Verisign Inc Valuation – March 2019 #VRSN

Company Profile (excerpt from Reuters): VeriSign, Inc., incorporated on April 12, 1995, is a provider of domain name registry services and Internet security, enabling Internet navigation for various domain names and providing protection for Websites and enterprises around the world. The Company operates through Registry Services and Security Services segment. Registry Services ensure the security, stability and resiliency of Internet infrastructure and services, including the .com and .net domains, and operation of the root-zone maintainer functions for the core of the Internet’s Domain Name System (DNS). Security Services provides infrastructure assurance services consisting of Distributed Denial of Services (DDoS) Protection Services and Managed DNS Services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VRSN – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $21,248,216,007 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.39 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 81.88% Pass
6. Moderate PEmg Ratio PEmg < 20 40.77 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -15.55 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 1.39 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.83 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.35
MG Growth Estimate 9.85%
MG Value $122.80
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $63.12
MG Value based on 0% Growth $37.00
Market Implied Growth Rate 16.14%
Current Price $177.49
% of Intrinsic Value 144.54%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.63 in 2015 to an estimated $4.35 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 16.14% 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 Verisign, 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 40.77, which was below the industry average of 56.55, 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 $-16.33.

Verisign, 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) -$16.33
Graham Number $0.00
PEmg 40.77
Current Ratio 1.39
PB Ratio -15.55
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,317,034,000
Total Current Liabilities $947,590,000
Long-Term Debt $1,785,047,000
Total Assets $1,914,504,000
Intangible Assets $52,527,000
Total Liabilities $3,299,978,000
Shares Outstanding (Diluted Average) 121,407,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.12
Dec2018 $4.75
Dec2017 $3.68
Dec2016 $3.42
Dec2015 $2.82
Dec2014 $2.52
Dec2013 $3.49
Dec2012 $1.95
Dec2011 $0.86
Dec2010 $4.64
Dec2009 $1.28
Dec2008 -$1.90
Dec2007 -$0.63
Dec2006 $1.53
Dec2005 $1.63
Dec2004 $0.60
Dec2003 -$1.20
Dec2002 -$20.97
Dec2001 -$65.64
Dec2000 -$19.57
Dec1999 $0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.35
Dec2018 $3.79
Dec2017 $3.27
Dec2016 $2.99
Dec2015 $2.63
Dec2014 $2.58
Dec2013 $2.56
Dec2012 $1.85
Dec2011 $1.48
Dec2010 $1.53
Dec2009 $0.11
Dec2008 -$0.24
Dec2007 $0.52
Dec2006 -$0.49
Dec2005 -$6.71
Dec2004 -$14.37
Dec2003 -$21.73

Recommended Reading:

Other ModernGraham posts about the company

Verisign Inc Valuation – May 2018 $VRSN
Verisign Inc Valuation – February 2017 $VRSN
Verisign Inc Valuation – August 2016 $VRSN
Verisign Inc. Analysis – 2015 Update $VRSN
20 Companies in the Research Spotlight This Week – June 7, 2014

Other ModernGraham posts about related companies

Motorola Solutions Inc Valuation – February 2019 $MSI
Gartner Inc Valuation – January 2019 $IT
Xerox Corp Valuation – January 2019 $XRX
Cognizant Technology Solutions Corp Valuation – January 2019 $CTSH
International Business Machines Corp Valuation – November 2018 $IBM
DXC Technology Corp Valuation – November 2018 $DXC
Sykes Enterprises Inc Valuation – October 2018 $SYKE
Computer Programs and Systems Inc Valuation – August 2018 $CPSI
Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM

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.

