Yum Brands Inc Valuation – February 2019 $YUM

Company Profile (excerpt from Reuters): YUM! Brands, Inc., incorporated on May 30, 1997, is engaged in restaurant business. As of December 31, 2016, the Company operated or franchised over 43,500 restaurants in more than 135 countries and territories operating under the KFC, Pizza Hut or Taco Bell (collectively the Concepts) brands. The Company operates through three segments: The KFC Division, which includes the operations of the KFC concept around the world; The Pizza Hut Division, which includes the operations of the Pizza Hut concept around the world, and The Taco Bell Division, which includes the operations of the Taco Bell concept around the world. Through its KFC, Pizza Hut and Taco Bell Concepts, the Company develops, operates or franchises a system of restaurants, which prepare, package and sell a menu of priced food items.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of YUM – 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 $29,581,245,821 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.93 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 40.94% Pass
6. Moderate PEmg Ratio PEmg < 20 24.18 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -3.82 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 0.93 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -103.73 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 $3.92
MG Growth Estimate 6.84%
MG Value $86.92
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $56.81
MG Value based on 0% Growth $33.30
Market Implied Growth Rate 7.84%
Current Price $94.72
% of Intrinsic Value 108.98%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.69 in 2015 to an estimated $3.92 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 7.84% 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 Yum! Brands, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.44 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 24.18, which was below the industry average of 31.73, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-33.9.

Yum! Brands, 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) -$33.90
Graham Number $0.00
PEmg 24.18
Current Ratio 0.93
PB Ratio -3.82
Current Dividend $1.44
Dividend Yield 1.52%
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 12/1/2018
Total Current Assets $1,207,000,000
Total Current Liabilities $1,301,000,000
Long-Term Debt $9,751,000,000
Total Assets $4,130,000,000
Intangible Assets $767,000,000
Total Liabilities $12,056,000,000
Shares Outstanding (Diluted Average) 320,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.52
Dec2018 $4.69
Dec2017 $3.77
Dec2016 $4.10
Dec2015 $2.90
Dec2014 $2.32
Dec2013 $2.36
Dec2012 $3.38
Dec2011 $2.74
Dec2010 $2.38
Dec2009 $2.22
Dec2008 $1.96
Dec2007 $1.68
Dec2006 $1.46
Dec2005 $1.28
Dec2004 $1.21
Dec2003 $1.01
Dec2002 $0.94
Dec2001 $0.81
Dec2000 $0.69
Dec1999 $0.98

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.92
Dec2018 $3.93
Dec2017 $3.40
Dec2016 $3.14
Dec2015 $2.69
Dec2014 $2.60
Dec2013 $2.70
Dec2012 $2.76
Dec2011 $2.37
Dec2010 $2.10
Dec2009 $1.88
Dec2008 $1.64
Dec2007 $1.43
Dec2006 $1.27
Dec2005 $1.13
Dec2004 $1.01
Dec2003 $0.91

Recommended Reading:

Other ModernGraham posts about the company

Yum Brands Inc Valuation – April 2018 $YUM
Yum Brands Inc Valuation – December 2016 $YUM
5 of the Worst Stocks to Invest In – August 2016
Yum! Brands Inc Valuation – August 2016 $YUM
5 Speculative and Overvalued Companies to Avoid – March 2015

Other ModernGraham posts about related companies

Starbucks Corporation Valuation – January 2019 $SBUX
McDonald’s Corp Valuation – November 2018 $MCD
Sonic Corp Valuation – August 2018 $SONC
Jack in the Box Inc Valuation – July 2018 $JACK
Chuy’s Holdings Inc Valuation – July 2018 $CHUY
Chipotle Mexican Grill Inc Valuation – June 2018 $CMG
Darden Restaurants Inc Valuation – May 2018 $DRI
Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD

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.

Starbucks Corporation Valuation – January 2019 $SBUX

Company Profile (excerpt from Reuters): Starbucks Corporation (Starbucks), incorporated on November 4, 1985, is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company purchases and roasts coffees that it sells, along with handcrafted coffee, tea and other beverages and a range of fresh food items, including snack offerings, through Company-operated stores. The Company also sells a range of coffee and tea products and licenses its trademarks through other channels, such as licensed stores, grocery and foodservice accounts. In addition to its Starbucks Coffee brand, the Company sells goods and services under various brands, including Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange and Ethos.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBUX – 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 $80,018,700,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.20 Pass
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 235.91% Pass
6. Moderate PEmg Ratio PEmg < 20 25.80 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 73.96 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.20 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.33 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 $2.50
MG Growth Estimate 15.00%
MG Value $96.22
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $36.24
MG Value based on 0% Growth $21.24
Market Implied Growth Rate 8.65%
Current Price $64.48
% of Intrinsic Value 67.01%

Starbucks Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, 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 $1.14 in 2015 to an estimated $2.5 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.65% 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 above the price.

