Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN

Company Profile (excerpt from Reuters): Chemtrade Logistics Income Fund (Chemtrade) provides industrial chemicals and services. Chemtrade operates in four business segments: Sulphur Products & Performance Chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), International (Intl) and Corporate (Corp). Its SPPC segment markets, removes and produces merchant, regenerated sulfuric acid, liquid sulfur dioxide, sodium hydrosulfite, elemental sulfur, hydrogen sulfide, and sodium bisulfite and other processing services. Its WSSC segment manufactures and markets a range of inorganic coagulants used in water treatment, including aluminum sulfate, aluminum chlorohydrate, polyaluminum chloride and ferric sulfate, and various specialty chemicals. The Company’s Intl segment provides removal and marketing services for elemental sulfur and sulfuric acid. Its Corp segment provides centralized services, such as treasury, finance, information technology, human resources, legal and risk management.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CHE.UN – 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 $1,335,163,418 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.47 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 -45.92% Fail
6. Moderate PEmg Ratio PEmg < 20 28.39 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.20 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 1.47 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 11.62 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 $0.53
MG Growth Estimate -1.79%
MG Value $2.59
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $7.64
MG Value based on 0% Growth $4.48
Market Implied Growth Rate 9.94%
Current Price $14.95
% of Intrinsic Value 576.79%

Chemtrade Logistics Income Fund 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 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 $0.6 in 2014 to an estimated $0.53 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.94% 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 Chemtrade Logistics Income Fund revealed the company was trading above its Graham Number of $12.05. The company pays a dividend of $1.2 per share, for a yield of 8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 28.39, which was below the industry average of 30.34, 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 $-15.93.

Chemtrade Logistics Income Fund 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) -$15.93
Graham Number $12.05
PEmg 28.39
Current Ratio 1.47
PB Ratio 1.20
Current Dividend $1.20
Dividend Yield 8.03%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $349,530,000
Total Current Liabilities $237,384,000
Long-Term Debt $1,303,484,000
Total Assets $2,976,182,000
Intangible Assets $1,269,955,000
Total Liabilities $1,824,792,000
Shares Outstanding (Diluted Average) 92,596,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.52
Dec2017 $1.53
Dec2016 $0.07
Dec2015 -$0.69
Dec2014 $0.35
Dec2013 $0.13
Dec2012 $0.94
Dec2011 $1.48
Dec2010 $0.92
Dec2009 $1.52
Dec2008 $1.21
Dec2007 $0.61
Dec2006 $0.11
Dec2005 $0.48
Dec2004 $0.71
Dec2003 $0.81
Dec2002 $0.91
Dec2001 $0.46

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.53
Dec2017 $0.45
Dec2016 -$0.01
Dec2015 $0.11
Dec2014 $0.60
Dec2013 $0.81
Dec2012 $1.18
Dec2011 $1.24
Dec2010 $1.04
Dec2009 $1.00
Dec2008 $0.70
Dec2007 $0.48
Dec2006 $0.48
Dec2005 $0.66
Dec2004 $0.70
Dec2003 $0.60
Dec2002 $0.43

Recommended Reading:

Other ModernGraham posts about the company

Chemtrade Logistics Income Fund Valuation – Initial Coverage $TSE:CHE.UN

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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.

Chemtrade Logistics Income Fund Valuation – Initial Coverage $TSE:CHE.UN

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 – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Chemtrade Logistics Income Fund (TSE:CHE.UN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Chemtrade Logistics Income Fund (Chemtrade) provides industrial chemicals and services. Chemtrade operates in four business segments: Sulphur Products & Performance Chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), International (Intl) and Corporate (Corp). Its SPPC segment markets, removes and produces merchant, regenerated sulfuric acid, liquid sulfur dioxide, sodium hydrosulfite, elemental sulfur, hydrogen sulfide, and sodium bisulfite and other processing services. Its WSSC segment manufactures and markets a range of inorganic coagulants used in water treatment, including aluminum sulfate, aluminum chlorohydrate, polyaluminum chloride and ferric sulfate, and various specialty chemicals. The Company’s Intl segment provides removal and marketing services for elemental sulfur and sulfuric acid. Its Corp segment provides centralized services, such as treasury, finance, information technology, human resources, legal and risk management.