Motorola Solutions Inc Valuation – February 2019 $MSI

Company Profile (excerpt from Reuters): Motorola Solutions, Inc., incorporated on March 9, 1973, is a provider of communication infrastructure, devices, accessories, software and services. The Company operates through two segments: Products and Services. It serves global customer base spanning federal, state, county, province, territory, municipal and departmental independent bodies, along with its commercial and industrial customers. The Company, through VaaS International Holdings, Inc. (VaaS), provides data and image analytics for vehicle location. The Company’s image capture and analysis platform, which includes fixed and mobile license plate reader cameras driven by machine learning and artificial intelligence, provides vehicle location data to public safety and commercial customers. VaaS platform enables controllable, audited data-sharing across multiple law enforcement agencies. Vehicle location information can help accelerate time to resolution and improve outcomes for public safety agencies, particularly when combined with police records.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MSI – 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 $22,938,661,879 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.38 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 48.30% Pass
6. Moderate PEmg Ratio PEmg < 20 31.40 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -19.00 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 1.38 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.46
MG Growth Estimate 2.37%
MG Value $58.99
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $64.65
MG Value based on 0% Growth $37.90
Market Implied Growth Rate 11.45%
Current Price $139.98
% of Intrinsic Value 237.29%

Motorola Solutions Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings stability over the last five years. 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 $3.85 in 2015 to an estimated $4.46 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.45% 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 Motorola Solutions Inc revealed the company was trading above its Graham Number of $0. The company pays a dividend of $2.13 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 31.4, which was below the industry average of 51.56, 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 $-37.03.

Motorola Solutions 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) -$37.03
Graham Number $0.00
PEmg 31.40
Current Ratio 1.38
PB Ratio -19.00
Current Dividend $2.13
Dividend Yield 1.52%
Number of Consecutive Years of Dividend Growth 8

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 $4,272,000,000
Total Current Liabilities $3,096,000,000
Long-Term Debt $5,289,000,000
Total Assets $9,409,000,000
Intangible Assets $2,744,000,000
Total Liabilities $10,685,000,000
Shares Outstanding (Diluted Average) 173,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.55
Dec2018 $5.62
Dec2017 -$0.95
Dec2016 $3.24
Dec2015 $3.02
Dec2014 $5.29
Dec2013 $4.06
Dec2012 $2.96
Dec2011 $3.41
Dec2010 $1.87
Dec2009 -$0.14
Dec2008 -$13.09
Dec2007 -$0.14
Dec2006 $10.22
Dec2005 $12.67
Dec2004 $4.38
Dec2003 $2.66
Dec2002 -$7.63
Dec2001 -$12.46
Dec2000 $4.06
Dec1999 $2.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.46
Dec2018 $3.02
Dec2017 $2.13
Dec2016 $3.68
Dec2015 $3.85
Dec2014 $4.02
Dec2013 $3.06
Dec2012 $1.38
Dec2011 -$0.15
Dec2010 -$1.37
Dec2009 -$1.36
Dec2008 -$0.38
Dec2007 $5.97
Dec2006 $7.51
Dec2005 $4.08
Dec2004 -$0.75
Dec2003 -$2.91

Recommended Reading:

Other ModernGraham posts about the company

Motorola Solutions Inc Valuation – May 2018 $MSI
5 Undervalued Companies for Value Investors with a Low Beta – July 2017
5 Undervalued Companies for Value Investors with a Low Beta – January 2017
8 Best Stocks for Value Investors This Week – 12/27/16
Motorola Solutions Inc Valuation – December 2016 $MSI

Other ModernGraham posts about related companies

Gartner Inc Valuation – January 2019 $IT
Xerox Corp Valuation – January 2019 $XRX
Cognizant Technology Solutions Corp Valuation – January 2019 $CTSH
International Business Machines Corp Valuation – November 2018 $IBM
DXC Technology Corp Valuation – November 2018 $DXC
Sykes Enterprises Inc Valuation – October 2018 $SYKE
Computer Programs and Systems Inc Valuation – August 2018 $CPSI
Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY

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.