At the time of valuation, further research into Starbucks Corporation revealed the company was trading above its Graham Number of $7.23. The company pays a dividend of $1.26 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 25.8, which was below the industry average of 25.96, 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 $-7.78.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.78
Graham Number $7.23
PEmg 25.80
Current Ratio 2.20
PB Ratio 73.96
Current Dividend $1.26
Dividend Yield 1.95%
Number of Consecutive Years of Dividend Growth 9

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $12,494,200,000
Total Current Liabilities $5,684,200,000
Long-Term Debt $9,090,200,000
Total Assets $24,156,400,000
Intangible Assets $4,583,800,000
Total Liabilities $22,980,600,000
Shares Outstanding (Diluted Average) 1,348,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.60
Sep2018 $3.24
Sep2017 $1.97
Sep2016 $1.90
Sep2015 $1.82
Sep2014 $1.35
Sep2013 $0.01
Sep2012 $0.90
Sep2011 $0.81
Sep2010 $0.62
Sep2009 $0.26
Sep2008 $0.22
Sep2007 $0.44
Sep2006 $0.36
Sep2005 $0.15
Sep2004 $0.12
Sep2003 $0.17
Sep2002 $0.07
Sep2001 $0.06
Sep2000 $0.03
Sep1999 $0.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.50
Sep2018 $2.32
Sep2017 $1.71
Sep2016 $1.45
Sep2015 $1.14
Sep2014 $0.78
Sep2013 $0.50
Sep2012 $0.69
Sep2011 $0.55
Sep2010 $0.40
Sep2009 $0.29
Sep2008 $0.29
Sep2007 $0.30
Sep2006 $0.21
Sep2005 $0.13
Sep2004 $0.11
Sep2003 $0.09

Recommended Reading:

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Starbucks Corporation Valuation – March 2018 $SBUX
Starbucks Corp Valuation – June 2016 $SBUX
40 Companies in the Spotlight This Week – 2/21/15
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14 Companies in the Spotlight This Week – 2/15/14

Other ModernGraham posts about related companies

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Sonic Corp Valuation – August 2018 $SONC
Jack in the Box Inc Valuation – July 2018 $JACK
Chuy’s Holdings Inc Valuation – July 2018 $CHUY
Chipotle Mexican Grill Inc Valuation – June 2018 $CMG
Darden Restaurants Inc Valuation – May 2018 $DRI
Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO

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.

Sonic Corp Valuation – August 2018 $SONC

Company Profile (excerpt from Reuters): Sonic Corp., incorporated on August 31, 1990, operates and franchises the chain of drive-thru restaurants (Sonic Drive-Ins) in the United States. As of August 31, 2016, 3,557 Sonic Drive-Ins were in operation from coast to coast in 45 states, consisting of 345 Company drive-thrus and 3,212 franchise drive-thrus. As of August 31, 2016, the Company’s restaurant design and construction consisted of a kitchen housed in a one-story building, which was approximately 1,500 square feet, flanked by canopy-covered rows of 16 to 24 parking spaces, with each space having its own payment terminal, intercom speaker system and menu board. At a Sonic Drive-In, a customer drives into one of the parking spaces, orders through the intercom speaker system and has the food delivered by a carhop. Sonic Drive-Ins also include a drive-thru lane and patio seating to provide customers with alternative dining options.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SONC – 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 $1,235,546,903 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.78 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 215.07% Pass
6. Moderate PEmg Ratio PEmg < 20 23.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -4.67 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 1.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 15.38 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.48
MG Growth Estimate 15.00%
MG Value $57.03
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $21.48
MG Value based on 0% Growth $12.59
Market Implied Growth Rate 7.30%
Current Price $34.21
% of Intrinsic Value 59.98%

Sonic Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, poor dividend history, 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 $0.64 in 2014 to an estimated $1.48 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.3% 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 Sonic Corporation revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.56 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 23.09, which was below the industry average of 29.02, 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 $-19.15.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.15
Graham Number $0.00
PEmg 23.09
Current Ratio 1.78
PB Ratio -4.67
Current Dividend $0.56
Dividend Yield 1.64%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 5/1/2018
Total Current Assets $104,135,000
Total Current Liabilities $58,512,000
Long-Term Debt $701,853,000
Total Assets $545,546,000
Intangible Assets $75,344,000
Total Liabilities $818,806,000
Shares Outstanding (Diluted Average) 37,316,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.86
Aug2017 $1.45
Aug2016 $1.29
Aug2015 $1.20
Aug2014 $0.85
Aug2013 $0.64
Aug2012 $0.60
Aug2011 $0.31
Aug2010 $0.34
Aug2009 $0.81
Aug2008 $0.97
Aug2007 $0.91
Aug2006 $0.88
Aug2005 $0.75
Aug2004 $0.63
Aug2003 $0.52
Aug2002 $0.50
Aug2001 $0.41
Aug2000 $0.35
Aug1999 $0.28
Aug1998 $0.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.48
Aug2017 $1.22
Aug2016 $1.05
Aug2015 $0.86
Aug2014 $0.64
Aug2013 $0.53
Aug2012 $0.52
Aug2011 $0.55
Aug2010 $0.70
Aug2009 $0.88
Aug2008 $0.88
Aug2007 $0.81
Aug2006 $0.72
Aug2005 $0.62
Aug2004 $0.53
Aug2003 $0.45
Aug2002 $0.40

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Other ModernGraham posts about the company

14 Best Stocks for Value Investors This Week – 2/11/17
Sonic Corporation Valuation – Initial Coverage $SONC

Other ModernGraham posts about related companies

Jack in the Box Inc Valuation – July 2018 $JACK
Chuy’s Holdings Inc Valuation – July 2018 $CHUY
Chipotle Mexican Grill Inc Valuation – June 2018 $CMG
Darden Restaurants Inc Valuation – May 2018 $DRI
Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO
Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Sonic Corporation Valuation – Initial Coverage $SONC

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.

