Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cullen/Frost Bankers Inc (CFR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cullen/Frost Bankers, Inc. is a financial holding and bank holding company. The Company, through its subsidiaries, offers commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. It serves various industries, such as energy, manufacturing, services, construction and retail. It operates through two segments, which include Banking and Frost Wealth Advisors. Its Banking segment includes both commercial and consumer banking services, Frost Insurance Agency and Frost Securities. Its Banking segment offers commercial banking services, such as lending and cash management products to corporations and other business clients. Its Frost Wealth Advisors segment includes fee-based services within private trust, retirement services and financial management services, including personal wealth management and securities brokerage services.

CFR Chart

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ModernGraham Valuation of CFR – December 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,560,311,623 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 30.15% Fail
5. Moderate PEmg Ratio PEmg < 20 20.26 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.73 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $4.27
MG Growth Estimate 3.02%
MG Value $62.02
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $61.87
MG Value based on 0% Growth $36.27
Market Implied Growth Rate 5.88%
Current Price $86.46
% of Intrinsic Value 139.41%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.55 in 2012 to an estimated $4.27 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.88% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $69.78. The company pays a dividend of $2.14 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 20.26, which was above the industry average of 13.43.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $69.78
PEmg 20.26
PB Ratio 1.73
Dividend Yield 2.48%
TTM Dividend $2.14
Number of Consecutive Years of Dividend Growth 20

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $236,072,000
Total Assets $29,602,912,000
Intangible Assets $661,599,000
Total Liabilities $26,441,116,000
Shares Outstanding (Diluted Average) 63,141,000

Earnings Per Share History

Next Fiscal Year Estimate $4.51
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38
Dec1997 $1.34
Dec1996 $1.16

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.27
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92
Dec2001 $1.69
Dec2000 $1.68

Recommended Reading:

Other ModernGraham posts about the company

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

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Disclaimer:

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

Lennar Corp Valuation – November 2016 $LEN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Lennar Corp (LEN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Lennar Corporation is a homebuilder that operates in various states with deliveries of over 24,290 new homes. The Company’s segments include Homebuilding activities, which include Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida and Homebuilding Houston; Lennar Financial Services; Rialto, and Lennar Multifamily. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which it has investments. The Lennar Financial Services segment operations include mortgage financing, title insurance and closing services for its homebuyers and others. The Rialto segment operations include commercial real estate, investment management and finance company. The Lennar Multifamily segment develops a portfolio of institutional multifamily rental properties in select the United States markets.

LEN Chart

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ModernGraham Valuation of Len – November 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,309,257,384 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 5.14 Pass
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 -146.39% Fail
6. Moderate PEmg Ratio PEmg < 20 13.35 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.54 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 5.14 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.55 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

len-value-chart-november-2016

EPSmg $3.26
MG Growth Estimate 15.00%
MG Value $125.38
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $47.22
MG Value based on 0% Growth $27.68
Market Implied Growth Rate 2.42%
Current Price $43.47
% of Intrinsic Value 34.67%

Lennar Corporation 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. 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 $0.47 in 2012 to an estimated $3.26 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.42% 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 Lennar Corporation revealed the company was trading below its Graham Number of $49.83. The company pays a dividend of $0.16 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 13.35, which was below the industry average of 28.02, 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 $11.5.

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

Stage 3: Information for Further Research

len-charts-november-2016

Net Current Asset Value (NCAV) $11.50
Graham Number $49.83
PEmg 13.35
Current Ratio 5.14
PB Ratio 1.54
Current Dividend $0.16
Dividend Yield 0.37%
Number of Consecutive Years of Dividend Growth 0

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ModernGraham tagged articles Morningstar
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Most Recent Balance Sheet Figures

Balance Sheet Information 8/1/2016
Total Current Assets $11,118,198,000
Total Current Liabilities $2,164,310,000
Long-Term Debt $4,920,848,000
Total Assets $14,998,720,000
Intangible Assets $39,838,000
Total Liabilities $8,453,185,000
Shares Outstanding (Diluted Average) 231,818,000

Earnings Per Share History

Next Fiscal Year Estimate $3.84
Nov2015 $3.46
Nov2014 $2.80
Nov2013 $2.15
Nov2012 $3.11
Nov2011 $0.48
Nov2010 $0.51
Nov2009 -$2.45
Nov2008 -$7.01
Nov2007 -$12.31
Nov2006 $3.69
Nov2005 $8.23
Nov2004 $5.70
Nov2003 $4.65
Nov2002 $3.51
Nov2001 $2.73
Nov2000 $1.66
Nov1999 $1.25
Nov1998 $1.25
Nov1997 $1.12
Nov1996 $1.22