CHE.UN Chart

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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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*Note – This is a Canadian company. The currency in use is the Canadian Dollar.

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CHE.UN – December 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $1,275,794,170 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.08 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 -94.91% Fail
6. Moderate PEmg Ratio PEmg < 20 134.26 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.61 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 1.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 45.47 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 $0.14
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $1.97
MG Value based on 0% Growth $1.16
Market Implied Growth Rate 62.88%
Current Price $18.26
% of Intrinsic Value N/A

Chemtrade Logistics Income Fund 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 current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.18 in 2012 to an estimated $0.14 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 62.88% 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 Chemtrade Logistics Income Fund revealed the company was trading above its Graham Number of $11.4. The company pays a dividend of $1.2 per share, for a yield of 6.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 134.26, which was above the industry average of 22.46. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.45.

Chemtrade Logistics Income Fund 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) -$16.45
Graham Number $11.40
PEmg 134.26
Current Ratio 1.08
PB Ratio 1.61
Current Dividend $1.20
Dividend Yield 6.57%
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 $254,093,000
Total Current Liabilities $236,146,000
Long-Term Debt $816,047,000
Total Assets $2,172,918,000
Intangible Assets $1,099,799,000
Total Liabilities $1,390,323,000
Shares Outstanding (Diluted Average) 69,088,000

Earnings Per Share History

Next Fiscal Year Estimate $0.51
Dec2015 -$0.69
Dec2014 $0.35
Dec2013 $0.13
Dec2012 $0.94
Dec2011 $1.48
Dec2010 $0.92
Dec2009 $1.52
Dec2008 $1.21
Dec2007 $0.61
Dec2006 $0.11
Dec2005 $0.48
Dec2004 $0.71
Dec2003 $0.81
Dec2002 $0.91
Dec2001 $0.46

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.14
Dec2015 $0.11
Dec2014 $0.60
Dec2013 $0.81
Dec2012 $1.18
Dec2011 $1.24
Dec2010 $1.04
Dec2009 $1.00
Dec2008 $0.70
Dec2007 $0.48
Dec2006 $0.48
Dec2005 $0.66
Dec2004 $0.70
Dec2003 $0.60
Dec2002 $0.43
Dec2001 $0.15

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

Air Products & Chemicals Inc Valuation – August 2016 $APD
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FMC Corporation Valuation – July 2016 $FMC
Eastman Chemical Company Valuation – July 2016 $EMN
Dow Chemical Co Valuation – July 2016 $DOW
Olin Corporation Valuation – June 2016 $OLN
LyondellBasell Industries Valuation – June 2016 $LYB
Praxair Inc Valuation – June 2016 $PX
Albemarle Corp Valuation – February 2016 $ALB
Airgas Inc Stock Valuation – February 2016 $ARG

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.

Linde PLC Valuation – April 2019 #LIN

Company Profile (excerpt from Reuters): Linde plc, incorporated on April 18, 2017, is an industrial gases and engineering company that operates through its subsidiaries. The Company provides atmospheric gases (oxygen, nitrogen, argon and rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases and acetylene). It designs, engineers and builds equipment that produces industrial gases primarily for internal use. It also offers gaseous medication and related medical products and devices for patients and medical staff. The Company serves the customers in various industries, including healthcare, petroleum refining, manufacturing, food, beverage carbonation, fiber-optics, steel making, aerospace, chemicals and water treatment.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LIN – 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 $100,601,281,539 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.86 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 26.09% Fail
6. Moderate PEmg Ratio PEmg < 20 32.37 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.99 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 0.86 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.92 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 $5.70
MG Growth Estimate 0.33%
MG Value $52.23
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $82.69
MG Value based on 0% Growth $48.47
Market Implied Growth Rate 11.94%
Current Price $184.62
% of Intrinsic Value 353.45%