Gartner Inc Valuation – January 2019 $IT

Company Profile (excerpt from Reuters): Gartner, Inc., incorporated on June 1, 1990, is an information technology research and advisory company. The Company works with clients to research, analyze and interpret the business of information technology (IT), supply chain and marketing within the context of their individual roles. The Company operates through three segments: Research, Consulting and Events. Research segment consists of subscription-based research products, access to research inquiry, peer networking services and membership programs. Consulting segment consists of consulting, measurement engagements and strategic advisory services. Events segment consists of various symposia, conferences and exhibitions.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IT – 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 $11,868,808,106 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.66 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 23.44% Fail
6. Moderate PEmg Ratio PEmg < 20 92.22 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 12.78 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.66 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -2.57 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.42
MG Growth Estimate -3.11%
MG Value $3.22
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $20.53
MG Value based on 0% Growth $12.04
Market Implied Growth Rate 41.86%
Current Price $130.58
% of Intrinsic Value 4051.52%

Gartner Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, 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 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 $1.79 in 2014 to an estimated $1.42 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 41.86% 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 Gartner Inc revealed the company was trading above its Graham Number of $19.74. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 92.22, which was above the industry average of 44.74. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-37.63.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$37.63
Graham Number $19.74
PEmg 92.22
Current Ratio 0.66
PB Ratio 12.78
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 9/1/2018
Total Current Assets $1,535,340,000
Total Current Liabilities $2,343,596,000
Long-Term Debt $2,077,466,000
Total Assets $5,944,817,000
Intangible Assets $3,996,585,000
Total Liabilities $5,003,269,000
Shares Outstanding (Diluted Average) 92,148,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.60
Dec2017 $0.04
Dec2016 $2.31
Dec2015 $2.06
Dec2014 $2.03
Dec2013 $1.93
Dec2012 $1.73
Dec2011 $1.39
Dec2010 $0.96
Dec2009 $0.85
Dec2008 $1.05
Dec2007 $0.68
Dec2006 $0.50
Dec2005 -$0.02
Dec2004 $0.13
Dec2003 $0.25
Sep2002 $0.46
Sep2001 -$0.78
Sep2000 $0.30
Sep1999 $0.84
Sep1998 $0.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.42
Dec2017 $1.44
Dec2016 $2.10
Dec2015 $1.94
Dec2014 $1.79
Dec2013 $1.57
Dec2012 $1.32
Dec2011 $1.07
Dec2010 $0.88
Dec2009 $0.76
Dec2008 $0.64
Dec2007 $0.39
Dec2006 $0.25
Dec2005 $0.09
Dec2004 $0.12
Dec2003 $0.15
Sep2002 $0.17

Recommended Reading:

Other ModernGraham posts about the company

Gartner Inc Valuation – March 2018 $IT

Other ModernGraham posts about related companies

Xerox Corp Valuation – January 2019 $XRX
Cognizant Technology Solutions Corp Valuation – January 2019 $CTSH
International Business Machines Corp Valuation – November 2018 $IBM
DXC Technology Corp Valuation – November 2018 $DXC
Sykes Enterprises Inc Valuation – October 2018 $SYKE
Computer Programs and Systems Inc Valuation – August 2018 $CPSI
Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN

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.

DXC Technology Corp Valuation – November 2018 $DXC

Company Profile (excerpt from Reuters): DXC Technology Company provides digital information technology (IT) services and solutions. The Company provides a range of services, including analytics, applications, business process, cloud and workload, consulting, enterprise and cloud applications, security, and workplace and mobility. The Company also offers e-commerce, finance and administration products and services.

Downloadable PDF version of this valuation:

ModernGraham Valuation of DXC – November 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,370,000,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 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 118.54% Pass
6. Moderate PEmg Ratio PEmg < 20 14.24 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.50 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 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 17.97 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.35
MG Growth Estimate 11.74%
MG Value $139.17
Opinion Undervalued
MG Grade C+
MG Value based on 3% Growth $63.11
MG Value based on 0% Growth $37.00
Market Implied Growth Rate 2.87%
Current Price $62.00
% of Intrinsic Value 44.55%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.44 in 2015 to an estimated $4.35 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.87% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into DXC Technology Co revealed the company was trading below its Graham Number of $92.46. 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 14.24, which was below the industry average of 52.08, 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 $-28.8.