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.26
Nov2015 $2.78
Nov2014 $2.23
Nov2013 $1.55
Nov2012 $0.47
Nov2011 -$1.95
Nov2010 -$3.28
Nov2009 -$4.11
Nov2008 -$3.40
Nov2007 -$0.40
Nov2006 $5.42
Nov2005 $5.84
Nov2004 $4.32
Nov2003 $3.34
Nov2002 $2.48
Nov2001 $1.84
Nov2000 $1.36

Recommended Reading:

Other ModernGraham posts about the company

12 Best Stocks For Value Investors This Week – 11/14/15
Lennar Corporation Valuation – November 2015 Update $LEN
The Best Companies of the Construction Industry – October 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
Lennar Corporation Analysis – August 2015 Update $LEN

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Disclaimer:

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

Agilent Technologies Inc Valuation – August 2016 $A

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – July 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Agilent Technologies Inc (A) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Agilent Technologies, Inc. provides application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. The Company serves the life sciences, diagnostics and applied chemical markets. It has three business segments: life sciences and applied markets business, diagnostics and genomics business, and Agilent CrossLab business. Its life sciences and applied markets business segment offers instruments and software that enable customers to identify, quantify and analyze the physical and biological properties of substances and products, as well as enable customers in the clinical and life sciences research areas to interrogate samples at the molecular level. Its diagnostics and genomics business segment includes the reagent partnership, pathology, companion diagnostics, genomics and the nucleic acid solutions businesses. Its Agilent CrossLab business segment spans the entire lab with its consumables and services portfolio.

A Chart

A data by YCharts

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ModernGraham Valuation of A – August 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $14,954,007,072 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.07 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 30.15% Fail
6. Moderate PEmg Ratio PEmg < 20 28.70 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.60 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 3.07 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.69 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

A value chart August 2016

EPSmg $1.66
MG Growth Estimate -4.25%
MG Value $0.42
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $24.06
MG Value based on 0% Growth $14.10
Market Implied Growth Rate 10.10%
Current Price $47.62
% of Intrinsic Value 11236.95%

Agilent Technologies Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, the poor dividend history, and the 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 $2.35 in 2012 to an estimated $1.66 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.1% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Agilent Technologies Inc revealed the company was trading above its Graham Number of $21.5. The company pays a dividend of $0.45 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 28.7, which was above the industry average of 22.64. Finally, the company was trading above its Net Current Asset Value (NCAV) of $0.42.

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

Stage 3: Information for Further Research

A charts August 2016

Net Current Asset Value (NCAV) $0.42
Graham Number $21.50
PEmg 28.70
Current Ratio 3.07
PB Ratio 3.60
Current Dividend $0.45
Dividend Yield 0.93%
Number of Consecutive Years of Dividend Growth 1

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Useful Links:

ModernGraham tagged articles Morningstar
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Most Recent Balance Sheet Figures

Balance Sheet Information 7/1/2016
Total Current Assets $3,530,000,000
Total Current Liabilities $1,151,000,000
Long-Term Debt $1,652,000,000
Total Assets $7,734,000,000
Intangible Assets $2,967,000,000
Total Liabilities $3,391,000,000
Shares Outstanding (Diluted Average) 328,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.54
Oct2015 $1.20
Oct2014 $1.62
Oct2013 $2.13
Oct2012 $3.27
Oct2011 $2.85
Oct2010 $1.94
Oct2009 -$0.09
Oct2008 $1.87
Oct2007 $1.57
Oct2006 $7.50
Oct2005 $0.65
Oct2004 $0.75
Oct2003 -$4.35
Oct2002 -$2.22
Oct2001 $0.38
Oct2000 $1.66
Oct1999 $1.35
Oct1998 $0.56

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.66
Oct2015 $1.88
Oct2014 $2.27
Oct2013 $2.40
Oct2012 $2.35
Oct2011 $1.80
Oct2010 $1.71
Oct2009 $1.83
Oct2008 $2.68
Oct2007 $2.46
Oct2006 $2.10
Oct2005 -$0.72
Oct2004 -$1.19
Oct2003 -$1.65
Oct2002 -$0.09
Oct2001 $0.91
Oct2000 $1.02

Recommended Reading:

Other ModernGraham posts about the company

Agilent Technologies Inc Valuation – February 2016
Agilent Technologies Inc. Valuation – October 2015 Update $A
Agilent Technologies Inc. Valuation – October 2015 Update $A
Agilent Technologies Inc. Analysis – July 2015 Update $A
27 Companies in the Spotlight This Week – 4/4/15

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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.

