
Dec2003 $2.58
Dec2002 $1.01

Recommended Reading:

Other ModernGraham posts about the company

Capstead Mortgage Corporation Valuation – Initial Coverage $CMO

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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.

Investment Technology Group Inc Valuation – July 2018 $ITG

Company Profile (excerpt from Reuters): Investment Technology Group, Inc. (ITG), incorporated on March 10, 1994, is a financial technology company that helps brokers and asset managers improve returns for investors around the world. The Company operates through four segments: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations. These four operating segments provide categories of products and services, such as Execution Services, Workflow Technology and Analytics.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ITG – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $734,712,447 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.45 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 -73.45% Fail
6. Moderate PEmg Ratio PEmg < 20 60.30 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 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 1.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.01 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.37
MG Growth Estimate 15.00%
MG Value $14.32
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $5.39
MG Value based on 0% Growth $3.16
Market Implied Growth Rate 25.90%
Current Price $22.43
% of Intrinsic Value 156.61%

Investment Technology Group does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the low current ratio, 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 Overvalued after growing its EPSmg (normalized earnings) from $-1.16 in 2014 to an estimated $0.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 25.9% 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 Investment Technology Group revealed the company was trading above its Graham Number of $17.42. The company pays a dividend of $0.28 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 60.3, which was above the industry average of 21.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.69.

Investment Technology Group 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) $5.69
Graham Number $17.42
PEmg 60.30
Current Ratio 1.45
PB Ratio 2.10
Current Dividend $0.28
Dividend Yield 1.25%
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 3/1/2018
Total Current Assets $631,207,000
Total Current Liabilities $435,222,000
Long-Term Debt $2,509,000
Total Assets $800,668,000
Intangible Assets $66,064,000
Total Liabilities $437,731,000
Shares Outstanding (Diluted Average) 33,993,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.21
Dec2017 -$1.19
Dec2016 -$0.79
Dec2015 $2.63
Dec2014 $1.40
Dec2013 $0.82
Dec2012 -$6.45
Dec2011 -$4.42
Dec2010 $0.55
Dec2009 $0.97
Dec2008 $2.61
Dec2007 $2.48
Dec2006 $2.21
Dec2005 $1.60
Dec2004 $0.96
Dec2003 $0.89
Dec2002 $1.51
Dec2001 $1.62
Dec2000 $1.34
Dec1999 $0.95
Dec1998 $0.94

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.37
Dec2017 $0.16
Dec2016 $0.40
Dec2015 $0.26
Dec2014 -$1.16
Dec2013 -$2.19
Dec2012 -$2.92
Dec2011 -$0.62
Dec2010 $1.44
Dec2009 $1.92
Dec2008 $2.25
Dec2007 $1.92
Dec2006 $1.57
Dec2005 $1.28
Dec2004 $1.16
Dec2003 $1.27
Dec2002 $1.39

Recommended Reading:

Other ModernGraham posts about the company

Investment Technology Group Valuation – Initial Coverage $ITG

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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.

Target Corp Valuation – June 2018 $TGT

Company Profile (excerpt from Reuters): Target Corporation (Target), incorporated on February 11, 1902, is a general merchandise retailer selling products through its stores and digital channels. The Company’s general merchandise stores offer an edited food assortment, including perishables, dry grocery, dairy and frozen items. The Company’s digital channels include a range of general merchandise, including a range of items found in its stores, along with an assortment, such as additional sizes and colors sold only online. The Company’s owned brands include Archer Farms, Market Pantry, Sutton & Dodge, Art Class, Merona, Threshold, Ava & Viv, Pillowfort, up & up, Boots & Barkley, Room Essentials, Wine Cube, Cat & Jack, Simply Balanced, Wondershop, Embark, Smith & Hawken, Xhilaration, Gilligan & O’Malley, Sonia Kashuk, Knox Rose and Spritz.

