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Inter Parfums Inc Valuation – July 2018 $IPAR

Company Profile (excerpt from Reuters): Inter Parfums, Inc., incorporated on May 6, 1985, operates in the fragrance business. The Company manufactures, markets and distributes an array of fragrance and fragrance related products. The Company operates through two segments: European based operations and United States based operations. Its prestige fragrance products are produced and marketed by both its United States operations and its European operations. The Company sells its products to department stores, perfumeries, specialty stores, and domestic and international wholesalers and distributors. The Company operates in North America, the Europe, Central and South America, the Middle East, Asia and Other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPAR – 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 $1,887,816,013 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.36 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 50.00% Pass
6. Moderate PEmg Ratio PEmg < 20 46.14 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.12 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.36 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.08 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.29
MG Growth Estimate -3.63%
MG Value $11.66
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $18.74
MG Value based on 0% Growth $10.99
Market Implied Growth Rate 18.82%
Current Price $59.65
% of Intrinsic Value 511.70%

Inter Parfums, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. 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 seeing its EPSmg (normalized earnings) decline from $1.71 in 2014 to an estimated $1.29 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.82% 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 Inter Parfums, Inc. revealed the company was trading above its Graham Number of $22.28. The company pays a dividend of $0.72 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 46.14, which was below the industry average of 72.01, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $11.66.

Inter Parfums, 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) $11.66
Graham Number $22.28
PEmg 46.14
Current Ratio 3.36
PB Ratio 3.12
Current Dividend $0.72
Dividend Yield 1.21%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $571,205,000
Total Current Liabilities $169,938,000
Long-Term Debt $31,011,000
Total Assets $805,106,000
Intangible Assets $205,489,000
Total Liabilities $204,830,000
Shares Outstanding (Diluted Average) 31,429,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.59
Dec2017 $1.33
Dec2016 $1.07
Dec2015 $0.98
Dec2014 $0.95
Dec2013 $1.27
Dec2012 $4.26
Dec2011 $1.05
Dec2010 $0.87
Dec2009 $0.74
Dec2008 $0.77
Dec2007 $0.76
Dec2006 $0.57
Dec2005 $0.50
Dec2004 $0.51
Dec2003 $0.46
Dec2002 $0.31
Dec2001 $0.27
Dec2000 $0.23
Dec1999 $0.18
Dec1998 $0.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.29
Dec2017 $1.14
Dec2016 $1.26
Dec2015 $1.47
Dec2014 $1.71
Dec2013 $1.93
Dec2012 $2.02
Dec2011 $0.88
Dec2010 $0.78
Dec2009 $0.71
Dec2008 $0.67
Dec2007 $0.61
Dec2006 $0.51
Dec2005 $0.46
Dec2004 $0.41
Dec2003 $0.33
Dec2002 $0.26

Recommended Reading:

Other ModernGraham posts about the company

Inter Parfums Inc Valuation – Initial Coverage $IPAR

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Service Corp International Valuation – July 2018 $SCI
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Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
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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.

Service Corp International Valuation – July 2018 $SCI

Company Profile (excerpt from Reuters): Service Corporation International, incorporated on July 6, 1962, is a provider of deathcare products and services, with a network of funeral service locations and cemeteries. The Company’s segments include Funeral, Cemetery and Corporate. It conducts both funeral and cemetery operations in the United States and Canada. As December 31, 2016, it operated 1,502 funeral service locations and 470 cemeteries, including 281 funeral service/cemetery combination locations, which are geographically diversified across 45 states, eight Canadian provinces, the District of Columbia, and Puerto Rico. It offers various brands, such as Dignity Memorial, Dignity Planning, National Cremation Society, Advantage Funeral and Cremation Services, Funeraria del Angel, Making Everlasting Memories, Neptune Society and Trident Society. Its funeral service and cemetery operations consist of funeral service locations, cemeteries, funeral service/cemetery combination locations, crematoria, and related businesses. It sells cemetery property, and funeral and cemetery merchandise and services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SCI – 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 $6,890,062,632 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.59 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 246.88% Pass
6. Moderate PEmg Ratio PEmg < 20 21.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.72 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 0.59 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -13.77 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.75
MG Growth Estimate 15.00%
MG Value $67.25
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $25.33
MG Value based on 0% Growth $14.85
Market Implied Growth Rate 6.51%
Current Price $37.58
% of Intrinsic Value 55.88%

Service Corporation International 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 Undervalued after growing its EPSmg (normalized earnings) from $0.71 in 2014 to an estimated $1.75 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.51% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Service Corporation International revealed the company was trading above its Graham Number of $17.54. The company pays a dividend of $0.56 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 21.52, which was below the industry average of 72.01, 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 $-55.63.