Marsh & McLennan Companies Inc Valuation – July 2016 $MMC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – June 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Marsh & McLennan Companies Inc (MMC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Marsh & McLennan Companies, Inc. is a professional services firm offering clients advice and solutions in risk, strategy and people. The Company is the parent company of various specialty consultants, including Marsh, an insurance broker, intermediary and risk advisor; Guy Carpenter, a risk and reinsurance specialist; Mercer, a provider of human resource (HR) and related financial advice and services, and Oliver Wyman Group, a management, economic and brand consultancy. The Company provides analysis, advice and transactional capabilities to clients in approximately 130 countries. The Company operates through two segments: Risk and Insurance Services and Consulting. The Risk and Insurance Services segment includes risk management activities, as well as insurance and reinsurance broking and services. The Company’s consulting segment includes health, retirement, talent and investments consulting services and products, and specialized management, economic and brand consulting services.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MMC – July 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $35,068,541,703 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.52 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 86.07% Pass
6. Moderate PEmg Ratio PEmg < 20 23.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.30 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 1.52 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.90 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

MMC value chart July 2016

EPSmg $2.90
MG Growth Estimate 13.15%
MG Value $100.81
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $42.01
MG Value based on 0% Growth $24.63
Market Implied Growth Rate 7.36%
Current Price $67.30
% of Intrinsic Value 66.76%

Marsh & McLennan 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, insufficient earnings stability over the last ten years, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.54 in 2012 to an estimated $2.9 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.36% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

Marsh & McLennan Companies, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

MMC charts July 2016

Net Current Asset Value (NCAV) -$12.64
Graham Number $30.93
PEmg 23.23
Current Ratio 1.52
PB Ratio 5.30
Current Dividend $1.52
Dividend Yield 2.26%
Number of Consecutive Years of Dividend Growth 7

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2016
Total Current Assets $4,798,000,000
Total Current Liabilities $3,159,000,000
Long-Term Debt $4,748,000,000
Total Assets $18,128,000,000
Intangible Assets $8,985,000,000
Total Liabilities $11,449,000,000
Shares Outstanding (Diluted Average) 526,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.32
Dec2015 $2.98
Dec2014 $2.65
Dec2013 $2.43
Dec2012 $2.13
Dec2011 $1.79
Dec2010 $1.55
Dec2009 $0.42
Dec2008 -$0.14
Dec2007 $4.53
Dec2006 $1.76
Dec2005 $0.74
Dec2004 $0.33
Dec2003 $2.81
Dec2002 $2.45
Dec2001 $1.70
Dec2000 $2.05
Dec1999 $1.31
Dec1998 $1.49
Dec1997 $0.80
Dec1996 $1.06

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.90
Dec2015 $2.59
Dec2014 $2.30
Dec2013 $1.97
Dec2012 $1.54
Dec2011 $1.38
Dec2010 $1.32
Dec2009 $1.29
Dec2008 $1.63
Dec2007 $2.36
Dec2006 $1.39
Dec2005 $1.34
Dec2004 $1.71
Dec2003 $2.29
Dec2002 $1.95
Dec2001 $1.63
Dec2000 $1.51

Recommended Reading:

Other ModernGraham posts about the company

26 Best Stocks For Value Investors This Week – 2/6/16
Marsh & McLennan Company Valuation – January 2016 Update $MMC
The Best Companies of the Insurance Industry – October 2015
15 Best Stocks For Value Investors This Week – 9/12/15
Marsh & McLennan Companies Analysis – September 2015 Update $MMC

Other ModernGraham posts about related companies

Cigna Corp Valuation – July 2016 $CI
Progressive Corporation Valuation – June 2016 $PGR
Cincinnati Financial Corporation Valuation – May 2016 $CINF
Lincoln National Corporation Valuation – May 2016 $LNC
Allstate Corporation Valuation – May 2016 $ALL
The Travelers Companies Valuation – May 2016 $TRV
Unum Group Valuation – March 2016 $UNM
Principal Financial Group Inc Valuation – March 2016 $PFG
Assurant Inc Valuation – February 2016 $AIZ
American International Group Inc Stock Valuation – February 2016 $AIG

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.