DXC Technology 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) -$28.80
Graham Number $92.46
PEmg 14.24
Current Ratio 1.04
PB Ratio 1.50
Current Dividend $0.72
Dividend Yield 1.16%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $8,815,000,000
Total Current Liabilities $8,514,000,000
Long-Term Debt $5,409,000,000
Total Assets $28,882,000,000
Intangible Assets $14,019,000,000
Total Liabilities $17,045,000,000
Shares Outstanding (Diluted Average) 285,780,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.04
Mar2018 $6.04
Mar2017 -$0.88
Mar2016 $1.78
Mar2015 $0.01
Mar2014 $6.28
Mar2013 $4.89
Mar2012 -$3.97
Mar2011 $4.73
Mar2010 $5.28
Mar2009 $7.31
Mar2008 $3.20
Mar2007 $2.21
Mar2006 $2.81
Mar2005 $4.22
Mar2004 $2.75
Mar2003 $2.54
Mar2002 $2.01
Mar2001 $1.37
Mar2000 $2.37
Mar1999 $2.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.35
Mar2018 $2.55
Mar2017 $1.35
Mar2016 $2.24
Mar2015 $2.44
Mar2014 $3.59
Mar2013 $2.71
Mar2012 $2.18
Mar2011 $5.02
Mar2010 $4.83
Mar2009 $4.39
Mar2008 $2.96
Mar2007 $2.87
Mar2006 $3.08
Mar2005 $3.01
Mar2004 $2.34
Mar2003 $2.11

Recommended Reading:

Other ModernGraham posts about related companies

Sykes Enterprises Inc Valuation – October 2018 $SYKE
Computer Programs and Systems Inc Valuation – August 2018 $CPSI
Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH

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.

Sykes Enterprises Inc Valuation – October 2018 $SYKE

Company Profile (excerpt from Reuters): Sykes Enterprises, Incorporated (Sykes), incorporated on March 1, 1996, is engaged in providing outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena on a global basis. The Company has operations in two segments: the Americas, which includes the United States, Canada, Latin America, Australia and the Asia Pacific Rim, and EMEA, which includes Europe, the Middle East and Africa. The Company provides its service to clients from its locations in the United States, Canada, Latin America, Australia, the Asia Pacific Rim, Europe and Africa. It serves a range of clients, including medium-sized businesses and public institutions, which span the communications, financial services, technology/consumer, transportation and leisure, healthcare and other industries. Its Americas and EMEA groups primarily provide customer engagement services (with an emphasis on inbound technical support, digital marketing and demand generation, and customer service), which include customer assistance, healthcare and roadside assistance, technical support, and product and service sales to its clients’ customers.

SYKE Chart

SYKE data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SYKE – October 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 $1,300,051,749 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.90 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 104.76% Pass
6. Moderate PEmg Ratio PEmg < 20 22.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.60 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 2.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.25 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.35
MG Growth Estimate 6.50%
MG Value $28.97
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $19.55
MG Value based on 0% Growth $11.46
Market Implied Growth Rate 7.01%
Current Price $30.36
% of Intrinsic Value 104.80%

Sykes Enterprises, Incorporated is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $0.94 in 2014 to an estimated $1.35 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 7.01% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Sykes Enterprises, Incorporated revealed the company was trading above its Graham Number of $26.13. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 22.52, which was below the industry average of 52.08, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.2.

Sykes Enterprises, Incorporated receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $5.20
Graham Number $26.13
PEmg 22.52
Current Ratio 2.90
PB Ratio 1.60
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 6/1/2018
Total Current Assets $552,963,000
Total Current Liabilities $190,904,000
Long-Term Debt $90,000,000
Total Assets $1,134,401,000
Intangible Assets $405,820,000
Total Liabilities $333,538,000
Shares Outstanding (Diluted Average) 42,160,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.63
Dec2017 $0.76
Dec2016 $1.48
Dec2015 $1.62
Dec2014 $1.35
Dec2013 $0.87
Dec2012 $0.66
Dec2011 $1.06
Dec2010 -$0.22
Dec2009 $1.05
Dec2008 $1.48
Dec2007 $0.98
Dec2006 $1.05
Dec2005 $0.59
Dec2004 $0.27
Dec2003 $0.23
Dec2002 -$0.46
Dec2001 $0.01
Dec2000 $1.13
Dec1999 $0.51
Dec1998 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.35
Dec2017 $1.21
Dec2016 $1.36
Dec2015 $1.23
Dec2014 $0.94
Dec2013 $0.72
Dec2012 $0.70
Dec2011 $0.77
Dec2010 $0.70
Dec2009 $1.12
Dec2008 $1.06
Dec2007 $0.78
Dec2006 $0.56
Dec2005 $0.25
Dec2004 $0.14
Dec2003 $0.14
Dec2002 $0.15