Service Corporation International receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$55.63
Graham Number $17.54
PEmg 21.52
Current Ratio 0.59
PB Ratio 4.72
Current Dividend $0.56
Dividend Yield 1.49%
Number of Consecutive Years of Dividend Growth 4

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 $351,005,000
Total Current Liabilities $591,805,000
Long-Term Debt $3,316,695,000
Total Assets $12,429,008,000
Intangible Assets $1,819,134,000
Total Liabilities $10,917,159,000
Shares Outstanding (Diluted Average) 189,923,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.81
Dec2017 $2.84
Dec2016 $0.90
Dec2015 $1.14
Dec2014 $0.81
Dec2013 $0.68
Dec2012 $0.70
Dec2011 $0.61
Dec2010 $0.50
Dec2009 $0.49
Dec2008 $0.37
Dec2007 $0.85
Dec2006 $0.19
Dec2005 -$0.42
Dec2004 $0.34
Dec2003 $0.28
Dec2002 -$0.80
Dec2001 -$2.18
Dec2000 -$4.75
Dec1999 -$0.12
Dec1998 $1.31

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.75
Dec2017 $1.57
Dec2016 $0.90
Dec2015 $0.87
Dec2014 $0.71
Dec2013 $0.63
Dec2012 $0.59
Dec2011 $0.54
Dec2010 $0.50
Dec2009 $0.43
Dec2008 $0.35
Dec2007 $0.31
Dec2006 $0.00
Dec2005 -$0.25
Dec2004 -$0.58
Dec2003 -$1.20
Dec2002 -$1.73

Recommended Reading:

Other ModernGraham posts about the company

Service Corporation Intl Valuation – Initial Coverage $SCI

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Avon Products Inc Valuation – June 2018 $AVP
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Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL

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.

Avon Products Inc Valuation – June 2018 $AVP

Company Profile (excerpt from Reuters): Avon Products, Inc., incorporated on January 27, 1916, is a manufacturer and marketer of beauty and related products. The Company’s segments include Europe, Middle East & Africa; South Latin America; North Latin America, and Asia Pacific. Its product categories are Beauty, and Fashion and Home. Beauty consists of skincare (which includes personal care), fragrance and color (cosmetics). Fashion and Home consists of fashion jewelry, watches, apparel, footwear, accessories, gift and decorative products, housewares, entertainment and leisure products, children’s products and nutritional products. The Company’s products include Anew Ultimate Supreme Advanced Performance Creme, Anew Vitale Visible Perfection Blurring Treatment, Big & Multiplied Volume Mascara, Avon True Perfectly Matte Lipstick, Avon Life for Him and for Her Fragrances, Far Away Infinity Fragrance and Avon Nutra Effects body collection with Active Seed Complex.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AVP – 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 $702,271,701 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.23 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -105.55% Fail
6. Moderate PEmg Ratio PEmg < 20 -3.68 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -2.62 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 1.23 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.09 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.44
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$6.39
MG Value based on 0% Growth -$3.75
Market Implied Growth Rate -6.09%
Current Price $1.62
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.1 in 2014 to an estimated $-0.44 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 Avon Products, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -3.68, which was below the industry average of 68.19, 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 $-4.

Avon Products, 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) -$4.00
Graham Number $0.00
PEmg -3.68
Current Ratio 1.23
PB Ratio -2.62
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $2,149,500,000
Total Current Liabilities $1,750,800,000
Long-Term Debt $1,629,600,000
Total Assets $3,640,400,000
Intangible Assets $186,700,000
Total Liabilities $3,913,200,000
Shares Outstanding (Diluted Average) 440,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.07
Dec2017 $0.00
Dec2016 -$0.29
Dec2015 -$2.60
Dec2014 -$0.88
Dec2013 -$0.13
Dec2012 -$0.10
Dec2011 $1.18
Dec2010 $1.39
Dec2009 $1.45
Dec2008 $2.03
Dec2007 $1.21
Dec2006 $1.06
Dec2005 $1.81
Dec2004 $1.77
Dec2003 $1.39
Dec2002 $1.11
Dec2001 $0.93
Dec2000 $1.00
Dec1999 $0.55
Dec1998 $0.51