Lennar Corporation Valuation – May 2016 $LEN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – March 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Lennar Corporation (LEN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Lennar Corporation is a homebuilder that operates in various states with deliveries of over 24,290 new homes. The Company’s segments include Homebuilding activities, which include Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida and Homebuilding Houston; Lennar Financial Services; Rialto, and Lennar Multifamily. Its Homebuilding operations include the construction and sale of single-family attached and detached homes, as well as the purchase, development and sale of residential land directly and through unconsolidated entities in which it has investments. The Lennar Financial Services segment operations include mortgage financing, title insurance and closing services for its homebuyers and others. The Rialto segment operations include commercial real estate, investment management and finance company. The Lennar Multifamily segment develops a portfolio of institutional multifamily rental properties in select the United States markets.

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ModernGraham Valuation of LEN

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,993,573,396 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 399,747,243,487,321.00 Pass
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 -145.82% Fail
6. Moderate PEmg Ratio PEmg < 20 13.57 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.02 Pass
Score
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 > 1.5 399,747,243,487,321.00 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 49.53 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

LEN value chart May 2016

EPSmg $3.21
MG Growth Estimate 15.00%
MG Value $123.71
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $46.59
MG Value based on 0% Growth $27.31
Market Implied Growth Rate 2.53%
Current Price $43.59
% of Intrinsic Value 35.23%

Lennar Corporation 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. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.47 in 2012 to an estimated $3.21 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.53% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

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

Stage 3: Information for Further Research

LEN charts May 2016

Net Current Asset Value (NCAV) $8.53
Graham Number $47.57
PEmg 13.57
Current Ratio 9.18
PB Ratio 1.72
Current Dividend $0.16
Dividend Yield 0.37%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 2/1/2016
Total Current Assets $10,328,452,000
Total Current Liabilities $1,125,527,000
Long-term Debt $5,943,131,000
Total Assets $14,195,188,000
Intangible Assets $39,439,000
Total Liabilities $8,375,074,000
Shares Outstanding (Diluted Average) 228,916,000

Earnings Per Share History

Next Fiscal Year Estimate $3.71
11/1/2015 $3.46
11/1/2014 $2.80
11/1/2013 $2.15
11/1/2012 $3.11
11/1/2011 $0.48
11/1/2010 $0.51
11/1/2009 -$2.45
11/1/2008 -$7.00
11/1/2007 -$12.31
11/1/2006 $3.69
11/1/2005 $8.23
11/1/2004 $5.70
11/1/2003 $4.65
11/1/2002 $3.51
11/1/2001 $2.73
11/1/2000 $1.66
11/1/1999 $1.25
11/1/1998 $1.25
11/1/1997 $1.12
11/1/1996 $1.22

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.21
11/1/2015 $2.78
11/1/2014 $2.23
11/1/2013 $1.55
11/1/2012 $0.47
11/1/2011 -$1.95
11/1/2010 -$3.28
11/1/2009 -$4.10
11/1/2008 -$3.40
11/1/2007 -$0.40
11/1/2006 $5.42
11/1/2005 $5.84
11/1/2004 $4.32
11/1/2003 $3.34
11/1/2002 $2.48
11/1/2001 $1.84
11/1/2000 $1.36

Recommended Reading:

Other ModernGraham posts about the company

12 Best Stocks For Value Investors This Week – 11/14/15
Lennar Corporation Valuation – November 2015 Update $LEN
The Best Companies of the Construction Industry – October 2015
The 20 Best Stocks For Value Investors This Week – 8/15/15
Lennar Corporation Analysis – August 2015 Update $LEN

Other ModernGraham posts about related companies

Quanta Services Inc Valuation – February 2016 $PWR
Martin Marietta Materials Inc Valuation – February 2016 Update $MLM
Fluor Corp Valuation – February 2016 Update $FLR
Jacobs Engineering Group Inc Valuation – January 2016 Update $JEC
D.R. Horton Inc Valuation – January 2016 Update $DHI
Lowe’s Companies Inc Valuation – January 2016 Update $LOW
Martin Marietta Materials Inc Valuation – February 2016 Update $MLM
Fluor Corp Valuation – February 2016 Update $FLR
Jacobs Engineering Group Inc Valuation – January 2016 Update $JEC
Lowe’s Companies Inc Valuation – January 2016 Update $LOW

Disclaimer:

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

Agilent Technologies Inc Valuation – February 2016

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Agilent Technologies Inc (A) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Agilent Technologies Inc. is engaged in the life sciences, diagnostics and applied chemical markets. The Company provides application focused solutions that include instruments, software, services and consumables for the entire laboratory workflow. The Company has three business segments: the life sciences and applied markets business, the diagnostics and genomics business, and the Agilent CrossLab business. The Company’s life sciences and applied markets business segment brings together the Company’s analytical laboratory instrumentation and informatics. The Company’s diagnostics and genomics business segment consists of three businesses: the Dako business, the genomics business and the nucleic acid solutions business. The Company’s Agilent CrossLab business segment combines its analytical laboratory services and consumables business.