Linde PLC does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings 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 $5.58 in 2014 to an estimated $5.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.94% 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 Linde PLC revealed the company was trading above its Graham Number of $58.47. The company pays a dividend of $3.15 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 32.37, which was above the industry average of 23.27. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-34.09.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$34.09
Graham Number $58.47
PEmg 32.37
Current Ratio 0.86
PB Ratio 7.99
Current Dividend $3.15
Dividend Yield 1.71%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,305,000,000
Total Current Liabilities $3,860,000,000
Long-Term Debt $6,615,000,000
Total Assets $19,979,000,000
Intangible Assets $3,714,000,000
Total Liabilities $13,244,000,000
Shares Outstanding (Diluted Average) 291,513,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.24
Dec2017 $4.32
Dec2016 $5.21
Dec2015 $5.35
Dec2014 $5.73
Dec2013 $5.87
Dec2012 $5.61
Dec2011 $5.45
Dec2010 $3.84
Dec2009 $4.01
Dec2008 $3.80
Dec2007 $3.62
Dec2006 $3.00
Dec2005 $2.20
Dec2004 $2.10
Dec2003 $1.77
Dec2002 $1.24
Dec2001 $1.31
Dec2000 $1.13
Dec1999 $1.33
Dec1998 $1.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.70
Dec2017 $5.05
Dec2016 $5.47
Dec2015 $5.60
Dec2014 $5.58
Dec2013 $5.32
Dec2012 $4.88
Dec2011 $4.39
Dec2010 $3.79
Dec2009 $3.62
Dec2008 $3.27
Dec2007 $2.84
Dec2006 $2.33
Dec2005 $1.90
Dec2004 $1.67
Dec2003 $1.42
Dec2002 $1.25

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

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

Disclaimer:

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

PPG Industries Inc Valuation – February 2019 $PPG

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

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PPG – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $26,373,508,919 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.36 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 102.28% Pass
6. Moderate PEmg Ratio PEmg < 20 20.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.66 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.36 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.75 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.51
MG Growth Estimate -2.43%
MG Value $20.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $79.90
MG Value based on 0% Growth $46.84
Market Implied Growth Rate 5.90%
Current Price $111.80
% of Intrinsic Value 558.89%

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $6.58 in 2015 to an estimated $5.51 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.9% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into PPG Industries, Inc. revealed the company was trading above its Graham Number of $51.51. The company pays a dividend of $1.86 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 20.29, which was below the industry average of 22.8, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.2.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$22.20
Graham Number $51.51
PEmg 20.29
Current Ratio 1.36
PB Ratio 5.66
Current Dividend $1.86
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $5,961,000,000
Total Current Liabilities $4,373,000,000
Long-Term Debt $4,365,000,000
Total Assets $16,015,000,000
Intangible Assets $6,042,000,000
Total Liabilities $11,283,000,000
Shares Outstanding (Diluted Average) 239,700,000

Earnings Per Share History

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

Earnings Per Share – ModernGraham History

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

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

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

Disclaimer:

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

Celanese Corporation Valuation – February 2019 $CE

Company Profile (excerpt from Reuters): Celanese Corporation (Celanese), incorporated on November 3, 2004, is a technology and specialty materials company. The Company’s segments include Advanced Engineered Materials, Consumer Specialties, Industrial Specialties, Acetyl Intermediates and Other Activities. The Company’s business involves processing chemical raw materials, such as methanol, carbon monoxide, ethylene and natural products, including wood pulp, into chemicals, thermoplastic polymers and other chemical-based products. Its product portfolio serves a range of end-use applications, including paints and coatings, textiles, automotive applications, consumer and medical applications, performance industrial applications, filtration applications, paper and packaging, chemical additives, construction, consumer and industrial adhesives, and food and beverage applications. The Company operates in North America, Europe and Asia. As of December 31, 2016, the Company had 30 global production facilities, and an additional eight affiliate production facilities.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CE – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $13,125,672,172 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.62 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 234.46% Pass
6. Moderate PEmg Ratio PEmg < 20 12.58 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.84 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 1.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.71 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $7.80
MG Growth Estimate 15.00%
MG Value $300.35
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $113.12
MG Value based on 0% Growth $66.31
Market Implied Growth Rate 2.04%
Current Price $98.13
% of Intrinsic Value 32.67%