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.44
Dec2017 -$0.72
Dec2016 -$0.99
Dec2015 -$1.06
Dec2014 -$0.10
Dec2013 $0.45
Dec2012 $0.89
Dec2011 $1.41
Dec2010 $1.49
Dec2009 $1.53
Dec2008 $1.57
Dec2007 $1.38
Dec2006 $1.45
Dec2005 $1.56
Dec2004 $1.37
Dec2003 $1.11
Dec2002 $0.92

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International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
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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.

Colgate-Palmolive Co Valuation – June 2018 $CL

Company Profile (excerpt from Reuters): Colgate-Palmolive Company (Colgate), incorporated on July 25, 1923, is a consumer products company. The Company operates in two product segments: Oral, Personal and Home Care, and Pet Nutrition. The Oral, Personal and Home Care product segment is operated through five geographic segments, which include North America, Latin America, Europe, Asia Pacific and Africa/Eurasia. It is engaged in oral care business with toothpaste and manual toothbrush brands around the world. The Company’s oral care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate Max Fresh, Colgate Maximum Cavity Protection plus Sugar Acid Neutralizer, Colgate Optic White and Colgate Luminous White toothpastes, Colgate 360 degree and Colgate Slim Soft manual toothbrushes and Colgate Optic White, Colgate Total and Colgate Plax mouthwashes. Colgate’s Oral Care business also includes pharmaceutical products for dentists and other oral health professionals.

CL Chart

CL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CL – 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 $56,378,091,813 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.08 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 18.36% Fail
6. Moderate PEmg Ratio PEmg < 20 26.10 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 563.05 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 1.08 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 20.99 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 $2.48
MG Growth Estimate 2.45%
MG Value $33.18
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $35.90
MG Value based on 0% Growth $21.05
Market Implied Growth Rate 8.80%
Current Price $64.63
% of Intrinsic Value 194.79%

Colgate-Palmolive Company 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 $2.13 in 2014 to an estimated $2.48 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.8% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Colgate-Palmolive Company revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.59 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.1, which was below the industry average of 68.19, 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 $-9.95.

Colgate-Palmolive Company receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.95
Graham Number $0.00
PEmg 26.10
Current Ratio 1.08
PB Ratio 563.05
Current Dividend $1.59
Dividend Yield 2.46%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $4,292,000,000
Total Current Liabilities $3,980,000,000
Long-Term Debt $6,550,000,000
Total Assets $13,144,000,000
Intangible Assets $4,354,000,000
Total Liabilities $13,043,000,000
Shares Outstanding (Diluted Average) 879,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.06
Dec2017 $2.28
Dec2016 $2.72
Dec2015 $1.52
Dec2014 $1.52
Dec2013 $2.38
Dec2012 $2.57
Dec2011 $2.47
Dec2010 $2.16
Dec2009 $2.19
Dec2008 $1.83
Dec2007 $1.60
Dec2006 $1.23
Dec2005 $1.22
Dec2004 $1.17
Dec2003 $1.23
Dec2002 $1.10
Dec2001 $0.95
Dec2000 $0.85
Dec1999 $0.74
Dec1998 $0.65

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.48
Dec2017 $2.15
Dec2016 $2.10
Dec2015 $1.90
Dec2014 $2.13
Dec2013 $2.41
Dec2012 $2.36
Dec2011 $2.19
Dec2010 $1.96
Dec2009 $1.78
Dec2008 $1.52
Dec2007 $1.34
Dec2006 $1.20
Dec2005 $1.17
Dec2004 $1.12
Dec2003 $1.05
Dec2002 $0.93

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Colgate-Palmolive Co. Valuation – April 2017 $CL
Colgate-Palmolive Co Valuation – January 2016 Update $CL
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International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG

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.