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ModernGraham Valuation of A – February 2016

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,915,063,376 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 3.78 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 40.00% Pass
6. Moderate PEmg Ratio PEmg < 20 20.05 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.85 Fail
Score
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 3.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.61 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

A value Chart February 2016

EPSmg $1.77
MG Growth Estimate -3.74%
MG Value $1.82
Opinion Overvalued
MG Value based on 3% Growth $25.60
MG Value based on 0% Growth $15.01
Market Implied Growth Rate 5.77%
Current Price $35.39
% of Intrinsic Value 1946.75%

Agilent Technologies Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, the poor dividend history, and the 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 $2.35 in 2012 to an estimated $1.77 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.77% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

Stage 3: Information for Further Research

A Charts February 2016

Net Current Asset Value (NCAV) $1.12
Graham Number $22.98
PEmg 20.05
Current Ratio 3.78
PB Ratio 2.85
Dividend Yield 1.13%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Oct2015
Total Current Assets $3,686,000,000
Total Current Liabilities $976,000,000
Long-Term Debt $1,655,000,000
Total Assets $7,479,000,000
Intangible Assets $2,811,000,000
Total Liabilities $3,312,000,000
Shares Outstanding (Diluted Average) 335,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.87
Oct2015 $1.20
Oct2014 $1.62
Oct2013 $2.10
Oct2012 $3.27
Oct2011 $2.85
Oct2010 $1.94
Oct2009 -$0.09
Oct2008 $1.87
Oct2007 $1.57
Oct2006 $7.50
Oct2005 $0.65
Oct2004 $0.75
Oct2003 -$4.35
Oct2002 -$2.22
Oct2001 $0.38
Oct2000 $1.66
Oct1999 $1.35
Oct1998 $0.56

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.77
Oct2015 $1.88
Oct2014 $2.26
Oct2013 $2.39
Oct2012 $2.35
Oct2011 $1.80
Oct2010 $1.71
Oct2009 $1.83
Oct2008 $2.68
Oct2007 $2.46
Oct2006 $2.10
Oct2005 -$0.72
Oct2004 -$1.19
Oct2003 -$1.65
Oct2002 -$0.09
Oct2001 $0.91
Oct2000 $1.03

Recommended Reading:

Other ModernGraham posts about the company

Agilent Technologies Inc. Valuation – October 2015 Update $A
Agilent Technologies Inc. Analysis – July 2015 Update $A
27 Companies in the Spotlight This Week – 4/4/15
Agilent Technologies Inc. Quarterly Valuation – April 2015 $A

Other ModernGraham posts about related companies

Texas Instruments Inc Valuation – February 2016 $TXN
Apple Inc Valuation – February 2016 $AAPL
Ametek Inc Valuation – February 2016 Update $AME
MTS Systems Corp Valuation – February 2016 Update $MTSC
Linear Technology Corp Valuation – January 2016 Update $LLTC
Seagate Technology PLC Valuation – January 2016 Update $STX
Microchip Technology Inc Valuation – January 2016 Update $MCHP
Avago Technologies Ltd Valuation – January 2016 Update $AVGO
KLA-Tencor Corp Valuation – January 2016 Update $KLAC
Lam Research Corp Valuation – January 2016 Update $LRCX

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.

Marsh & McLennan Company Valuation – January 2016 Update $MMC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – November 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Marsh & McLennan Company (MMC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Marsh and McLennan Companies, Inc. is a professional services firm. The Company operates as two business segments: Risk and Insurance Services, and Consulting. The Risk and Insurance Services segment provides risk management activities and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter. The Company conducts business in its Consulting segment through two main business groups: Mercer, provides consulting expertise, advice, services and solutions in the areas of health, retirement, talent and investments, and Oliver Wyman Group, provides specialized management and economic and brand consulting services.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MMC

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 $27,021,379,986 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.62 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 30.24% Fail
6. Moderate PEmg Ratio PEmg < 20 20.73 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 4.55 Fail
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.62 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.08 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