Celanese 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 is only concerned with the level of debt relative to the net 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 $3.61 in 2015 to an estimated $7.8 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.04% 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 Celanese Corporation revealed the company was trading above its Graham Number of $69.96. The company pays a dividend of $2.08 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 12.58, which was below the industry average of 22.8, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-23.16.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$23.16
Graham Number $69.96
PEmg 12.58
Current Ratio 1.62
PB Ratio 3.84
Current Dividend $2.08
Dividend Yield 2.12%
Number of Consecutive Years of Dividend Growth 9

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $2,874,000,000
Total Current Liabilities $1,779,000,000
Long-Term Debt $2,970,000,000
Total Assets $9,313,000,000
Intangible Assets $1,367,000,000
Total Liabilities $5,934,000,000
Shares Outstanding (Diluted Average) 132,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $9.75
Dec2018 $8.91
Dec2017 $6.09
Dec2016 $6.18
Dec2015 $2.00
Dec2014 $4.00
Dec2013 $6.91
Dec2012 $2.33
Dec2011 $2.69
Dec2010 $2.38
Dec2009 $3.17
Dec2008 $1.73
Dec2007 $2.49
Dec2006 $2.36
Dec2005 $1.67
Dec2004 -$2.01
Dec2003 $2.57
Dec2002 $2.44
Dec2001 -$7.25

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.80
Dec2018 $6.36
Dec2017 $5.07
Dec2016 $4.47
Dec2015 $3.61
Dec2014 $4.16
Dec2013 $3.99
Dec2012 $2.51
Dec2011 $2.56
Dec2010 $2.47
Dec2009 $2.44
Dec2008 $1.80
Dec2007 $1.70
Dec2006 $1.34
Dec2005 $0.38
Dec2004 -$0.46
Dec2003 $0.06

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

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

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.

Ecolab Inc Valuation – January 2019 $ECL

Company Profile (excerpt from Reuters): Ecolab Inc., incorporated on February 18, 1924, provides water, hygiene and energy technologies and services. The Company’s cleaning and sanitizing programs and products, pest elimination services and equipment maintenance and repair services support customers in the foodservice, food and beverage processing, hospitality, healthcare, government and education, retail, textile care and commercial facilities management sectors in over 170 countries. The Company’s segments include Global Industrial, Global Institutional, Global Energy, Other and Corporate. Its products and technologies are also used in water treatment, pollution control, energy conservation, oil production and refining, steelmaking, papermaking, mining, and other industrial processes.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ECL – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $43,316,505,468 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 143.03% Pass
6. Moderate PEmg Ratio PEmg < 20 32.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.50 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 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.14 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 $4.57
MG Growth Estimate 7.67%
MG Value $109.08
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $66.32
MG Value based on 0% Growth $38.88
Market Implied Growth Rate 12.11%
Current Price $149.70
% of Intrinsic Value 137.24%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.03 in 2014 to an estimated $4.57 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.11% 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 Ecolab Inc. revealed the company was trading above its Graham Number of $54.54. The company pays a dividend of $1.52 per share, for a yield of 1% Its PEmg (price over earnings per share – ModernGraham) was 32.73, which was above the industry average of 20.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-24.39.