TGT Chart

TGT data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TGT – 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 $41,572,798,391 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.90 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 30.66% Fail
6. Moderate PEmg Ratio PEmg < 20 16.97 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.78 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 0.90 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -9.51 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 $4.60
MG Growth Estimate 15.00%
MG Value $177.00
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $66.66
MG Value based on 0% Growth $39.08
Market Implied Growth Rate 4.24%
Current Price $78.02
% of Intrinsic Value 44.08%

Target 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 stability or growth over the last ten years, and the high PB ratio. 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 Undervalued after growing its EPSmg (normalized earnings) from $1.7 in 2015 to an estimated $4.6 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.24% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Target Corporation revealed the company was trading above its Graham Number of $49.41. The company pays a dividend of $2.44 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.97, which was below the industry average of 37.1, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-31.23.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$31.23
Graham Number $49.41
PEmg 16.97
Current Ratio 0.90
PB Ratio 3.78
Current Dividend $2.44
Dividend Yield 3.13%
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 4/1/2018
Total Current Assets $10,876,000,000
Total Current Liabilities $12,044,000,000
Long-Term Debt $11,107,000,000
Total Assets $38,929,000,000
Intangible Assets $0
Total Liabilities $27,771,000,000
Shares Outstanding (Diluted Average) 541,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.10
Jan2018 $5.33
Jan2017 $4.70
Jan2016 $5.31
Jan2015 -$2.58
Jan2014 $3.07
Jan2013 $4.52
Jan2012 $4.28
Jan2011 $4.00
Jan2010 $3.30
Jan2009 $2.86
Jan2008 $3.33
Jan2007 $3.21
Jan2006 $2.71
Jan2005 $3.51
Jan2004 $1.76
Jan2003 $1.78
Jan2002 $1.21
Jan2001 $1.38
Jan2000 $1.23
Jan1999 $0.99

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.60
Jan2018 $3.95
Jan2017 $3.18
Jan2016 $2.58
Jan2015 $1.70
Jan2014 $3.84
Jan2013 $4.08
Jan2012 $3.76
Jan2011 $3.44
Jan2010 $3.14
Jan2009 $3.08
Jan2008 $3.09
Jan2007 $2.85
Jan2006 $2.51
Jan2005 $2.25
Jan2004 $1.57
Jan2003 $1.42

Recommended Reading:

Other ModernGraham posts about the company

Target Corp Valuation – March 2017 $TGT
Target Corp Valuation – August 2016 $TGT
Target Corporation Stock Analysis – 2015 Update $TGT
17 Companies in the Spotlight This Week – June 21, 2014
Target Corp Annual Valuation – 2014 $TGT

Other ModernGraham posts about related companies

Ulta Beauty Inc Valuation – June 2018 $ULTA
Kohl’s Corporation Valuation – June 2018 $KSS
Dollar Tree Inc Valuation – May 2018 $DLTR
TJX Companies Inc Valuation – May 2018 $TJX
Tractor Supply Co Valuation – April 2018 $TSCO
Tapestry Inc Valuation – April 2018 $TPR
Dollar General Corp Valuation – April 2018 $DG
Tiffany & Co. Valuation – April 2018 $TIF
Best Buy Co Inc Valuation – April 2018 $BBY
Macy’s Inc Valuation – April 2018 $M

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.

Triumph Group Inc Valuation – Initial Coverage $TGI

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Undervalued Stocks for the Enterprising Investor – August 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Triumph Group Inc (TGI) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Triumph Group, Inc. designs, engineers, manufactures, repairs, overhauls and distributes a portfolio of aircraft components, accessories, subassemblies and systems. The Company offers a range of products and services to the aerospace industry through three segments: Triumph Aerostructures Group, whose companies are engaged in the design, manufacture, assembly and integration of metallic and composite aerostructures and structural components for the aerospace original equipment manufacturer (OEM) market; Triumph Aerospace Systems Group, whose companies design, engineer and manufacture a range of build-to-print components, assemblies and systems also for the OEM market, and Triumph Aftermarket Services Group, whose companies serve aircraft fleets, such as commercial airlines, the United States military and cargo carriers, through the maintenance, repair and overhaul (MRO) of aircraft components and accessories manufactured by third parties.

TGI Chart

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ModernGraham Valuation of TGI – August 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,255,467,959 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.43 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 -334.67% Fail
6. Moderate PEmg Ratio PEmg < 20 -10.74 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.46 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 1.43 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.27 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$2.36
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth -$34.15
MG Value based on 0% Growth -$20.02
Market Implied Growth Rate -9.62%
Current Price $25.30
% of Intrinsic Value N/A