Jack in the Box Inc Valuation – July 2018 $JACK

Company Profile (excerpt from Reuters): Jack in the Box Inc., incorporated on May 27, 1999, is a restaurant company that operates and franchises Jack in the Box restaurants. The Company segment is Jack in the Box. It has more then 2,200 restaurants in 21 states and Guam.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of JACK – 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 $2,362,168,115 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.87 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 134.96% Pass
6. Moderate PEmg Ratio PEmg < 20 22.87 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -5.61 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 0.87 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -40.21 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 $3.60
MG Growth Estimate 15.00%
MG Value $138.55
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $52.18
MG Value based on 0% Growth $30.59
Market Implied Growth Rate 7.19%
Current Price $82.31
% of Intrinsic Value 59.41%

Jack in the Box 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. 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 $1.57 in 2014 to an estimated $3.6 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.19% 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 Jack in the Box Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.6 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 22.87, which was below the industry average of 30.09, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-39.54.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$39.54
Graham Number $0.00
PEmg 22.87
Current Ratio 0.87
PB Ratio -5.61
Current Dividend $1.60
Dividend Yield 1.94%
Number of Consecutive Years of Dividend Growth 4

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $145,141,000
Total Current Liabilities $167,535,000
Long-Term Debt $900,402,000
Total Assets $875,038,000
Intangible Assets $48,124,000
Total Liabilities $1,305,948,000
Shares Outstanding (Diluted Average) 29,356,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.55
Sep2017 $4.38
Sep2016 $3.63
Sep2015 $2.85
Sep2014 $2.12
Sep2013 $1.14
Sep2012 $1.28
Sep2011 $1.61
Sep2010 $1.26
Sep2009 $2.05
Sep2008 $2.01
Sep2007 $1.87
Sep2006 $1.49
Sep2005 $1.21
Sep2004 $0.99
Sep2003 $0.95
Sep2002 $1.00
Sep2001 $1.03
Sep2000 $1.28
Sep1999 $0.98
Sep1998 $0.83

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.60
Sep2017 $3.36
Sep2016 $2.63
Sep2015 $2.02
Sep2014 $1.57
Sep2013 $1.35
Sep2012 $1.52
Sep2011 $1.68
Sep2010 $1.72
Sep2009 $1.87
Sep2008 $1.69
Sep2007 $1.46
Sep2006 $1.21
Sep2005 $1.06
Sep2004 $1.01
Sep2003 $1.02
Sep2002 $1.05

Recommended Reading:

Other ModernGraham posts about the company

Jack in the Box Inc Valuation – Initial Coverage $JACK

Other ModernGraham posts about related companies

Chipotle Mexican Grill Inc Valuation – June 2018 $CMG
Darden Restaurants Inc Valuation – May 2018 $DRI
Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO
Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Sonic Corporation Valuation – Initial Coverage $SONC
Darden Restaurants Inc Valuation – February 2017 $DRI
Jack in the Box Inc Valuation – Initial Coverage $JACK

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.

Chuy’s Holdings Inc Valuation – July 2018 $CHUY

Company Profile (excerpt from Reuters): Chuy’s Holdings, Inc., incorporated on October 16, 2006, operates Chuy’s, a restaurant concept offering a distinct menu of authentic, freshly prepared Mexican and Tex-Mex inspired food. As of December 25, 2016, the Company operated 80 Chuy’s restaurants across 16 states. The Company offers the same menu during lunch and dinner, which includes enchiladas, fajitas, tacos, burritos, combination platters and daily specials, complemented by a range of appetizers, soups and salads.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CHUY – 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 $544,052,754 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.87 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 -122.50% Fail
6. Moderate PEmg Ratio PEmg < 20 27.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.91 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 0.87 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 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 $1.17
MG Growth Estimate 15.00%
MG Value $45.15
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $17.00
MG Value based on 0% Growth $9.97
Market Implied Growth Rate 9.59%
Current Price $32.45
% of Intrinsic Value 71.88%

Chuy’s Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of 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 Undervalued after growing its EPSmg (normalized earnings) from $-0.64 in 2014 to an estimated $1.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 9.59% 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 Chuy’s Holdings Inc revealed the company was trading above its Graham Number of $16.63. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 27.67, which was below the industry average of 30.09, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.64.

Chuy’s Holdings Inc receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.64
Graham Number $16.63
PEmg 27.67
Current Ratio 0.87
PB Ratio 2.91
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 $21,462,000
Total Current Liabilities $24,579,000
Long-Term Debt $0
Total Assets $274,253,000
Intangible Assets $48,163,000
Total Liabilities $83,643,000
Shares Outstanding (Diluted Average) 17,069,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.10
Dec2017 $1.70
Dec2016 $1.02
Dec2015 $0.77
Dec2014 $0.69
Dec2013 $0.66
Dec2012 $0.37
Dec2011 $0.20
Dec2010 -$17.18

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.17
Dec2017 $1.13
Dec2016 $0.80
Dec2015 $0.64
Dec2014 -$0.64
Dec2013 -$1.93
Dec2012 -$3.26
Dec2011 -$4.51
Dec2010 -$5.73

Recommended Reading:

Other ModernGraham posts about the company

Chuy’s Holdings Inc Valuation – Initial Coverage $CHUY

Other ModernGraham posts about related companies

Chipotle Mexican Grill Inc Valuation – June 2018 $CMG
Darden Restaurants Inc Valuation – May 2018 $DRI
Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO
Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Sonic Corporation Valuation – Initial Coverage $SONC
Darden Restaurants Inc Valuation – February 2017 $DRI
Jack in the Box Inc Valuation – Initial Coverage $JACK

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.