Ecolab 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) -$24.39
Graham Number $54.54
PEmg 32.73
Current Ratio 1.34
PB Ratio 5.50
Current Dividend $1.52
Dividend Yield 1.02%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $4,822,300,000
Total Current Liabilities $3,589,800,000
Long-Term Debt $6,334,800,000
Total Assets $19,962,600,000
Intangible Assets $10,898,800,000
Total Liabilities $11,979,600,000
Shares Outstanding (Diluted Average) 293,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.02
Dec2017 $5.13
Dec2016 $4.14
Dec2015 $3.32
Dec2014 $3.93
Dec2013 $3.16
Dec2012 $2.35
Dec2011 $1.91
Dec2010 $2.23
Dec2009 $1.74
Dec2008 $1.80
Dec2007 $1.70
Dec2006 $1.43
Dec2005 $1.23
Dec2004 $1.09
Dec2003 $1.06
Dec2002 $0.75
Dec2001 $0.72
Dec2000 $0.78
Dec1999 $0.65
Dec1998 $0.72

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.57
Dec2017 $4.21
Dec2016 $3.63
Dec2015 $3.23
Dec2014 $3.03
Dec2013 $2.48
Dec2012 $2.09
Dec2011 $1.93
Dec2010 $1.89
Dec2009 $1.67
Dec2008 $1.58
Dec2007 $1.41
Dec2006 $1.21
Dec2005 $1.06
Dec2004 $0.94
Dec2003 $0.84
Dec2002 $0.73

Recommended Reading:

Other ModernGraham posts about the company

Ecolab Inc Valuation – March 2018 $ECL
Ecolab Inc Valuation – June 2016 $ECL
40 Companies in the Spotlight This Week – 2/21/15
ECOLAB Inc. Annual Valuation – 2015 $ECL
14 Companies in the Spotlight This Week – 2/22/14

Other ModernGraham posts about related companies

FMC Corp Valuation – January 2019 $FMC
Air Products & Chemicals Inc Valuation – January 2019 $APD
Albemarle Corp Valuation – January 2019 $ALB
LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG
Innospec Inc Valuation – April 2018 $IOSP
Innophos Holdings Inc Valuation – March 2018 $IPHS

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.

FMC Corp Valuation – January 2019 $FMC

Company Profile (excerpt from Reuters): FMC Corporation, incorporated on August 10, 1928, is a diversified chemical company serving agricultural, consumer and industrial markets. The Company operates in three business segments: FMC Agricultural Solutions, FMC Health and Nutrition, and FMC Lithium. As of December 31, 2016, the FMC Agricultural Solutions segment developed, marketed and sold three classes of crop protection chemicals: insecticides, herbicides and fungicides. The FMC Health and Nutrition segment focuses on nutritional ingredients, health excipients and functional health ingredients. The Company’s FMC Lithium segment manufactures lithium for use in a range of lithium products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FMC – January 2019

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

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,651,447,594 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.54 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 95.65% Pass
6. Moderate PEmg Ratio PEmg < 20 21.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.50 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 1.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.13 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 $3.62
MG Growth Estimate 8.01%
MG Value $88.66
Opinion Fairly Valued
MG Grade C
MG Value based on 3% Growth $52.44
MG Value based on 0% Growth $30.74
Market Implied Growth Rate 6.69%
Current Price $79.10
% of Intrinsic Value 89.22%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.36 in 2014 to an estimated $3.62 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.69% 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 within a margin of safety relative to the price.

At the time of valuation, further research into FMC Corp revealed the company was trading above its Graham Number of $46.43. The company pays a dividend of $0.66 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 21.87, which was above the industry average of 20.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-20.81.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$20.81
Graham Number $46.43
PEmg 21.87
Current Ratio 1.54
PB Ratio 3.50
Current Dividend $0.66
Dividend Yield 0.83%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $3,491,200,000
Total Current Liabilities $2,271,500,000
Long-Term Debt $2,593,300,000
Total Assets $9,406,900,000
Intangible Assets $4,206,300,000
Total Liabilities $6,328,600,000
Shares Outstanding (Diluted Average) 136,357,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.80
Dec2017 $3.99
Dec2016 $1.56
Dec2015 $3.66
Dec2014 $2.29
Dec2013 $2.16
Dec2012 $3.00
Dec2011 $2.55
Dec2010 $1.18
Dec2009 $1.56
Dec2008 $2.01
Dec2007 $0.86
Dec2006 $0.42
Dec2005 $0.36
Dec2004 $0.54
Dec2003 $0.19
Dec2002 $0.48
Dec2001 -$2.72
Dec2000 $0.88
Dec1999 $0.82
Dec1998 $0.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.62
Dec2017 $2.93
Dec2016 $2.44
Dec2015 $2.83
Dec2014 $2.36
Dec2013 $2.29
Dec2012 $2.26
Dec2011 $1.80
Dec2010 $1.35
Dec2009 $1.31
Dec2008 $1.07
Dec2007 $0.55
Dec2006 $0.40
Dec2005 $0.18
Dec2004 $0.02
Dec2003 -$0.18
Dec2002 -$0.25