Triumph 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  small size, 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 $4.45 in 2014 to an estimated $-2.36 for 2018.  This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Triumph Group Inc revealed the company was trading below its Graham Number of $37.96.  The company pays a dividend of $0.16 per share, for a yield of 0.6%  Its PEmg (price over earnings per share – ModernGraham) was -10.74, which was below the industry average of 32.41, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-35.66.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$35.66
Graham Number $37.96
PEmg -10.74
Current Ratio 1.43
PB Ratio 1.46
Current Dividend $0.16
Dividend Yield 0.63%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2017
Total Current Assets $1,663,799,000
Total Current Liabilities $1,161,607,000
Long-Term Debt $1,140,165,000
Total Assets $4,276,044,000
Intangible Assets $1,726,201,000
Total Liabilities $3,423,154,000
Shares Outstanding (Diluted Average) 49,341,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.75
Mar2017 -$0.87
Mar2016 -$21.29
Mar2015 $4.68
Mar2014 $3.91
Mar2013 $5.67
Mar2012 $5.41
Mar2011 $3.16
Mar2010 $2.04
Mar2009 $2.65
Mar2008 $1.92
Mar2007 $1.44
Mar2006 $1.08
Mar2005 $0.60
Mar2004 $0.62
Mar2003 $1.16
Mar2002 $1.56
Mar2001 $1.50
Mar2000 $1.40
Mar1999 $1.22
Mar1998 $1.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$2.36
Mar2017 -$4.13
Mar2016 -$3.95
Mar2015 $4.67
Mar2014 $4.45
Mar2013 $4.41
Mar2012 $3.53
Mar2011 $2.48
Mar2010 $2.03
Mar2009 $1.87
Mar2008 $1.36
Mar2007 $1.04
Mar2006 $0.90
Mar2005 $0.90
Mar2004 $1.12
Mar2003 $1.37
Mar2002 $1.43

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Raytheon Company Valuation – April 2017 $RTN
General Dynamics Corp Valuation – March 2017 $GD
TASER International Inc Valuation – Initial Coverage $TASR
Cubic Corporation Valuation – Initial Coverage $CUB
Northrop Grumman Corp Valuation – February 2017 $NOC
Rockwell Collins Inc Valuation – January 2017 $COL
Raytheon Company Valuation – August 2016 $RTN
Rockwell Collins Inc Valuation – August 2016 $COL
L-3 Communications Holdings Inc Valuation – July 2016 $LLL
Lockheed Martin Corporation Valuation – June 2016 $LMT

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.

Tredegar Corp Valuation – Initial Coverage $TG

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tredegar Corp (TG) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Tredegar Corporation is engaged in the manufacture of polyethylene plastic films, polyester films and aluminum extrusions. The Company’s segments are PE Films, Flexible Packaging Films and Aluminum Extrusions. The PE Films segment manufactures plastic films, elastics and laminate materials utilized in personal care materials, surface protection films and specialty and optical lighting applications. Its Surface Protection unit produces single- and multi-layer surface protection films sold under the UltraMask, ForceField and ForceField PEARL brand names. The Flexible Packaging Films segment produces polyethylene terephthalate-based films for use in packaging applications that have specialized properties, such as heat resistance, barrier protection and the ability to accept print graphics. The Aluminum Extrusions segment manufactures mill (unfinished), anodized (coated) and painted and fabricated aluminum extrusions for sale directly to fabricators and distributors.

TG Chart

TG data by YCharts

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ModernGraham Valuation of TG – July 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $535,650,556 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 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 -75.61% Fail
6. Moderate PEmg Ratio PEmg < 20 38.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.64 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 1.82 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 $0.41
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $5.95
MG Value based on 0% Growth $3.49
Market Implied Growth Rate 15.11%
Current Price $15.90
% of Intrinsic Value N/A

Tredegar Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the  small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. 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 $0.72 in 2013 to an estimated $0.41 for 2017.  This level of demonstrated earnings growth does not support the market’s implied estimate of 15.11% 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 Tredegar Corporation revealed the company was trading above its Graham Number of $11.66.  The company pays a dividend of $0.44 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 38.72, which was above the industry average of 23.13.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.36.