Coty Inc Valuation – May 2018 $COTY

Company Profile (excerpt from Reuters): Coty Inc., incorporated on January 20, 1995, is a beauty company. The Company operates through four segments: Fragrances, Color Cosmetics, Skin & Body Care and Brazil Acquisition. The Company sells products in each of its segments through retailers, including hypermarkets, supermarkets, independent and chain drug stores and pharmacies, upscale perfumeries, upscale and mid-tier department stores, nail salons, specialty retailers, duty-free shops and traditional food, drug and mass retailers. It sells a range of its products through travel retail sales channels, including duty-free shops, airlines, cruise lines and other tax-free zones. In addition, the Company sells its products through the Internet over its retail partners’ e-commerce sites and through online retailers, and the Company sells its philosophy products through philosophy-branded Websites and through direct marketing through television. The Company operates in the Americas (comprising North, Central and South America); Europe, the Middle East and Africa (EMEA), and Asia Pacific (comprising Asia and Australia).

COTY Chart

COTY data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COTY – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,528,094,898 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.99 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 -366.67% Fail
6. Moderate PEmg Ratio PEmg < 20 526.50 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.11 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 0.99 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -244.51 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 $0.03
MG Growth Estimate 0.79%
MG Value $0.27
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $0.39
MG Value based on 0% Growth $0.23
Market Implied Growth Rate 259.00%
Current Price $14.04
% of Intrinsic Value 5223.76%

Coty Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, 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 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 $0.03 in 2014 to an estimated $0.03 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 259% 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 Coty Inc revealed the company was trading above its Graham Number of $6.26. The company pays a dividend of $0.65 per share, for a yield of 4.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 526.5, which was above the industry average of 28.09. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.8.

Coty 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) -$13.80
Graham Number $6.26
PEmg 526.50
Current Ratio 0.99
PB Ratio 1.11
Current Dividend $0.65
Dividend Yield 4.63%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $3,910,600,000
Total Current Liabilities $3,941,800,000
Long-Term Debt $7,628,600,000
Total Assets $23,765,000,000
Intangible Assets $17,634,900,000
Total Liabilities $14,265,700,000
Shares Outstanding (Diluted Average) 750,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.14
Jun2017 -$0.66
Jun2016 $0.44
Jun2015 $0.64
Jun2014 -$0.26
Jun2013 $0.42

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.03
Jun2017 $0.02
Jun2016 $0.32
Jun2015 $0.23
Jun2014 $0.03
Jun2013 $0.14

Recommended Reading:

Other ModernGraham posts about the company

Coty Inc Valuation – Initial Coverage $COTY

Other ModernGraham posts about related companies

Church & Dwight Co Inc Valuation – April 2018 $CHD
Kimberly-Clark Corp Valuation – March 2018 $KMB
International Flavors & Fragrances Inc Valuation – March 2018 $IFF
Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR

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.

Kimberly-Clark Corp Valuation – March 2018 $KMB

Company Profile (obtained from Marketwatch): Kimberly-Clark Corp. engages in the manufacture of paper-based products and provision of cleaning solutions. It operates through the following segments: Personal Care, Consumer Tissue, and K-C Professional. The Personal Care segment manufactures and markets disposable diapers, training and youth pants, swim pants, baby wipes, feminine and incontinence care products, and related products, which are primarily for household use. The Consumer Tissue segment produces and sells facial and bathroom tissue, paper towels, napkins and related products for household use. The K-C Professional segment manufacture and sell facial and bathroom tissue, paper towels, napkins, wipers and a range of safety products for the away-from-home marketplace. The company was founded by John A. Kimberly, Havilah Babcock, Charles B. Clark, and Frank C. Shattuck in 1872 and is headquartered in Irving, TX.

KMB Chart

KMB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KMB – March 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 $39,286,121,685 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.89 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 46.06% Pass
6. Moderate PEmg Ratio PEmg < 20 19.57 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 62.96 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 0.89 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -10.00 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.72
MG Growth Estimate 3.93%
MG Value $93.69
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $82.99
MG Value based on 0% Growth $48.65
Market Implied Growth Rate 5.54%
Current Price $112.02
% of Intrinsic Value 119.57%

Kimberly Clark Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 Overvalued after growing its EPSmg (normalized earnings) from $4.53 in 2014 to an estimated $5.72 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.54% 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 Kimberly Clark Corp revealed the company was trading above its Graham Number of $16.24. The company pays a dividend of $3.88 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.57, which was below the industry average of 30.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.34.