Chipotle Mexican Grill Inc Valuation – June 2018 $CMG

Company Profile (excerpt from Reuters): Chipotle Mexican Grill, Inc. (Chipotle), incorporated on January 30, 1998, together with its subsidiaries, operates Chipotle Mexican Grill restaurants. The Company’s Chipotle Mexican Grill restaurants serve a menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. As of December 31, 2016, the Company managed its operations and restaurants based on 11 regions. As of December 31, 2016, the Company operated 2,198 Chipotle restaurants throughout the United States, as well as 29 international Chipotle restaurants, and it also had 23 restaurants in operation in other non-Chipotle concepts. As of December 31, 2016, 29 of its restaurants were located outside of the United States, with 17 in Canada, six in the United Kingdom, five in France and one in Frankfurt, Germany. The Company sells gift cards, which do not have an expiration date.

CMG Chart

CMG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CMG – 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 $13,061,212,606 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.72 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 -9.85% Fail
6. Moderate PEmg Ratio PEmg < 20 63.90 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 9.63 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 1.72 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 Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $7.35
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $106.64
MG Value based on 0% Growth $62.51
Market Implied Growth Rate 27.70%
Current Price $469.94
% of Intrinsic Value N/A

Chipotle Mexican Grill, 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 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 $10.53 in 2014 to an estimated $7.35 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 27.7% 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 Chipotle Mexican Grill, Inc. revealed the company was trading above its Graham Number of $92.43. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 63.9, which was above the industry average of 28.54. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.68.

Chipotle Mexican Grill, 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) -$3.68
Graham Number $92.43
PEmg 63.90
Current Ratio 1.72
PB Ratio 9.63
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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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 $630,439,000
Total Current Liabilities $367,320,000
Long-Term Debt $0
Total Assets $2,097,444,000
Intangible Assets $21,939,000
Total Liabilities $733,399,000
Shares Outstanding (Diluted Average) 27,950,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.80
Dec2017 $6.17
Dec2016 $0.77
Dec2015 $15.10
Dec2014 $14.13
Dec2013 $10.47
Dec2012 $8.75
Dec2011 $6.76
Dec2010 $5.64
Dec2009 $3.95
Dec2008 $2.36
Dec2007 $2.13
Dec2006 $1.28
Dec2005 $1.43
Dec2004 $0.24
Dec2003 -$0.34
Dec2002 -$0.87
Dec2001 -$1.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.35
Dec2017 $7.86
Dec2016 $9.09
Dec2015 $12.51
Dec2014 $10.53
Dec2013 $8.19
Dec2012 $6.53
Dec2011 $5.00
Dec2010 $3.77
Dec2009 $2.64
Dec2008 $1.82
Dec2007 $1.35
Dec2006 $0.75
Dec2005 $0.26
Dec2004 -$0.38
Dec2003 -$0.64
Dec2002 -$0.69

Recommended Reading:

Other ModernGraham posts about the company

Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Chipotle Mexican Grill Inc Valuation – August 2016 $CMG
Chipotle Mexican Grill Inc Stock Valuation – February 2016 $CMG
Chipotle Mexican Group Inc Valuation – November 2015 Update $CMG
Chipotle Mexican Grill Inc. Analysis – August 2015 Update $CMG

Other ModernGraham posts about related companies

Darden Restaurants Inc Valuation – May 2018 $DRI
Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO
Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Sonic Corporation Valuation – Initial Coverage $SONC
Darden Restaurants Inc Valuation – February 2017 $DRI
Jack in the Box Inc Valuation – Initial Coverage $JACK
Chuy’s Holdings Inc Valuation – Initial Coverage $CHUY

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.

Darden Restaurants Inc Valuation – May 2018 $DRI

Company Profile (excerpt from Reuters): Darden Restaurants, Inc., incorporated on March 30, 1995, is a full-service restaurant company. The Company owned and operated 1,536 restaurants through its subsidiaries in the United States and Canada, as of May 29, 2016. The Company’s segments include Olive Garden, LongHorn Steakhouse, Fine Dining (which includes The Capital Grille, and Eddie V’s Prime Seafood and Wildfish Seafood Grille (Eddie V’s)) and Other Business (which includes Yard House, Seasons 52, Bahama Breeze, consumer-packaged goods and franchise revenues). As of May 29, 2016, the Company also had 50 restaurants operated by independent third parties pursuant to area development and franchise agreements.