Recommended Reading:

Other ModernGraham posts about the company

5 Great Stocks This Week – 3/12/18
FMC Corp Valuation – March 2018 $FMC
9 Best Stocks For Value Investors This Week – 7/8/16
FMC Corporation Valuation – July 2016 $FMC
10 Most Undervalued Companies for the Defensive Investor – May 2016

Other ModernGraham posts about related companies

LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG
Innospec Inc Valuation – April 2018 $IOSP
Innophos Holdings Inc Valuation – March 2018 $IPHS
Olin Corp Valuation – March 2018 $OLN
A Schulman Inc Valuation – March 2018 $SHLM
FMC Corp Valuation – March 2018 $FMC

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.

Air Products & Chemicals Inc Valuation – January 2019 $APD

Company Profile (excerpt from Reuters): Air Products and Chemicals, Inc., incorporated on May 25, 1961, is an industrial gases company. The Company’s Industrial Gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. The Company is also a supplier of liquefied natural gas process technology and equipment. The Company operates through five segments: Industrial Gases-Americas, Industrial Gases-Europe, Middle East, and Africa (EMEA), Industrial Gases-Asia, Industrial Gases-Global, and Corporate and other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APD – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $34,708,500,605 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.17 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 80.14% Pass
6. Moderate PEmg Ratio PEmg < 20 19.76 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.13 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 2.17 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.22 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 $8.00
MG Growth Estimate 7.96%
MG Value $195.30
Opinion Fairly Valued
MG Grade A-
MG Value based on 3% Growth $115.98
MG Value based on 0% Growth $67.99
Market Implied Growth Rate 5.63%
Current Price $158.09
% of Intrinsic Value 80.95%

Air Products & Chemicals, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the high PB ratio. The Enterprising Investor is only concerned with the level of debt relative to the net 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 Fairly Valued after growing its EPSmg (normalized earnings) from $5.23 in 2015 to an estimated $8 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 5.63% 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 Air Products & Chemicals, Inc. revealed the company was trading above its Graham Number of $94.7. The company pays a dividend of $4.25 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.76, which was below the industry average of 20.47, 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 $-13.21.

Air Products & Chemicals, Inc. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.21
Graham Number $94.70
PEmg 19.76
Current Ratio 2.17
PB Ratio 3.13
Current Dividend $4.25
Dividend Yield 2.69%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $5,082,200,000
Total Current Liabilities $2,338,300,000
Long-Term Debt $3,351,700,000
Total Assets $19,178,300,000
Intangible Assets $1,227,400,000
Total Liabilities $8,002,000,000
Shares Outstanding (Diluted Average) 221,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.05
Sep2018 $6.78
Sep2017 $13.65
Sep2016 $2.89
Sep2015 $5.88
Sep2014 $4.61
Sep2013 $4.68
Sep2012 $5.44
Sep2011 $5.63
Sep2010 $4.74
Sep2009 $2.96
Sep2008 $4.15
Sep2007 $4.64
Sep2006 $3.18
Sep2005 $0.03
Sep2004 $0.03
Sep2003 $1.78
Sep2002 $2.36
Sep2001 $2.12
Sep2000 $0.57
Sep1999 $2.09

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.00
Sep2018 $7.57
Sep2017 $7.42
Sep2016 $4.44
Sep2015 $5.23
Sep2014 $4.94
Sep2013 $4.97
Sep2012 $4.93
Sep2011 $4.60
Sep2010 $4.03
Sep2009 $3.45
Sep2008 $3.26
Sep2007 $2.52
Sep2006 $1.47
Sep2005 $0.83
Sep2004 $1.28
Sep2003 $1.86