Kimberly Clark 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) -$26.34
Graham Number $16.24
PEmg 19.57
Current Ratio 0.89
PB Ratio 62.96
Current Dividend $3.88
Dividend Yield 3.46%
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 12/1/2017
Total Current Assets $5,211,000,000
Total Current Liabilities $5,858,000,000
Long-Term Debt $6,472,000,000
Total Assets $15,151,000,000
Intangible Assets $1,576,000,000
Total Liabilities $14,522,000,000
Shares Outstanding (Diluted Average) 353,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.54
Dec2017 $6.40
Dec2016 $5.99
Dec2015 $2.77
Dec2014 $4.04
Dec2013 $5.53
Dec2012 $4.42
Dec2011 $3.99
Dec2010 $4.45
Dec2009 $4.52
Dec2008 $4.04
Dec2007 $4.09
Dec2006 $3.25
Dec2005 $3.28
Dec2004 $3.61
Dec2003 $3.33
Dec2002 $3.22
Dec2001 $3.02
Dec2000 $3.31
Dec1999 $3.09
Dec1998 $1.99

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.72
Dec2017 $5.19
Dec2016 $4.58
Dec2015 $3.96
Dec2014 $4.53
Dec2013 $4.71
Dec2012 $4.30
Dec2011 $4.23
Dec2010 $4.26
Dec2009 $4.05
Dec2008 $3.77
Dec2007 $3.59
Dec2006 $3.34
Dec2005 $3.35
Dec2004 $3.36
Dec2003 $3.22
Dec2002 $3.09

Recommended Reading:

Other ModernGraham posts about the company

34 Companies in the Spotlight This Week – 2/7/15
Kimberly Clark Corporation Annual Valuation – 2015 $KMB
15 Companies in the Spotlight This Week – 2/1/14
Kimberly Clark Corp (KMB) Annual Valuation

Other ModernGraham posts about related companies

Signet Jewelers Ltd Valuation – March 2018 $SIG
Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR
Church & Dwight Co Inc Valuation – Initial Coverage $CHD
Service Corporation Intl Valuation – Initial Coverage $SCI
Avon Products Inc Valuation – July 2016 $AVP

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.

International Flavors & Fragrances Inc Valuation – March 2018 $IFF

Company Profile (obtained from Marketwatch): International Flavors & Fragrances, Inc. engages in the creation, manufacture, and supply of flavors and fragrances that are used in the food, beverage, personal care, and household products industries. It operates through the Flavors and Fragrances segments. The Flavors segment involves in building blocks that impart taste experiences in food and beverage products. The Fragrances segment offers creation of fragrance compounds that are integral elements in the perfumes and consumer products, within fabric care, home care, personal wash, hair care, and toiletries. The company was founded in 1958 and is headquartered in New York, NY.

IFF Chart

IFF data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IFF – March 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 $10,980,195,849 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.47 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 66.82% Pass
6. Moderate PEmg Ratio PEmg < 20 27.28 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.56 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.47 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 $5.10
MG Growth Estimate 3.65%
MG Value $80.49
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $73.91
MG Value based on 0% Growth $43.33
Market Implied Growth Rate 9.39%
Current Price $139.03
% of Intrinsic Value 172.72%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.1 in 2014 to an estimated $5.1 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.39% 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 International Flavors & Fragrances Inc revealed the company was trading above its Graham Number of $54.58. The company pays a dividend of $2.66 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 27.28, which was below the industry average of 30.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-12.82.

International Flavors & Fragrances Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.82
Graham Number $54.58
PEmg 27.28
Current Ratio 2.47
PB Ratio 6.56
Current Dividend $2.66
Dividend Yield 1.91%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $1,896,544,000
Total Current Liabilities $768,768,000
Long-Term Debt $1,632,186,000
Total Assets $4,598,926,000
Intangible Assets $1,572,075,000
Total Liabilities $2,914,724,000
Shares Outstanding (Diluted Average) 79,421,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.21
Dec2017 $3.72
Dec2016 $5.05
Dec2015 $5.16
Dec2014 $5.06
Dec2013 $4.29
Dec2012 $3.09
Dec2011 $3.26
Dec2010 $3.26
Dec2009 $2.46
Dec2008 $2.86
Dec2007 $2.82
Dec2006 $2.48
Dec2005 $2.04
Dec2004 $2.05
Dec2003 $1.83
Dec2002 $1.84
Dec2001 $1.20
Dec2000 $1.22
Dec1999 $1.53
Dec1998 $1.90