DRI Chart

DRI data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DRI – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,921,395,378 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.39 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 27.48% Fail
6. Moderate PEmg Ratio PEmg < 20 21.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.16 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 0.39 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -1.03 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.01
MG Growth Estimate 5.67%
MG Value $79.50
Opinion Fairly Valued
MG Grade C-
MG Value based on 3% Growth $58.09
MG Value based on 0% Growth $34.05
Market Implied Growth Rate 6.64%
Current Price $87.25
% of Intrinsic Value 109.74%

Darden Restaurants, 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 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.91 in 2014 to an estimated $4.01 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.64% 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 Darden Restaurants, Inc. revealed the company was trading above its Graham Number of $41.74. The company pays a dividend of $2.24 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 21.78, which was below the industry average of 29.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.96.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.96
Graham Number $41.74
PEmg 21.78
Current Ratio 0.39
PB Ratio 5.16
Current Dividend $2.24
Dividend Yield 2.57%
Number of Consecutive Years of Dividend Growth 1

Useful Links:

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Most Recent Balance Sheet Figures

Balance Sheet Information 2/1/2018
Total Current Assets $569,600,000
Total Current Liabilities $1,467,500,000
Long-Term Debt $926,400,000
Total Assets $5,454,700,000
Intangible Assets $2,132,200,000
Total Liabilities $3,329,800,000
Shares Outstanding (Diluted Average) 125,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.62
May2017 $3.80
May2016 $2.90
May2015 $5.47
May2014 $2.15
May2013 $3.13
May2012 $3.57
May2011 $3.39
May2010 $2.84
May2009 $2.65
May2008 $2.60
May2007 $1.35
May2006 $2.16
May2005 $1.78
May2004 $1.34
May2003 $1.27
May2002 $1.30
May2001 $1.06
May2000 $0.89
May1999 $0.66
May1998 $0.45

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.01
May2017 $3.63
May2016 $3.51
May2015 $3.72
May2014 $2.91
May2013 $3.23
May2012 $3.19
May2011 $2.85
May2010 $2.50
May2009 $2.25
May2008 $1.99
May2007 $1.65
May2006 $1.72
May2005 $1.45
May2004 $1.25
May2003 $1.15
May2002 $1.01

Recommended Reading:

Other ModernGraham posts about the company

Darden Restaurants Inc Valuation – February 2017 $DRI
Darden Restaurants Inc. Analysis – September 2015 Update $DRI
5 Speculative and Overvalued Companies to Avoid – October 2014
17 Companies in the Spotlight This Week – 9/27/2014
Darden Restaurants Inc. Annual Valuation – 2014 $DRI

Other ModernGraham posts about related companies

Yum Brands Inc Valuation – April 2018 $YUM
Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO
Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Sonic Corporation Valuation – Initial Coverage $SONC
Darden Restaurants Inc Valuation – February 2017 $DRI
Jack in the Box Inc Valuation – Initial Coverage $JACK
Chuy’s Holdings Inc Valuation – Initial Coverage $CHUY
Yum Brands Inc Valuation – December 2016 $YUM

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.

Yum Brands Inc Valuation – April 2018 $YUM

Company Profile (excerpt from Reuters): YUM! Brands, Inc., incorporated on May 30, 1997, is engaged in restaurant business. As of December 31, 2016, the Company operated or franchised over 43,500 restaurants in more than 135 countries and territories operating under the KFC, Pizza Hut or Taco Bell (collectively the Concepts) brands. The Company operates through three segments: The KFC Division, which includes the operations of the KFC concept around the world; The Pizza Hut Division, which includes the operations of the Pizza Hut concept around the world, and The Taco Bell Division, which includes the operations of the Taco Bell concept around the world. Through its KFC, Pizza Hut and Taco Bell Concepts, the Company develops, operates or franchises a system of restaurants, which prepare, package and sell a menu of priced food items.

YUM Chart

YUM data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of YUM – April 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 $28,206,279,751 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.66 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 50.82% Pass
6. Moderate PEmg Ratio PEmg < 20 25.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -4.69 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 1.66 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 9.48 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 $3.43
MG Growth Estimate 4.79%
MG Value $62.06
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $49.78
MG Value based on 0% Growth $29.18
Market Implied Growth Rate 8.26%
Current Price $85.89
% of Intrinsic Value 138.41%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.6 in 2014 to an estimated $3.43 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.26% 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 Yum! Brands, Inc. revealed the company was trading above its Graham Number of $0. The company pays a dividend of $1.2 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 25.02, which was below the industry average of 26.95, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.41.

Yum! Brands, Inc. receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.41
Graham Number $0.00
PEmg 25.02
Current Ratio 1.66
PB Ratio -4.69
Current Dividend $1.20
Dividend Yield 1.40%
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 12/1/2017
Total Current Assets $2,507,000,000
Total Current Liabilities $1,512,000,000
Long-Term Debt $9,429,000,000
Total Assets $5,311,000,000
Intangible Assets $622,000,000
Total Liabilities $11,645,000,000
Shares Outstanding (Diluted Average) 346,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.20
Dec2017 $3.77
Dec2016 $4.10
Dec2015 $2.90
Dec2014 $2.32
Dec2013 $2.36
Dec2012 $3.38
Dec2011 $2.74
Dec2010 $2.38
Dec2009 $2.22
Dec2008 $1.96
Dec2007 $1.68
Dec2006 $1.46
Dec2005 $1.28
Dec2004 $1.21
Dec2003 $1.01
Dec2002 $0.94
Dec2001 $0.81
Dec2000 $0.69
Dec1999 $0.98
Dec1998 $0.71