Recommended Reading:

Other ModernGraham posts about the company

6 Best Stocks for Value Investors This Week – 3/26/17
Sykes Enterprises Inc Valuation – Initial Coverage $SYKE

Other ModernGraham posts about related companies

Computer Programs and Systems Inc Valuation – August 2018 $CPSI
Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM

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.

Computer Programs and Systems Inc Valuation – August 2018 $CPSI

Company Profile (excerpt from Reuters): Computer Programs and Systems, Inc. (CPSI), incorporated on March 13, 2002, is a provider of healthcare information technology (IT) solutions for rural and community hospitals, and post-acute care facilities. The Company’s segments include acute care EHR, post-acute care EHR, and TruBridge, Rycan, and other outsourcing. Its Acute Care EHR segment consists of acute care software solutions and supports sales generated by its subsidiaries, Evident, LLC (Evident) and Healthland Inc. (Healthland). Its Post-acute Care EHR segment consists of post-acute care software solutions and support sales generated by American HealthTech, Inc. (AHT). Its TruBridge, Rycan, and Other Outsourcing segment primarily consists of business management, consulting and managed IT services sales generated by TruBridge, LLC (TruBridge) and the sale of Rycan Technologies, Inc.’s (Rycan’s) revenue cycle management workflow and automation software.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CPSI – August 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $374,978,090 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 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 -101.65% Fail
6. Moderate PEmg Ratio PEmg < 20 61.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.49 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 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.96 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 $0.43
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $6.21
MG Value based on 0% Growth $3.64
Market Implied Growth Rate 26.65%
Current Price $26.45
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.73 in 2014 to an estimated $0.43 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 26.65% 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 Computer Programs & Systems, Inc. revealed the company was trading above its Graham Number of $14.07. The company pays a dividend of $0.85 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 61.8, which was above the industry average of 42.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-8.33.

Computer Programs & Systems, 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) -$8.33
Graham Number $14.07
PEmg 61.80
Current Ratio 1.69
PB Ratio 2.49
Current Dividend $0.85
Dividend Yield 3.21%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $65,663,000
Total Current Liabilities $38,806,000
Long-Term Debt $133,151,000
Total Assets $322,844,000
Intangible Assets $231,959,000
Total Liabilities $178,603,000
Shares Outstanding (Diluted Average) 13,561,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.89
Dec2017 -$1.27
Dec2016 $0.29
Dec2015 $1.62
Dec2014 $2.94
Dec2013 $2.95
Dec2012 $2.71
Dec2011 $2.34
Dec2010 $1.71
Dec2009 $1.39
Dec2008 $1.42
Dec2007 $1.20
Dec2006 $1.48
Dec2005 $1.37
Dec2004 $0.67
Dec2003 $0.75
Dec2002 $1.06
Dec2001 $0.93
Dec2000 $0.53

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.43
Dec2017 $0.57
Dec2016 $1.69
Dec2015 $2.43
Dec2014 $2.73
Dec2013 $2.49
Dec2012 $2.15
Dec2011 $1.78
Dec2010 $1.48
Dec2009 $1.37
Dec2008 $1.32
Dec2007 $1.21
Dec2006 $1.16
Dec2005 $0.99
Dec2004 $0.79
Dec2003 $0.79
Dec2002 $0.71

Recommended Reading:

Other ModernGraham posts about the company

Computer Programs & Systems Inc Valuation – Initial Coverage $CPSI

Other ModernGraham posts about related companies

Science Applications International Corp Valuation – July 2018 $SAIC
Acxiom Corp Valuation – July 2018 $ACXM
Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV

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.