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.10
Dec2017 $4.58
Dec2016 $4.85
Dec2015 $4.56
Dec2014 $4.10
Dec2013 $3.50
Dec2012 $3.07
Dec2011 $3.02
Dec2010 $2.86
Dec2009 $2.61
Dec2008 $2.61
Dec2007 $2.40
Dec2006 $2.15
Dec2005 $1.92
Dec2004 $1.78
Dec2003 $1.61
Dec2002 $1.51

Recommended Reading:

Other ModernGraham posts about the company

International Flavors & Fragrances Inc Valuation – June 2016 $IFF
13 Best Stocks For Value Investors This Week – 12/12/15
International Flavors & Fragrances Valuation – December 2015 Update $IFF
19 Best Stocks For Value Investors This Week – 8/29/15
International Flavors & Fragrances Inc. Analysis – August 2015 Update $IFF

Other ModernGraham posts about related companies

Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR
Church & Dwight Co Inc Valuation – Initial Coverage $CHD
Service Corporation Intl Valuation – Initial Coverage $SCI
Avon Products Inc Valuation – July 2016 $AVP
Proctor & Gamble Co Valuation – July 2016 $PG

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.

Signet Jewelers Ltd Valuation – March 2018 $SIG

Company Profile (obtained from Marketwatch): Signet Jewelers Ltd. engages in retailing of jewelry, watches and associated services. It operates through the following divisions: Sterling Jewelers, Zale and UK Jewelry. The Sterling Jewelers division stores operate in malls and off-mall locations, such as Kay Jewelers, Kay Jewelers Outlet, Jared The Galleria Of Jewelry and Jared Vault. The Zale division consists of Zale Jewelry and Piercing Pagoda. The UK Jewelry division stores operate in shopping malls and off-mall locations, includes H.Samuel and Ernest Jones. The company was founded in 1949 and is headquartered in Hamilton, Bermuda.

SIG Chart

SIG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SIG – March 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 $2,959,236,111 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.63 Pass
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 -4176.60% Fail
6. Moderate PEmg Ratio PEmg < 20 8.06 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.37 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 2.63 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.32 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.07
MG Growth Estimate 8.60%
MG Value $156.00
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $88.01
MG Value based on 0% Growth $51.59
Market Implied Growth Rate -0.22%
Current Price $48.90
% of Intrinsic Value 31.35%

Signet Jewelers Ltd. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.86 in 2014 to an estimated $6.07 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.22% 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 Signet Jewelers Ltd. revealed the company was trading below its Graham Number of $61.99. The company pays a dividend of $1.04 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 8.06, which was below the industry average of 30.22, 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 $-3.32.

Signet Jewelers Ltd. fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.32
Graham Number $61.99
PEmg 8.06
Current Ratio 2.63
PB Ratio 1.37
Current Dividend $1.04
Dividend Yield 2.13%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 10/1/2017
Total Current Assets $3,462,200,000
Total Current Liabilities $1,317,500,000
Long-Term Debt $696,800,000
Total Assets $5,800,700,000
Intangible Assets $1,277,500,000
Total Liabilities $3,661,700,000
Shares Outstanding (Diluted Average) 60,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.21
Jan2017 $7.08
Jan2016 $5.87
Jan2015 $4.75
Jan2014 $4.56
Jan2013 $4.35
Jan2012 $3.73
Jan2011 $2.32
Jan2010 $1.83
Jan2009 -$4.62
Jan2008 $2.55
Jan2007 $3.07
Jan2006 $2.71
Jan2005 $2.94
Jan2004 $0.10
Jan2003 $2.47
Jan2002 $1.98
Jan2001 $1.90
Jan2000 $1.71
Jan1999 $0.13
Jan1998 $0.65

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.07
Jan2017 $5.77
Jan2016 $4.96
Jan2015 $4.32
Jan2014 $3.86
Jan2013 $2.84
Jan2012 $1.78
Jan2011 $0.88
Jan2010 $0.48
Jan2009 $0.31
Jan2008 $2.61
Jan2007 $2.51
Jan2006 $2.17
Jan2005 $1.89
Jan2004 $1.45
Jan2003 $1.97
Jan2002 $1.57