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
Best Dividend Paying Stocks for Dividend Growth Investors – April 2018
Air Products & Chemicals Inc Valuation – March 2018 $APD
Air Products & Chemicals Inc Valuation – January 2017 $APD

Other ModernGraham posts about related companies

LyondellBasell Industries NV Valuation – January 2019 $LYB
Eastman Chemical Co Valuation – January 2019 $EMN
DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG
Innospec Inc Valuation – April 2018 $IOSP
Innophos Holdings Inc Valuation – March 2018 $IPHS
Olin Corp Valuation – March 2018 $OLN
A Schulman Inc Valuation – March 2018 $SHLM
FMC Corp Valuation – March 2018 $FMC

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.

Albemarle Corp Valuation – January 2019 $ALB

Company Profile (excerpt from Reuters): Albemarle Corporation, incorporated on November 24, 1993, is a global developer, manufacturer and marketer of highly-engineered specialty chemicals. The Company operates through three segments: Lithium and Advanced Materials, Bromine Specialties and Refining Solutions. Lithium and Advanced Materials segment consists of two product categories: Lithium and Performance Catalyst Solutions. The bromine and bromine-based business includes products used in fire safety solutions and other specialty chemicals applications. The Company serves various end markets, including petroleum refining, consumer electronics, energy storage, construction, automotive, lubricants, pharmaceuticals, crop protection, food safety and custom chemistry services.

Downloadable PDF version of this valuation:

ModernGraham Valuation of ALB – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,212,910,174 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.83 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 31.61% Fail
6. Moderate PEmg Ratio PEmg < 20 19.55 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 1.83 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.51 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 $3.96
MG Growth Estimate 2.64%
MG Value $54.54
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $57.36
MG Value based on 0% Growth $33.63
Market Implied Growth Rate 5.52%
Current Price $77.33
% of Intrinsic Value 141.79%

Albemarle Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years. 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 $3.36 in 2014 to an estimated $3.96 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% 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 Albemarle Corporation revealed the company was trading above its Graham Number of $69.88. The company pays a dividend of $1.28 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 19.55, which was below the industry average of 20.47, 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 $-16.08.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.08
Graham Number $69.88
PEmg 19.55
Current Ratio 1.83
PB Ratio 2.27
Current Dividend $1.28
Dividend Yield 1.66%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,059,577,000
Total Current Liabilities $1,127,009,000
Long-Term Debt $1,411,605,000
Total Assets $7,487,195,000
Intangible Assets $1,988,907,000
Total Liabilities $3,800,918,000
Shares Outstanding (Diluted Average) 108,302,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.53
Dec2017 $0.49
Dec2016 $5.68
Dec2015 $3.00
Dec2014 $1.69
Dec2013 $4.90
Dec2012 $3.47
Dec2011 $4.28
Dec2010 $3.43
Dec2009 $1.94
Dec2008 $2.09
Dec2007 $2.36
Dec2006 $1.47
Dec2005 $1.20
Dec2004 $0.65
Dec2003 $0.86
Dec2002 $0.85
Dec2001 $0.74
Dec2000 $1.09
Dec1999 $0.94
Dec1998 $0.82

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.96
Dec2017 $2.83
Dec2016 $3.92
Dec2015 $3.18
Dec2014 $3.36
Dec2013 $4.00
Dec2012 $3.38
Dec2011 $3.17
Dec2010 $2.49
Dec2009 $1.95
Dec2008 $1.82
Dec2007 $1.56
Dec2006 $1.11
Dec2005 $0.90
Dec2004 $0.78
Dec2003 $0.87
Dec2002 $0.87

Recommended Reading:

Other ModernGraham posts about the company

Albemarle Corp Valuation – March 2018 $ALB
Albemarle Corp Valuation – March 2017 $ALB
Albemarle Corporation Valuation – August 2016 $ALB
Albemarle Corp Valuation – February 2016 $ALB
Albemarle Corporation Valuation – November 2015 Update $ALB

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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.