Tredegar 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) -$6.36
Graham Number $11.66
PEmg 38.72
Current Ratio 1.82
PB Ratio 1.64
Current Dividend $0.44
Dividend Yield 2.77%
Number of Consecutive Years of Dividend Growth 6

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2017
Total Current Assets $239,353,000
Total Current Liabilities $131,406,000
Long-Term Debt $193,000,000
Total Assets $767,667,000
Intangible Assets $191,564,000
Total Liabilities $448,864,000
Shares Outstanding (Diluted Average) 32,957,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.64
Dec2016 $0.75
Dec2015 -$0.99
Dec2014 $1.13
Dec2013 $0.67
Dec2012 $0.88
Dec2011 $0.77
Dec2010 $0.83
Dec2009 -$0.04
Dec2008 $0.85
Dec2007 $0.39
Dec2006 $0.98
Dec2005 $0.42
Dec2004 $0.76
Dec2003 -$0.69
Dec2002 -$0.07
Dec2001 $0.25
Dec2000 $2.86
Dec1999 $1.36
Dec1998 $1.78
Dec1997 $1.48

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.41
Dec2016 $0.36
Dec2015 $0.27
Dec2014 $0.89
Dec2013 $0.72
Dec2012 $0.72
Dec2011 $0.61
Dec2010 $0.55
Dec2009 $0.45
Dec2008 $0.69
Dec2007 $0.53
Dec2006 $0.49
Dec2005 $0.21
Dec2004 $0.28
Dec2003 $0.27
Dec2002 $0.92
Dec2001 $1.45

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

WestRock Co Valuation – August 2016 $WRK
Bemis Company Inc Valuation – July 2016 $BMS
Owens-Illinois Inc Valuation – June 2016 $OI
Bemis Co Inc Valuation – January 2016 Update $BMS
WestRock Co Valuation – January 2016 Update $WRK
International Paper Co Valuation – December 2015 Update $IP
Bemis Company Inc. Analysis – September 2015 Update $BMS
WestRock Co. Analysis – Initial Coverage $WRK
International Paper Company Analysis – September 2015 Update $IP
Ball Corporation Analysis – 2015 Update $BLL

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.

Target Corp Valuation – March 2017 $TGT

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Target Corp (TGT) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Target Corporation offers everyday essentials and merchandise to its customers. The Company sells a range of general merchandise and food through its store and digital channels. The Company’s general merchandise stores offer an edited food assortment, including perishables, dry grocery, dairy and frozen items. The Company’s digital channels include a range of general merchandise, including various items found in its stores, along with a complementary assortment, such as additional sizes and colors sold only online. The Company’s brands include Archer Farms, Market Pantry, Threshold, Simply Balanced, Merona, up & up, Boots & Barkley, Room Essentials, Wine Cube, Circo, Smith & Hawken, Xhilaration, Embark, Ava & Viv, Spritz and Sonia Kashuk. The Company’s exclusive brands include C9 by Champion, DENIZEN from Levi’s, Nate Berkus for Target, Cherokee, Fieldcrest, Oh Joy! for Target, Mossimo, Genuine Kids from OshKosh, Shaun White, Kid Made Modern and Hand Made Modern.

TGT Chart

TGT data by YCharts

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

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

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of TGT – March 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $29,998,053,727 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.94 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 36.12% Pass
6. Moderate PEmg Ratio PEmg < 20 15.97 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.84 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 0.94 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -15.36 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 $3.45
MG Growth Estimate -1.51%
MG Value $18.93
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $50.05
MG Value based on 0% Growth $29.34
Market Implied Growth Rate 3.74%
Current Price $55.14
% of Intrinsic Value 291.34%

Target 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 stability over the last ten years. 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 $3.84 in 2014 to an estimated $3.45 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 3.74% 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 Target Corporation revealed the company was trading above its Graham Number of $41.14. The company pays a dividend of $2.32 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 15.97, which was below the industry average of 50.09, 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 $-25.67.

Target 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) -$25.67
Graham Number $41.14
PEmg 15.97
Current Ratio 0.94
PB Ratio 2.84
Current Dividend $2.32
Dividend Yield 4.21%
Number of Consecutive Years of Dividend Growth 20

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 1/1/2017
Total Current Assets $11,990,000,000
Total Current Liabilities $12,708,000,000
Long-Term Debt $11,031,000,000
Total Assets $37,431,000,000
Intangible Assets $0
Total Liabilities $26,478,000,000
Shares Outstanding (Diluted Average) 564,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.82
Jan2017 $4.70
Jan2016 $5.31
Jan2015 -$2.56
Jan2014 $3.07
Jan2013 $4.52
Jan2012 $4.28
Jan2011 $4.00
Jan2010 $3.30
Jan2009 $2.86
Jan2008 $3.33
Jan2007 $3.21
Jan2006 $2.71
Jan2005 $3.51
Jan2004 $1.76
Jan2003 $1.78
Jan2002 $1.21
Jan2001 $1.38
Jan2000 $1.23
Jan1999 $0.99
Jan1998 $0.80