Science Applications International Corp Valuation – July 2018 $SAIC

Company Profile (excerpt from Reuters): Science Applications International Corporation (SAIC), incorporated on February 1, 2013, is a provider of technical, engineering and enterprise information technology (IT) services. The Company provides its services primarily to the United States Government, including the Department of Defense (DoD), the intelligence community and federal civilian agencies. The Company provides engineering, systems integration and information technology offerings for government projects, and offers a range of services with a targeted emphasis on higher-end, differentiated technology services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SAIC – 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 $3,447,240,116 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 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 37700.00% Pass
6. Moderate PEmg Ratio PEmg < 20 22.54 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.89 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 4.13 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 15.00%
MG Value $139.34
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $52.48
MG Value based on 0% Growth $30.76
Market Implied Growth Rate 7.02%
Current Price $81.57
% of Intrinsic Value 58.54%

Science Applications International Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability 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. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.58 in 2015 to an estimated $3.62 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.02% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Science Applications International Corp revealed the company was trading above its Graham Number of $26.35. The company pays a dividend of $1.24 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 22.54, which was below the industry average of 45.08, 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 $-18.57.

Science Applications International 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) -$18.57
Graham Number $26.35
PEmg 22.54
Current Ratio 1.34
PB Ratio 10.89
Current Dividend $1.24
Dividend Yield 1.52%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2018
Total Current Assets $930,000,000
Total Current Liabilities $695,000,000
Long-Term Debt $971,000,000
Total Assets $2,061,000,000
Intangible Assets $1,037,000,000
Total Liabilities $1,736,000,000
Shares Outstanding (Diluted Average) 43,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.20
Jan2018 $4.02
Jan2017 $3.12
Jan2016 $2.47
Jan2015 $2.91
Jan2014 $2.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.62
Jan2018 $3.21
Jan2017 $2.58
Jan2016 $2.05
Jan2015 $1.58
Jan2014 $0.76

Recommended Reading:

Other ModernGraham posts about the company

Science Applications International Corp Valuation – Initial Coverage $SAIC

Other ModernGraham posts about related companies

Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT

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.

Acxiom Corp Valuation – July 2018 $ACXM

Company Profile (excerpt from Reuters): Acxiom Corporation (Acxiom), incorporated on October 28, 1983, is a technology and enablement services company. The Company operates through three business segments: Marketing Services, Audience Solutions, and Connectivity. The Company serves a global client base from locations in the United States, Europe and the Asia-Pacific region. The Company’s client base includes organizations in these regions across industry verticals, including financial, insurance and investment services, automotive, retail, telecommunications, healthcare, travel, entertainment, non-profit and government.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ACXM – 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 $2,251,525,241 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.02 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 0.81% Fail
6. Moderate PEmg Ratio PEmg < 20 76.79 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.25 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 2.02 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.25 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.39
MG Growth Estimate 8.98%
MG Value $10.32
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $5.66
MG Value based on 0% Growth $3.32
Market Implied Growth Rate 34.15%
Current Price $29.95
% of Intrinsic Value 290.33%

Acxiom Corporation does not satisfy the requirements of either the Enterprising Investor or 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, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability 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 growing its EPSmg (normalized earnings) from $0.24 in 2015 to an estimated $0.39 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 34.15% 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 Acxiom Corporation revealed the company was trading above its Graham Number of $13.89. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 76.79, which was above the industry average of 45.08. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-1.23.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$1.23
Graham Number $13.89
PEmg 76.79
Current Ratio 2.02
PB Ratio 3.25
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 $360,345,000
Total Current Liabilities $178,355,000
Long-Term Debt $227,837,000
Total Assets $1,209,253,000
Intangible Assets $672,604,000
Total Liabilities $460,158,000
Shares Outstanding (Diluted Average) 81,282,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.90
Mar2018 $0.29
Mar2017 $0.05
Mar2016 $0.09
Mar2015 -$0.14
Mar2014 $0.12
Mar2013 $0.75
Mar2012 $0.96
Mar2011 -$0.29
Mar2010 $0.56
Mar2009 $0.48
Mar2008 -$0.10
Mar2007 $0.80
Mar2006 $0.71
Mar2005 $0.74
Mar2004 $0.64
Mar2003 $0.24
Mar2002 -$0.36
Mar2001 $0.07
Mar2000 $1.00
Mar1999 -$0.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.39
Mar2018 $0.12
Mar2017 $0.08
Mar2016 $0.18
Mar2015 $0.24
Mar2014 $0.43
Mar2013 $0.55
Mar2012 $0.41
Mar2011 $0.19
Mar2010 $0.45
Mar2009 $0.44
Mar2008 $0.46
Mar2007 $0.71
Mar2006 $0.57
Mar2005 $0.42
Mar2004 $0.28
Mar2003 $0.12