Recommended Reading:

Other ModernGraham posts about the company

Best Stocks Below Their Graham Number – August 2017
10 Undervalued Stocks for the Enterprising Investor – August 2017
10 Low PE Stock Picks for the Enterprising Investor – July 2017
10 Undervalued Stocks for the Enterprising Investor – July 2017
Best Stocks Below Their Graham Number – March 2017

Other ModernGraham posts about related companies

Estee Lauder Companies Inc Valuation – February 2018 $EL
Proctor & Gamble Co Valuation – February 2018 $PG
Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR
Church & Dwight Co Inc Valuation – Initial Coverage $CHD
Service Corporation Intl Valuation – Initial Coverage $SCI
Avon Products Inc Valuation – July 2016 $AVP
Proctor & Gamble Co Valuation – July 2016 $PG

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.

Estee Lauder Companies Inc Valuation – February 2018 $EL

Company Profile (obtained from Marketwatch): Estee Lauder Cos., Inc. engages in the manufacture and marketing of skin care, makeup, fragrance, and hair care products. It sells products under the following brand names: Estée Lauder, Clinique, Aramis, Prescriptives, Lab Series, Origins, MAC, Bobbi Brown, La Mer, Aveda, Jo Malone London, Bumble and bumble, Darphin, GoodSkin Labs, Ojon, Smashbox, Osiao, Le Labo, RODIN olio lusso, Editions de Parfums Frédéric Malle, GLAMGLOW, and By Kilian. The company was founded by Estée Lauder and Joseph Lauder in 1946 and is headquartered in New York, NY.

EL Chart

EL data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EL – February 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 $51,472,187,119 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.76 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 166.38% Pass
6. Moderate PEmg Ratio PEmg < 20 45.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.52 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 1.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.31 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 $3.05
MG Growth Estimate 3.68%
MG Value $48.38
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $44.25
MG Value based on 0% Growth $25.94
Market Implied Growth Rate 18.65%
Current Price $139.78
% of Intrinsic Value 288.94%

Estee Lauder Companies Inc 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 Overvalued after growing its EPSmg (normalized earnings) from $2.45 in 2014 to an estimated $3.05 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 18.65% 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 Estee Lauder Companies Inc revealed the company was trading above its Graham Number of $28.16. The company pays a dividend of $1.32 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 45.8, which was above the industry average of 28.39. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-5.49.

Estee Lauder Companies Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$5.49
Graham Number $28.16
PEmg 45.80
Current Ratio 1.76
PB Ratio 11.52
Current Dividend $1.32
Dividend Yield 0.94%
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 12/1/2017
Total Current Assets $5,975,000,000
Total Current Liabilities $3,403,000,000
Long-Term Debt $3,374,000,000
Total Assets $12,604,000,000
Intangible Assets $3,228,000,000
Total Liabilities $8,039,000,000
Shares Outstanding (Diluted Average) 376,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.96
Jun2017 $3.35
Jun2016 $2.96
Jun2015 $2.82
Jun2014 $3.06
Jun2013 $2.58
Jun2012 $2.16
Jun2011 $1.74
Jun2010 $1.19
Jun2009 $0.55
Jun2008 $1.20
Jun2007 $1.08
Jun2006 $0.56
Jun2005 $0.89
Jun2004 $0.74
Jun2003 $0.63
Jun2002 $0.35
Jun2001 $0.58
Jun2000 $0.60
Jun1999 $0.52
Jun1998 $0.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.05
Jun2017 $3.05
Jun2016 $2.84
Jun2015 $2.68
Jun2014 $2.45
Jun2013 $1.98
Jun2012 $1.58
Jun2011 $1.24
Jun2010 $0.96
Jun2009 $0.85
Jun2008 $0.97
Jun2007 $0.83
Jun2006 $0.68
Jun2005 $0.71
Jun2004 $0.60
Jun2003 $0.53
Jun2002 $0.49

Recommended Reading:

Other ModernGraham posts about the company

10 Best Stocks For Value Investors This Week – 10/31/15
The Estee Lauder Company Valuation – October 2015 Update $EL
The 8 Best Stocks For Value Investors This Week – 8/8/15
Estee Lauder Companies Analysis – August 2015 Update $EL
Estee Lauder Companies Quarterly Valuation – April 2015 $EL