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.45
Jan2017 $3.18
Jan2016 $2.59
Jan2015 $1.71
Jan2014 $3.84
Jan2013 $4.08
Jan2012 $3.76
Jan2011 $3.44
Jan2010 $3.14
Jan2009 $3.08
Jan2008 $3.09
Jan2007 $2.85
Jan2006 $2.51
Jan2005 $2.25
Jan2004 $1.57
Jan2003 $1.42
Jan2002 $1.20

Recommended Reading:

Other ModernGraham posts about the company

Target Corporation Stock Analysis – 2015 Update $TGT
17 Companies in the Spotlight This Week – June 21, 2014
Target Corp Annual Valuation – 2014 $TGT
17 Companies in the Spotlight This Week – 3/22/14
Target Corporation (TGT) Quarterly Valuation – March 2014

Other ModernGraham posts about related companies

Foot Locker Inc Valuation – Initial Coverage $FL
Ulta Beauty Inc Valuation – Initial Coverage $ULTA
Kohl’s Corporation Valuation – March 2017 $KSS
Stamps.com Inc Valuation – Initial Coverage $STMP
Kirkland’s Inc Valuation – Initial Coverage $KIRK
Dollar Tree Inc Valuation – February 2017 $DLTR
Staples Inc Valuation – February 2017 $SPLS
Stein Mart Inc Valuation – Initial Coverage $SMRT
J C Penney Company Inc Valuation – Initial Coverage $JCP
TJX Companies Inc Valuation – December 2016 $TJX

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.

Tegna Inc Valuation – February 2017 $TGNA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Tegna Inc (TGNA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TEGNA Inc., formerly Gannett Co., Inc., includes a portfolio of media and digital businesses that provide content. The Company operates through two segments: TEGNA Media (Media Segment) and TEGNA Digital (Digital Segment). As of December 31, 2015, the Company’s media business included 46 television stations operating in 38 markets, offering television programing and digital content. Its Media segment includes core advertising, including local and national non-political advertising; political advertising during elections; retransmission that represents satellite and cable networks, and telecommunications companies to carry its television signals; digital that includes digital marketing services and advertising on the stations’ Websites, tablet and mobile products, and other services, such as production of programing from third parties and production of advertising material. Its Digital segment consists of business units, including Cars.com, CareerBuilder and G/O Digital.

TGNA Chart

TGNA data by YCharts

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ModernGraham Valuation of TGNA – February 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,532,465,461 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.39 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 -137.18% Fail
6. Moderate PEmg Ratio PEmg < 20 10.48 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.55 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 1.39 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 17.83 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 $2.46
MG Growth Estimate 15.00%
MG Value $94.58
Opinion Undervalued
MG Grade C
MG Value based on 3% Growth $35.62
MG Value based on 0% Growth $20.88
Market Implied Growth Rate 0.99%
Current Price $25.74
% of Intrinsic Value 27.21%

Tegna 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. 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 $-0.15 in 2012 to an estimated $2.46 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.99% 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 Tegna Inc revealed the company was trading above its Graham Number of $21.49. The company pays a dividend of $0.56 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.48, which was below the industry average of 39.27, 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 $-25.8.

Tegna 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) -$25.80
Graham Number $21.49
PEmg 10.48
Current Ratio 1.39
PB Ratio 2.55
Current Dividend $0.56
Dividend Yield 2.18%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $846,252,000
Total Current Liabilities $608,614,000
Long-Term Debt $4,237,894,000
Total Assets $8,674,677,000
Intangible Assets $7,123,121,000
Total Liabilities $6,473,182,000
Shares Outstanding (Diluted Average) 218,099,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.00
Dec2015 $2.00
Dec2014 $4.58
Dec2013 $1.66
Dec2012 $1.79
Dec2011 $1.89
Dec2010 $2.43
Dec2009 $1.51
Dec2008 -$29.11
Dec2007 $4.52
Dec2006 $4.90
Dec2005 $5.06
Dec2004 $4.92
Dec2003 $4.46
Dec2002 $4.31
Dec2001 $3.03
Dec2000 $6.41
Dec1999 $3.40
Dec1998 $3.50
Dec1997 $2.50
Dec1996 $3.33