Recommended Reading:

Other ModernGraham posts about the company

Acxiom Corporation Valuation – November 2016 $ACXM
5 Speculative and Overvalued Companies to Avoid – August 2015
Acxiom Corporation Analysis – Initial Coverage $ACXM

Other ModernGraham posts about related companies

Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT
LivePerson Inc Valuation – Initial Coverage $LPSN

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.

Infosys Ltd Valuation – June 2018 $INFY

Company Profile (excerpt from Reuters): Infosys Limited, incorporated on July 2, 1981, is engaged in consulting, technology, outsourcing and next-generation services. The Company, along with its subsidiaries, provides business information technology (IT) services comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process management; consulting and systems integration services comprising consulting, enterprise solutions, systems integration and advanced technologies; products, business platforms and solutions to accelerate intellectual property-led innovation, including Finacle, its banking solution, and offerings in the areas of Analytics, Cloud and Digital Transformation. The Company’s segments are Financial Services and Insurance (FSI), Manufacturing and Hi-tech (MFG & Hi-TECH), Energy & utilities, Communication and Services (ECS), Retail, Consumer packaged goods and Logistics (RCL), and Life Sciences and Healthcare (LSH). The Company operates in North America, Europe, India and Rest of the World.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of INFY – 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 $2,843,573,514,131 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.55 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 53.03% Pass
6. Moderate PEmg Ratio PEmg < 20 19.63 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.24 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 3.55 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $0.99
MG Growth Estimate 3.72%
MG Value $15.78
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $14.36
MG Value based on 0% Growth $8.42
Market Implied Growth Rate 5.56%
Current Price $19.43
% of Intrinsic Value 123.15%

Infosys Ltd ADR 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 has no initial concerns. 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 Overvalued after growing its EPSmg (normalized earnings) from $0.79 in 2015 to an estimated $0.99 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.56% 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 Infosys Ltd ADR revealed the company was trading above its Graham Number of $10.1. The company pays a dividend of $0.43 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 19.63, which was below the industry average of 44.18, 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 $2.47.

Infosys Ltd ADR performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $2.47
Graham Number $10.10
PEmg 19.63
Current Ratio 3.55
PB Ratio 4.24
Current Dividend $0.43
Dividend Yield 2.22%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $7,673,000,000
Total Current Liabilities $2,164,000,000
Long-Term Debt $0
Total Assets $12,255,000,000
Intangible Assets $377,000,000
Total Liabilities $2,295,000,000
Shares Outstanding (Diluted Average) 2,174,809,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.99
Mar2018 $1.10
Mar2017 $0.94
Mar2016 $0.90
Mar2015 $0.88
Mar2014 $0.77
Mar2013 $0.76
Mar2012 $0.75
Mar2011 $0.66
Mar2010 $0.58
Mar2009 $0.56
Mar2008 $0.51
Mar2007 $0.38
Mar2006 $0.25
Mar2005 $0.19
Mar2004 $0.13
Mar2003 $0.09
Mar2002 $0.08
Mar2001 $0.06
Mar2000 $0.03
Mar1999 $0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.99
Mar2018 $0.97
Mar2017 $0.88
Mar2016 $0.84
Mar2015 $0.79
Mar2014 $0.73
Mar2013 $0.70
Mar2012 $0.65
Mar2011 $0.58
Mar2010 $0.51
Mar2009 $0.44
Mar2008 $0.35
Mar2007 $0.25
Mar2006 $0.18
Mar2005 $0.13
Mar2004 $0.09
Mar2003 $0.07