LyondellBasell Industries NV Valuation – January 2019 $LYB

Company Profile (excerpt from Reuters): LyondellBasell Industries N.V., incorporated on October 15, 2009, is a plastics, chemicals and refining company. The Company operates through its Advanced Polymer Solutions segment. It produces olefins and polyethylene (PE) and polypropylene (PP), high density polyethylene (HDPE), low density polyethylene (LDPE) and linear low density polyethylene (LLDPE). It produces PP homopolymers, PP impact copolymers and PP random copolymers. PP compounds are produced from blends of polyolefins and additives and are sold to the automotive and home appliances industries. Its engineered composites are lightweight, materials that are used in infrastructure, aerospace and automotive applications such as headlamps. It also manufactures powders, which is a specialty particle materials used in coatings, rotational molding, toll compounding and other technical applications. Masterbatches is a coloring and additive materials used in the production of paper, paint and plastic goods around the world.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LYB – January 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $31,908,835,157 Pass
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 Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -100.47% Fail
6. Moderate PEmg Ratio PEmg < 20 7.68 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.93 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 1.45 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 $10.84
MG Growth Estimate 11.51%
MG Value $341.49
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $157.11
MG Value based on 0% Growth $92.10
Market Implied Growth Rate -0.41%
Current Price $83.17
% of Intrinsic Value 24.36%

LyondellBasell Industries NV is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.13 in 2014 to an estimated $10.84 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.41% 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 above the price.

At the time of valuation, further research into LyondellBasell Industries NV revealed the company was trading above its Graham Number of $77.64. The company pays a dividend of $3.55 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 7.68, which was below the industry average of 20.47, 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 $-16.01.

LyondellBasell Industries NV performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.01
Graham Number $77.64
PEmg 7.68
Current Ratio 1.82
PB Ratio 2.93
Current Dividend $3.55
Dividend Yield 4.27%
Number of Consecutive Years of Dividend Growth 7

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $11,383,000,000
Total Current Liabilities $6,242,000,000
Long-Term Debt $7,471,000,000
Total Assets $28,696,000,000
Intangible Assets $2,801,000,000
Total Liabilities $17,627,000,000
Shares Outstanding (Diluted Average) 390,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $11.81
Dec2017 $12.23
Dec2016 $9.13
Dec2015 $9.59
Dec2014 $7.99
Dec2013 $6.75
Dec2012 $4.92
Dec2011 $3.74
Dec2010 $2.78
Dec2009 -$7,105.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $10.84
Dec2017 $9.94
Dec2016 $8.43
Dec2015 $7.58
Dec2014 $6.13
Dec2013 -$469.00
Dec2012 -$944.17
Dec2011 -$1,419.05
Dec2010 -$1,893.79
Dec2009 -$2,368.40

Recommended Reading:

Other ModernGraham posts about the company

10 Best Dividend Paying Stocks for the Enterprising Investor – September 2018
10 Best Dividend Paying Stocks for the Enterprising Investor – May 2018
10 Low PE Stock Picks for the Enterprising Investor – May 2018
10 Undervalued Stocks for the Enterprising Investor – April 2018
5 Great Stocks This Week – 3/5/18

Other ModernGraham posts about related companies

DowDuPont Inc Valuation – November 2018 $DWDP
Chemtrade Logistics Income Fund Valuation – July 2018 $TSE:CHE.UN
PPG Industries Inc Valuation – May 2018 $PPG
Innospec Inc Valuation – April 2018 $IOSP
Innophos Holdings Inc Valuation – March 2018 $IPHS
Olin Corp Valuation – March 2018 $OLN
A Schulman Inc Valuation – March 2018 $SHLM
FMC Corp Valuation – March 2018 $FMC
Compass Minerals International Inc Valuation – March 2018 $CMP
Ashland Global Holdings Inc Valuation – March 2018 $ASH

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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