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.43
Dec2017 $3.40
Dec2016 $3.14
Dec2015 $2.69
Dec2014 $2.60
Dec2013 $2.70
Dec2012 $2.76
Dec2011 $2.37
Dec2010 $2.10
Dec2009 $1.88
Dec2008 $1.64
Dec2007 $1.43
Dec2006 $1.27
Dec2005 $1.13
Dec2004 $1.01
Dec2003 $0.91
Dec2002 $0.85

Recommended Reading:

Other ModernGraham posts about the company

Yum Brands Inc Valuation – December 2016 $YUM
5 of the Worst Stocks to Invest In – August 2016
Yum! Brands Inc Valuation – August 2016 $YUM
5 Speculative and Overvalued Companies to Avoid – March 2015
18 Companies in the Spotlight This Week – 3/15/15

Other ModernGraham posts about related companies

Starbucks Corporation Valuation – March 2018 $SBUX
McDonald’s Corporation Valuation – February 2018 $MCD
El Pollo LoCo Holdings Inc Valuation – Initial Coverage $LOCO
Chipotle Mexican Grill Inc Valuation – March 2017 $CMG
Sonic Corporation Valuation – Initial Coverage $SONC
Darden Restaurants Inc Valuation – February 2017 $DRI
Jack in the Box Inc Valuation – Initial Coverage $JACK
Chuy’s Holdings Inc Valuation – Initial Coverage $CHUY
Yum Brands Inc Valuation – December 2016 $YUM
McDonald’s Corp Valuation – November 2016 $MCD

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.

Starbucks Corporation Valuation – March 2018 $SBUX

Company Profile (excerpt from Reuters): Starbucks Corporation (Starbucks), incorporated on November 4, 1985, is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company purchases and roasts coffees that it sells, along with handcrafted coffee, tea and other beverages and a range of fresh food items, including snack offerings, through Company-operated stores. The Company also sells a range of coffee and tea products and licenses its trademarks through other channels, such as licensed stores, grocery and foodservice accounts. In addition to its Starbucks Coffee brand, the Company sells goods and services under various brands, including Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange and Ethos.

SBUX Chart

SBUX data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SBUX – March 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $81,946,478,928 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.01 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 272.19% Pass
6. Moderate PEmg Ratio PEmg < 20 28.51 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 14.54 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 1.01 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 107.70 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 $2.04
MG Growth Estimate 15.00%
MG Value $78.72
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $29.65
MG Value based on 0% Growth $17.38
Market Implied Growth Rate 10.01%
Current Price $58.30
% of Intrinsic Value 74.06%

Starbucks Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 $0.78 in 2014 to an estimated $2.04 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 10.01% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Starbucks Corporation revealed the company was trading above its Graham Number of $14.33. The company pays a dividend of $1 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 28.51, which was below the industry average of 28.62, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.1.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$4.10
Graham Number $14.33
PEmg 28.51
Current Ratio 1.01
PB Ratio 14.54
Current Dividend $1.00
Dividend Yield 1.72%
Number of Consecutive Years of Dividend Growth 8

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $6,883,500,000
Total Current Liabilities $6,841,100,000
Long-Term Debt $4,566,500,000
Total Assets $18,518,500,000
Intangible Assets $4,921,000,000
Total Liabilities $12,766,400,000
Shares Outstanding (Diluted Average) 1,434,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.42
Sep2017 $1.97
Sep2016 $1.90
Sep2015 $1.82
Sep2014 $1.35
Sep2013 $0.01
Sep2012 $0.90
Sep2011 $0.81
Sep2010 $0.62
Sep2009 $0.26
Sep2008 $0.22
Sep2007 $0.44
Sep2006 $0.36
Sep2005 $0.31
Sep2004 $0.24
Sep2003 $0.17
Sep2002 $0.13
Sep2001 $0.12
Sep2000 $0.06
Sep1999 $0.07
Sep1998 $0.05

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.04
Sep2017 $1.71
Sep2016 $1.45
Sep2015 $1.14
Sep2014 $0.78
Sep2013 $0.50
Sep2012 $0.69
Sep2011 $0.55
Sep2010 $0.40
Sep2009 $0.30
Sep2008 $0.32
Sep2007 $0.34
Sep2006 $0.28
Sep2005 $0.22
Sep2004 $0.17
Sep2003 $0.13
Sep2002 $0.10

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Darden Restaurants Inc Valuation – February 2017 $DRI
Jack in the Box Inc Valuation – Initial Coverage $JACK
Chuy’s Holdings Inc Valuation – Initial Coverage $CHUY
Yum Brands Inc Valuation – December 2016 $YUM
McDonald’s Corp Valuation – November 2016 $MCD
Chipotle Mexican Grill Inc Valuation – August 2016 $CMG

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.

Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Dividend Growth Stocks

Dividend growth investing is a very popular approach which can fit within the ModernGraham methods.  This article will look at companies reviewed by ModernGraham which have grown their dividends annually for at least the last 20 years.

For all 900 companies covered by ModernGraham, I track the number of years a company has grown its dividend, and provide that information in my individual company valuations.

Out of the 900 companies, only 70 have grown dividends annually for at least the last 20 years.  Here is an overview of those companies:

The Elite

The following companies have been rated as undervalued and suitable for either the Defensive Investor or the Enterprising Investor:

AFLAC Incorporated (AFL)

AFLAC Incorporated qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. 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 Undervalued after growing its EPSmg (normalized earnings) from $4.72 in 2012 to an estimated $6.22 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.36% 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.