Recommended Reading:

Other ModernGraham posts about the company

Infosys Ltd Valuation – July 2016 $INFY
Infosys Ltd Valuation – January 2016 Update $INFY
Infosys Limited Analysis – October 2015 Update $INFY
The 8 Best Stocks For Value Investors This Week – 6/27/15
Infosys Analysis – June 2015 Update $INFY

Other ModernGraham posts about related companies

Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT
LivePerson Inc Valuation – Initial Coverage $LPSN

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.

Verisign Inc Valuation – May 2018 $VRSN

Company Profile (excerpt from Reuters): VeriSign, Inc., incorporated on April 12, 1995, is a provider of domain name registry services and Internet security, enabling Internet navigation for various domain names and providing protection for Websites and enterprises around the world. The Company operates through Registry Services and Security Services segment. Registry Services ensure the security, stability and resiliency of Internet infrastructure and services, including the .com and .net domains, and operation of the root-zone maintainer functions for the core of the Internet’s Domain Name System (DNS). Security Services provides infrastructure assurance services consisting of Distributed Denial of Services (DDoS) Protection Services and Managed DNS Services.

VRSN Chart

VRSN data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of VRSN – 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 $15,589,991,262 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.55 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 69.76% Pass
6. Moderate PEmg Ratio PEmg < 20 34.42 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -12.67 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 1.55 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.07 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.68
MG Growth Estimate 6.35%
MG Value $78.02
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $53.35
MG Value based on 0% Growth $31.27
Market Implied Growth Rate 12.96%
Current Price $126.66
% of Intrinsic Value 162.34%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.58 in 2014 to an estimated $3.68 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.96% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Verisign, 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 34.42, which was below the industry average of 42.24, 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 $-14.02.

Verisign, 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) -$14.02
Graham Number $0.00
PEmg 34.42
Current Ratio 1.55
PB Ratio -12.67
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 $2,408,528,000
Total Current Liabilities $1,548,946,000
Long-Term Debt $1,783,159,000
Total Assets $2,905,323,000
Intangible Assets $52,527,000
Total Liabilities $4,140,057,000
Shares Outstanding (Diluted Average) 123,506,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.41
Dec2017 $3.68
Dec2016 $3.42
Dec2015 $2.82
Dec2014 $2.52
Dec2013 $3.49
Dec2012 $1.95
Dec2011 $0.86
Dec2010 $4.64
Dec2009 $1.28
Dec2008 -$1.90
Dec2007 -$0.63
Dec2006 $1.53
Dec2005 $1.63
Dec2004 $0.60
Dec2003 -$1.20
Dec2002 -$20.97
Dec2001 -$65.64
Dec2000 -$19.57
Dec1999 $0.03
Dec1998 -$0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.68
Dec2017 $3.27
Dec2016 $2.99
Dec2015 $2.63
Dec2014 $2.58
Dec2013 $2.56
Dec2012 $1.85
Dec2011 $1.48
Dec2010 $1.53
Dec2009 $0.11
Dec2008 -$0.24
Dec2007 $0.52
Dec2006 -$0.49
Dec2005 -$6.71
Dec2004 -$14.37
Dec2003 -$21.73
Dec2002 -$28.42

Recommended Reading:

Other ModernGraham posts about the company

Verisign Inc Valuation – February 2017 $VRSN
Verisign Inc Valuation – August 2016 $VRSN
Verisign Inc. Analysis – 2015 Update $VRSN
20 Companies in the Research Spotlight This Week – June 7, 2014
Verisign Inc. Annual Valuation – 2014 $VRSN

Other ModernGraham posts about related companies

Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT
LivePerson Inc Valuation – Initial Coverage $LPSN
LogMeIn Inc Valuation – Initial Coverage $LOGM

Disclaimer:

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

Back To Top