MMC value chart January 2016

EPSmg $2.57
MG Growth Estimate 13.02%
MG Value $88.85
Opinion Undervalued
MG Value based on 3% Growth $37.30
MG Value based on 0% Growth $21.87
Market Implied Growth Rate 6.11%
Current Price $53.33
% of Intrinsic Value 60.02%

Marsh & McLennan Company qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned by the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.38 in 2011 to an estimated $2.57 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.11% annual earnings loss over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Marsh & McLennan Company (MMC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MMC charts January 2016

Net Current Asset Value (NCAV) -$11.16
Graham Number $28.08
PEmg 20.73
Current Ratio 1.62
PB Ratio 4.55
Dividend Yield 2.74%
Number of Consecutive Years of Dividend Growth 6

 

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information Sep2015
Total Current Assets $5,526,000,000
Total Current Liabilities $3,404,000,000
Long-Term Debt $4,422,000,000
Total Assets $17,724,000,000
Intangible Assets $8,342,000,000
Total Liabilities $11,476,000,000
Shares Outstanding (Diluted Average) 533,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.93
Dec2014 $2.65
Dec2013 $2.43
Dec2012 $2.13
Dec2011 $1.79
Dec2010 $1.55
Dec2009 $0.42
Dec2008 -$0.14
Dec2007 $4.53
Dec2006 $1.76
Dec2005 $0.74
Dec2004 $0.33
Dec2003 $2.81
Dec2002 $2.45
Dec2001 $1.70
Dec2000 $2.05
Dec1999 $1.31
Dec1998 $1.49
Dec1997 $0.87
Dec1996 $1.04

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.57
Dec2014 $2.30
Dec2013 $1.97
Dec2012 $1.54
Dec2011 $1.38
Dec2010 $1.32
Dec2009 $1.29
Dec2008 $1.63
Dec2007 $2.36
Dec2006 $1.39
Dec2005 $1.34
Dec2004 $1.71
Dec2003 $2.29
Dec2002 $1.95
Dec2001 $1.63
Dec2000 $1.52
Dec1999 $1.15

Recommended Reading:

Other ModernGraham posts about the company

The Best Companies of the Insurance Industry – October 2015
5 Undervalued Companies with a Low Beta – June 2015
The Best Companies of the Insurance Industry – June 2015
The 8 Best Stocks For Value Investors This Week – 6/6/15
Marsh & McLennan Companies Analysis – June 2015 Quarterly Update $MMC

Other ModernGraham posts about related companies

Aon PLC Valuation – January 2016 Update $AON
Progressive Corp Valuation – November 2015 Update $PGR
Progressive Corp Valuation – November 2015 Update $PGR
Ace Limited Valuation – November 2015 Update $ACE
Travelers Companies Inc. Valuation – November 2015 Update $TRV
Lincoln National Corp Valuation – November 2015 Update $LNC
Unum Group Valuation – November 2015 Update $UNM
Principal Financial Group Valuation – November 2015 Update $PFG
Assurant Inc. Valuation – November 2015 Update $AIZ
American International Group Inc. Valuation – November 2015 Update $AIG

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.

Lennar Corporation Valuation – November 2015 Update $LEN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Lennar Corporation (LEN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Lennar Corporation is a real estate company. The Company is a homebuilder, a provider of real estate-related financial services, a commercial real estate investment, investment management and finance company. It operates under Homebuilding Operations, Lennar Financial Services, Rialto and Lennar Multifamily segments. It has grouped its homebuilding activities into five segments: Homebuilding East, Homebuilding Central, Homebuilding West, Homebuilding Southeast Florida and Homebuilding Houston. Its homebuilding operations include the construction and sale of single-family attached and detached homes. Lennar Financial Services offers residential mortgage loan products to buyers of their homes and others. The Rialto segment is a commercial real estate investment, investment management and finance company. The Lennar Multifamily segment focuses on developing a portfolio of multifamily rental properties in select United States markets. It operates under brand name Lennar.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[level-mg-stocks-screens-subscriber]

Downloadable PDF version of this valuation:

ModernGraham Valuation of LEN – November 2015

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 $10,065,745,431 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.90 Pass
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 -155.83% Fail
6. Moderate PEmg Ratio PEmg < 20 17.05 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.11 Pass
Score
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 4.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.74 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

LEN value Chart November 2015

EPSmg $2.88
MG Growth Estimate 15.00%
MG Value $110.88
Opinion Undervalued
MG Value based on 3% Growth $41.76
MG Value based on 0% Growth $24.48
Market Implied Growth Rate 4.27%
Current Price $49.09
% of Intrinsic Value 44.27%