At the time of valuation, further research into AFLAC Incorporated revealed the company was trading below its Graham Number of $87.98. The company pays a dividend of $1.64 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.22, which was below the industry average of 18.78, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  (See the full valuation)

W W Grainger Inc (GWW)

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $8.13 in 2012 to an estimated $11.16 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 6.36% 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 W W Grainger Inc revealed the company was trading above its Graham Number of $92.08. The company pays a dividend of $4.78 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 21.21, which was below the industry average of 22.25, 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 $-11.81.  (See the full valuation)

Leggett & Platt, Inc. (LEG)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.31 in 2013 to an estimated $2.24 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.94% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Leggett & Platt, Inc. revealed the company was trading above its Graham Number of $21.87. The company pays a dividend of $1.34 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 22.37, which was below the industry average of 25.38, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.05.  (See the full valuation)

People’s United Financial, Inc. (PBCT)

People’s United Financial, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position. . 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 Undervalued after growing its EPSmg (normalized earnings) from $0.51 in 2012 to an estimated $0.83 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.97% 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.  (See the full valuation)

PBCT charts June 2016

T. Rowe Price Group Inc (TROW)

T. Rowe Price Group Inc qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only initially concerned with the  high PB ratio. The Enterprising Investor 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 Undervalued after growing its EPSmg (normalized earnings) from $3.23 in 2013 to an estimated $4.97 for 2017.  This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.82% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into T. Rowe Price Group Inc revealed the company was trading above its Graham Number of $51.41.  The company pays a dividend of $2.16 per share, for a yield of 2.7%, putting it among the best dividend paying stocks today.  Its PEmg (price over earnings per share – ModernGraham) was 16.13, which was below the industry average of 21.55, 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 $3.21.  (See the full valuation)

United Technologies Corporation (UTX)

 

 

 

United Technologies Corporation qualifies for both the Defensive Investor and the Enterprising Investor. The Defensive Investor is only initially concerned with the low current ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $5.17 in 2012 to an estimated $7.65 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.29% 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.  (See the full valuation)

UTX Charts May 2016

The Good

The following companies have been rated as fairly valued and suitable for either the Defensive Investor or the Enterprising Investor:

A. O. Smith Corp (AOS)

A. O. Smith Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.9 in 2012 to an estimated $2.82 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 4.47% 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.  (See the full valuation)

AOS charts June 2016

Bemis Company, Inc. (BMS)

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.68 in 2012 to an estimated $2.28 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.04% 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.  (See the full valuation)

BMS charts July 2016

Cincinnati Financial Corporation (CINF)

Cincinnati Financial Corporation 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 Fairly Valued after growing its EPSmg (normalized earnings) from $2.12 in 2012 to an estimated $3.21 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 6.36% 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 within a margin of safety relative to the price.  (See the full valuation)

CINF charts May 2016

Carlisle Companies, Inc. (CSL)

Carlisle Companies, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.24 in 2013 to an estimated $4.64 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.07% 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 Carlisle Companies, Inc. revealed the company was trading above its Graham Number of $70.65. The company pays a dividend of $1.3 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 22.65, which was below the industry average of 27.42, 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 $-2.21.  (See the full valuation)

Cintas Corporation (CTAS)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.07 in 2013 to an estimated $4.36 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 8.06% 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.  (See the full valuation)

CTAS charts July 2016

Genuine Parts Company (GPC)

Genuine Parts Company is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor is only concerned with the low current ratio. 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 $3.46 in 2012 to an estimated $4.59 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 7.19% 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.  (See the full valuation)

GPC charts July 2016

Hormel Foods Corp (HRL)

Hormel Foods Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg and PB ratios. The Enterprising Investor 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 Fairly Valued after growing its EPSmg (normalized earnings) from $0.89 in 2013 to an estimated $1.46 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.65% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Hormel Foods Corp revealed the company was trading above its Graham Number of $17.73. The company pays a dividend of $0.61 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 23.8, which was below the industry average of 24.74, 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 $0.61.  (See the full valuation)

Illinois Tool Works Inc. (ITW)

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $4.23 in 2013 to an estimated $5.99 for 2017.  This level of demonstrated earnings growth supports the market’s implied estimate of 7.29% 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 Illinois Tool Works Inc. revealed the company was trading above its Graham Number of $42.93.  The company pays a dividend of $2.4 per share, for a yield of 1.7%  Its PEmg (price over earnings per share – ModernGraham) was 23.09, which was below the industry average of 26.48, which by some methods of valuation makes it one of the most undervalued stocks in its industry.  Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.18.  (See the full valuation)

Ross Stores, Inc. (ROST)

Ross Stores, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.36 in 2013 to an estimated $2.35 for 2017. This level of demonstrated earnings growth supports the market’s implied estimate of 7.44% 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 within a margin of safety relative to the price.  (See the full valuation)

ROST charts June 2016

Stanley Black & Decker, Inc. (SWK)

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.6 in 2013 to an estimated $6.08 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.66% 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 Stanley Black & Decker, Inc. revealed the company was trading above its Graham Number of $81. The company pays a dividend of $2.26 per share, for a yield of 1.7% Its PEmg (price over earnings per share – ModernGraham) was 21.83, which was below the industry average of 24.17, 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 $-30.22.  (See the full valuation)