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.46
Dec2015 $2.58
Dec2014 $2.74
Dec2013 $1.83
Dec2012 -$0.15
Dec2011 -$2.00
Dec2010 -$3.68
Dec2009 -$5.36
Dec2008 -$6.52
Dec2007 $4.78
Dec2006 $4.85
Dec2005 $4.67
Dec2004 $4.52
Dec2003 $4.32
Dec2002 $4.21
Dec2001 $4.03
Dec2000 $4.30

Recommended Reading:

Other ModernGraham posts about the company

Tegna Inc. Valuation – November 2015 Update $TGNA
10 Most Undervalued Companies for the Enterprising Investor – November 2015
10 Most Undervalued Companies for the Enterprising Investor – October 2015
10 Companies Benjamin Graham Would Invest In Today – October 2015
10 Low PE Stocks for the Enterprising Investor – August 2015

Other ModernGraham posts about related companies

News Corp Valuation – February 2017 $NWSA
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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.

Capstead Mortgage Corporation Valuation – Initial Coverage $CMO

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – January 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Capstead Mortgage Corporation (CMO) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Capstead Mortgage Corporation is a self-managed real estate investment trust (REIT). The Company invests in a leveraged portfolio of residential mortgage pass-through securities consisting exclusively of short-duration adjustable-rate mortgage (ARM) securities issued and guaranteed by government-sponsored enterprises (GSEs), either the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac) (together, the GSEs), or by an agency of the federal Government, the Government National Mortgage Association (Ginnie Mae). The Company finances its residential mortgage investments primarily by borrowing under repurchase arrangements with commercial banks and other financial institutions supported by its long-term investment capital. The repurchase arrangements entered into by the Company involve the sale and a simultaneous agreement to repurchase the transferred assets at a future date.

CMO Chart

CMO data by YCharts

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

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

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CMO – January 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,038,754,144 Fail
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -19.58% Fail
5. Moderate PEmg Ratio PEmg < 20 10.74 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.81 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $1.00
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $14.43
MG Value based on 0% Growth $8.46
Market Implied Growth Rate 1.12%
Current Price $10.69
% of Intrinsic Value N/A

Capstead Mortgage Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings growth over the last ten years. The Enterprising Investor has concerns regarding 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 $1.62 in 2012 to an estimated $1 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.12% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Capstead Mortgage Corporation revealed the company was trading below its Graham Number of $13.64. The company pays a dividend of $0.98 per share, for a yield of 9.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.74, which was below the industry average of 21.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Capstead Mortgage Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $13.64
PEmg 10.74
PB Ratio 0.81
Dividend Yield 9.17%
TTM Dividend $0.98
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $12,529,904,000
Total Assets $13,905,814,000
Intangible Assets $0
Total Liabilities $12,635,704,000
Shares Outstanding (Diluted Average) 95,866,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.74
Dec2015 $0.97
Dec2014 $1.33
Dec2013 $0.93
Dec2012 $1.50
Dec2011 $1.75
Dec2010 $1.52
Dec2009 $1.66
Dec2008 $1.93
Dec2007 $0.19
Dec2006 -$0.87
Dec2005 $1.96
Dec2004 $1.33
Dec2003 $2.60
Dec2002 $4.85
Dec2001 $5.68
Dec2000 -$6.59
Dec1999 $2.42
Dec1998 -$16.88
Dec1997 $9.40
Dec1996 $8.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.00
Dec2015 $1.18
Dec2014 $1.33
Dec2013 $1.37
Dec2012 $1.62
Dec2011 $1.59
Dec2010 $1.30
Dec2009 $1.12
Dec2008 $0.87
Dec2007 $0.57
Dec2006 $1.17
Dec2005 $2.55
Dec2004 $2.42
Dec2003 $2.58
Dec2002 $1.01
Dec2001 -$1.00
Dec2000 -$3.12

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Affiliated Managers Group Inc Valuation – January 2017 $AMG
Investment Technology Group Valuation – Initial Coverage $ITG
Calamos Asset Management Inc Valuation – Initial Coverage $CLMS
Corelogic Inc Valuation – Initial Coverage $CLGX
CI Financial Corp Valuation – Initial Coverage $TSE-CIX
Stifel Financial Corp Valuation – Initial Coverage $SF
SEI Investments Company Valuation – Initial Coverage $SEIC
INTL Fcstone Inc Valuation – Initial Coverage $INTL
SLM Corp Valuation – December 2016 $SLM
The Western Union Company Valuation – December 2016 $WU

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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