Lennar Corporation qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the insufficient earnings growth or stability over the last ten years.  The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from a loss of $1.95 in 2011 to an estimated gain of $2.88 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.27% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Lennar Corporation (LEN)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

LEN Charts November 2015

Net Current Asset Value (NCAV) $6.40
Graham Number $47.07
PEmg 17.05
Current Ratio 4.90
PB Ratio 2.11
Dividend Yield 0.33%
Number of Consecutive Years of Dividend Growth 0

 

[/level-mg-stocks-screens-subscriber]

Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $10,285,140,000
Total Current Liabilities $2,099,581,000
Long-Term Debt $6,036,106,000
Total Assets $14,169,380,000
Intangible Assets $38,854,000
Total Liabilities $8,809,359,000
Shares Outstanding (Diluted Average) 230,548,000

Earnings Per Share History

Next Fiscal Year Estimate $3.77
Nov14 $2.80
Nov13 $2.15
Nov12 $3.11
Nov11 $0.48
Nov10 $0.51
Nov09 -$2.45
Nov08 -$7.00
Nov07 -$12.31
Nov06 $3.69
Nov05 $8.23
Nov04 $5.70
Nov03 $4.65
Nov02 $3.51
Nov01 $0.00
Nov00 $1.66
Nov99 $1.25
Nov98 $1.25
Nov97 $1.12
Nov96 $1.22
Nov95 $0.98

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.88
Nov14 $2.23
Nov13 $1.55
Nov12 $0.47
Nov11 -$1.95
Nov10 -$3.28
Nov09 -$4.10
Nov08 -$3.40
Nov07 -$0.40
Nov06 $5.42
Nov05 $5.66
Nov04 $3.95
Nov03 $2.79
Nov02 $1.75
Nov01 $0.93
Nov00 $1.36
Nov99 $1.20

Recommended Reading:

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The 20 Best Stocks For Value Investors This Week – 8/15/15
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Disclaimer:

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

Agilent Technologies Inc. Valuation – October 2015 Update $A

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – October 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Agilent Technologies Inc. (A) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Agilent Technologies, Inc. is a measurement company, providing core bio-analytical and electronic measurement solutions to the life sciences, diagnostics and genomics, chemical analysis, communications and electronics industries. The Company has three business segments. The Company’s chemical analysis business provides solutions that include instruments, software, consumables, and services that enable customers to identify, quantify and analyze the physical and biological properties of substances and products. The Company’s chemical analysis business provides solutions that include instruments, software, consumables, and services that enable customers to identify, quantify and analyze the physical and biological properties of substances and products. The Company’s electronic measurement business provides electronic measurement solutions to communications and electronics industries.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of A – October 2015

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,048,193,086 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.08 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 -55.85% Fail
6. Moderate PEmg Ratio PEmg < 20 19.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.95 Fail
Score
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 4.08 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.63 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

A value Chart October 2015

EPSmg $1.86
MG Growth Estimate 0.44%
MG Value $17.43
Opinion Overvalued
MG Value based on 3% Growth $26.92
MG Value based on 0% Growth $15.78
Market Implied Growth Rate 5.52%
Current Price $36.28
% of Intrinsic Value 208.16%

Agilent Technologies Inc. qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned by the insufficient earnings stability or growth over the last ten years, short dividend history, and the high PB ratio, while the Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be overvalued after growing its EPSmg (normalized earnings) from $1.80 in 2011 to an estimated $1.86 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 5.52% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Agilent Technologies Inc. (A)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

A Charts October 2015

Net Current Asset Value (NCAV) $0.99
Graham Number $18.57
PEmg 19.54
Current Ratio 4.08
PB Ratio 2.95
Dividend Yield 1.19%
Number of Consecutive Years of Dividend Growth 0

 

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Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $3,478,000,000
Total Current Liabilities $853,000,000
Long-Term Debt $1,655,000,000
Total Assets $7,251,000,000
Intangible Assets $2,850,000,000
Total Liabilities $3,148,000,000
Shares Outstanding (Diluted Average) 334,000,000

Earnings Per Share History

Next Fiscal Year Estimate $1.24
Oct14 $1.49
Oct13 $2.10
Oct12 $3.27
Oct11 $2.85
Oct10 $1.94
Oct09 -$0.09
Oct08 $1.87
Oct07 $1.57
Oct06 $7.50
Oct05 $0.65
Oct04 $0.75
Oct03 -$4.35
Oct02 -$2.22
Oct01 $0.38
Oct00 $1.66
Oct99 $1.35
Oct98 $0.56