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Avon Products Inc Valuation – July 2016 $AVP
Proctor & Gamble Co Valuation – July 2016 $PG
International Flavors & Fragrances Inc Valuation – June 2016 $IFF
Kimberly-Clark Corporation Valuation – June 2016 $KMB

Disclaimer:

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

Proctor & Gamble Co Valuation – February 2018 $PG

Company Profile (obtained from Marketwatch): Procter & Gamble Co. engages in the provision of branded consumer packaged goods. It operates through the following segments: Beauty, Grooming, Health Care, Fabric and Home Care, and Baby, Feminine and Family Care. The Beauty segment offers hair, skin, and personal care. The Grooming segment comprises of shave care like female and male blades and razors, pre and post shave products, and appliances. The Health Care segment includes oral care products like toothbrushes, toothpaste, and personal health care such as gastrointestinal, rapid diagnostics, respiratory, and vitamins, minerals, and supplements. The Fabric and Home Care segment consist of fabric enhancers, laundry additives and detergents, and air, dish, and surface care. The Baby, Feminine and Family Care segment sells baby wipes, diapers, and pants, adult incontinence, feminine care, paper towels, tissues, and toilet paper. The company was founded by William Procter and James Gamble in 1837 and is headquartered in Cincinnati, OH.

PG Chart

PG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PG – February 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 $204,327,307,733 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.94 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 6.75% Fail
6. Moderate PEmg Ratio PEmg < 20 19.75 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.00 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 0.94 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -11.72 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 $4.10
MG Growth Estimate 0.80%
MG Value $41.48
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $59.52
MG Value based on 0% Growth $34.89
Market Implied Growth Rate 5.62%
Current Price $81.05
% of Intrinsic Value 195.37%

Procter & Gamble Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the high 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 Overvalued after growing its EPSmg (normalized earnings) from $3.9 in 2014 to an estimated $4.1 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.62% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Procter & Gamble Co revealed the company was trading above its Graham Number of $42.87. The company pays a dividend of $2.7 per share, for a yield of 3.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.75, which was below the industry average of 28.39, 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 $-15.48.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$15.48
Graham Number $42.87
PEmg 19.75
Current Ratio 0.94
PB Ratio 4.00
Current Dividend $2.70
Dividend Yield 3.33%
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 12/1/2017
Total Current Assets $31,214,000,000
Total Current Liabilities $33,107,000,000
Long-Term Debt $22,186,000,000
Total Assets $126,644,000,000
Intangible Assets $69,848,000,000
Total Liabilities $72,532,000,000
Shares Outstanding (Diluted Average) 2,669,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.85
Jun2017 $5.59
Jun2016 $3.69
Jun2015 $2.44
Jun2014 $4.01
Jun2013 $3.86
Jun2012 $3.66
Jun2011 $3.93
Jun2010 $4.11
Jun2009 $4.26
Jun2008 $3.64
Jun2007 $3.04
Jun2006 $2.64
Jun2005 $2.53
Jun2004 $2.20
Jun2003 $1.70
Jun2002 $1.55
Jun2001 $1.04
Jun2000 $1.17
Jun1999 $1.27
Jun1998 $1.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.10
Jun2017 $4.13
Jun2016 $3.44
Jun2015 $3.40
Jun2014 $3.90
Jun2013 $3.88
Jun2012 $3.90
Jun2011 $3.95
Jun2010 $3.82
Jun2009 $3.52
Jun2008 $3.04
Jun2007 $2.63
Jun2006 $2.32
Jun2005 $2.05
Jun2004 $1.71
Jun2003 $1.43
Jun2002 $1.27

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Other ModernGraham posts about related companies

Colgate-Palmolive Co. Valuation – April 2017 $CL
Coty Inc Valuation – Initial Coverage $COTY
Signet Jewelers Ltd Valuation – Initial Coverage $SIG
Inter Parfums Inc Valuation – Initial Coverage $IPAR
Church & Dwight Co Inc Valuation – Initial Coverage $CHD
Service Corporation Intl Valuation – Initial Coverage $SCI
Avon Products Inc Valuation – July 2016 $AVP
Proctor & Gamble Co Valuation – July 2016 $PG
International Flavors & Fragrances Inc Valuation – June 2016 $IFF
Kimberly-Clark Corporation Valuation – June 2016 $KMB

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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