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.86
Oct14 $2.22
Oct13 $2.39
Oct12 $2.35
Oct11 $1.80
Oct10 $1.71
Oct09 $1.83
Oct08 $2.68
Oct07 $2.46
Oct06 $2.10
Oct05 -$0.72
Oct04 -$1.19
Oct03 -$1.65
Oct02 -$0.09
Oct01 $0.91
Oct00 $1.03
Oct99 $0.60

Recommended Reading:

Other ModernGraham posts about the company

Agilent Technologies Inc. Analysis – July 2015 Update $A
27 Companies in the Spotlight This Week – 4/4/15
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Agilent Technologies Quarterly Valuation – January 2015 $A
14 Companies in the Spotlight This Week – 10/11/14

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Disclaimer:

The author held a long position in Coach Inc. (COH) but did not hold a position in any other 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.

Marsh & McLennan Companies Analysis – September 2015 Update $MMC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – August 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Marsh & McLennan Companies (MMC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Marsh and McLennan Companies, Inc. is a professional services firm. The Company operates as two business segments: Risk and Insurance Services, and Consulting. The Risk and Insurance Services segment provides risk management activities and insurance broking, reinsurance broking and insurance program management services for businesses, public entities, insurance companies, associations, professional services organizations and private clients. The Company conducts business in this segment through Marsh and Guy Carpenter. The Company conducts business in its Consulting segment through two main business groups: Mercer, provides consulting expertise, advice, services and solutions in the areas of health, retirement, talent and investments, and Oliver Wyman Group, provides specialized management and economic and brand consulting services.

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MMC – September 2015

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 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 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 Fail
6. Moderate PEmg Ratio PEmg < 20 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 Fail
Score
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 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 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 $2.56
MG Growth Estimate 12.91%
MG Value $87.95
Opinion Undervalued
MG Value based on 3% Growth $37.16
MG Value based on 0% Growth $21.78
Market Implied Growth Rate 6.34%
Current Price $54.26
% of Intrinsic Value 61.70%

Marsh & McLennan Companies qualifies for the Enterprising Investor but not the more conservative Defensive Investor.  The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg and PB ratios.  The Enterprising Investor is only initially concerned with the level of debt relative to the net current assets.  As a result, all Enterprising Investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with further research into the company.

As for a valuation, the company appears to be undervalued after growing its EPSmg (normalized earnings) from $1.38 in 2011 to an estimated $2.56 for 2015.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.34% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Marsh & McLennan Companies (MMC)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MMC Charts September 2015

Net Current Asset Value (NCAV) -$9.85
Graham Number $28.60
PEmg 21.17
Current Ratio 1.65
PB Ratio 4.33
Dividend Yield 2.06%
Number of Consecutive Years of Dividend Growth 6

 

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Useful Links:

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

Most Recent Balance Sheet Figures

Total Current Assets $5,299,000,000
Total Current Liabilities $3,208,000,000
Long-Term Debt $3,825,000,000
Total Assets $17,413,000,000
Intangible Assets $8,155,000,000
Total Liabilities $10,630,000,000
Shares Outstanding (Diluted Average) 541,000,000

Earnings Per Share History

Next Fiscal Year Estimate $2.90
Dec14 $2.65
Dec13 $2.43
Dec12 $2.13
Dec11 $1.79
Dec10 $1.55
Dec09 $0.42
Dec08 -$0.14
Dec07 $4.53
Dec06 $1.76
Dec05 $0.74
Dec04 $0.33
Dec03 $2.81
Dec02 $2.45
Dec01 $1.70
Dec00 $2.05
Dec99 $1.31
Dec98 $1.49
Dec97 $0.80
Dec96 $1.06
Dec95 $0.92

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.56
Dec14 $2.30
Dec13 $1.97
Dec12 $1.54
Dec11 $1.38
Dec10 $1.32
Dec09 $1.29
Dec08 $1.63
Dec07 $2.36
Dec06 $1.39
Dec05 $1.34
Dec04 $1.71
Dec03 $2.29
Dec02 $1.95
Dec01 $1.63
Dec00 $1.51
Dec99 $1.20

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies with a Low Beta – June 2015
The Best Companies of the Insurance Industry – June 2015
The 8 Best Stocks For Value Investors This Week – 6/6/15
Marsh & McLennan Companies Analysis – June 2015 Quarterly Update $MMC
23 Companies in the Spotlight This Week – 3/9/15

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American International Group Inc. Analysis – August 2015 Update $AIG

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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