VF Corp (VFC)

 

 

 

 

 

 

VF Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor 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 Fairly Valued after growing its EPSmg (normalized earnings) from $1.83 in 2012 to an estimated $2.72 for 2016. This level of demonstrated earnings growth supports the market’s implied estimate of 7.2% 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 within a margin of safety relative to the price.  (See the full valuation)

VFC charts August 2016

The Full List

[not-level-free]
Clicking on the company name will take you to the company’s latest valuation.  For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield
ADM Archer Daniels Midland Company E 1/3/2017 $21.55 $41.56 192.85% 16.17 2.84%
ADP Automatic Data Processing E 11/20/2016 $49.29 $102.89 208.74% 31.18 2.06%
AFL AFLAC Incorporated D 12/19/2016 $112.32 $79.71 70.97% 12.82 2.06%
ALB Albemarle Corporation E 3/18/2017 $35.12 $113.48 323.12% 28.16 1.08%
AOS A. O. Smith Corp E 6/11/2016 $64.88 $53.75 82.85% 19.06 1.51%
APD Air Products & Chemicals, Inc. S 1/27/2017 $41.85 $145.15 346.83% 29.26 2.34%
BCR C R Bard Inc E 3/21/2017 $93.40 $319.42 341.99% 44.74 0.31%
BDX Becton Dickinson and Co S 1/8/2017 $18.86 $199.17 1056.04% 40.40 1.33%
BEN Franklin Resources, Inc. D 2/24/2017 $31.56 $41.77 132.35% 13.74 1.77%
BF.B Brown-Forman Corporation S 2/2/2017 $45.80 $50.90 111.14% 27.07 1.34%
BMS Bemis Company, Inc. E 7/1/2016 $43.96 $41.68 94.81% 18.28 2.71%
CAH Cardinal Health Inc S 7/3/2016 $54.67 $64.36 117.72% 18.71 2.41%
CFR Cullen/Frost Bankers, Inc. E 12/8/2016 $62.02 $85.00 137.05% 19.91 2.52%
CHRW C.H. Robinson Worldwide Inc S 8/29/2016 $46.96 $66.86 142.38% 20.08 2.50%
CINF Cincinnati Financial Corporation E 5/21/2016 $76.98 $76.98 100.00% 23.98 2.42%
CL Colgate-Palmolive Company S 4/8/2017 $22.55 $71.61 317.56% 29.11 2.16%
CLX Clorox Co S 1/28/2017 $63.04 $138.83 220.23% 28.98 2.24%
CSL Carlisle Companies, Inc. E 2/27/2017 $99.67 $92.40 92.71% 19.91 1.41%
CTAS Cintas Corporation E 7/21/2016 $167.73 $133.87 79.81% 30.70 0.78%
CVX Chevron Corporation S 3/15/2017 $0.00 $105.78 N/A 28.67 4.06%
CWT California Water Service Group S 3/26/2017 $11.50 $36.90 320.87% 33.85 1.87%
DCI Donaldson Company, Inc. E 7/17/2017 $17.47 $46.63 266.91% 28.96 1.48%
DOV Dover Corp D 7/8/2016 $60.20 $83.70 139.04% 18.36 1.98%
ECL Ecolab Inc. S 6/26/2016 $117.40 $130.40 111.07% 35.15 1.04%
ED Consolidated Edison, Inc. S 2/26/2017 $46.08 $83.75 181.75% 20.99 3.20%
EMR Emerson Electric Co. S 2/12/2016 $38.39 $58.00 151.08% 18.24 3.26%
EPD Enterprise Products Partners L.P. S 8/27/2016 $21.05 $24.98 118.67% 19.52 6.20%
ESS Essex Property Trust Inc S 3/14/2017 $87.33 $264.20 302.53% 64.75 2.42%
EXPD Expeditors International of Washington E 6/25/2016 $39.14 $54.98 140.47% 26.31 1.31%
GPC Genuine Parts Company E 7/8/2016 $83.61 $82.67 98.88% 18.01 3.02%
GWW W W Grainger Inc E 1/12/2017 $219.90 $158.41 72.04% 14.19 3.02%
HP Helmerich & Payne, Inc. S 6/23/2016 $14.72 $43.25 293.82% 12.95 6.36%
HRL Hormel Foods Corp E 3/9/2017 $40.41 $33.93 83.96% 23.24 1.80%
IBM International Business Machines Corp. S 3/13/2017 $94.03 $140.33 149.24% 10.76 3.92%
ITW Illinois Tool Works Inc. E 8/13/2017 $126.13 $135.60 107.51% 22.64 1.77%
JKHY Jack Henry & Associates, Inc. S 1/30/2017 $78.75 $99.30 126.10% 35.46 1.10%
JNJ Johnson & Johnson E 1/16/2017 $105.81 $133.45 126.12% 24.22 2.32%
KMB Kimberly Clark Corp S 6/24/2016 $47.14 $122.68 260.25% 26.90 2.90%
KO The Coca-Cola Co S 7/28/2016 $10.76 $45.68 424.54% 25.66 2.93%
LECO Lincoln Electric Holdings, Inc. E 3/8/2017 $29.79 $85.16 285.87% 29.26 1.54%
LEG Leggett & Platt, Inc. E 3/26/2017 $66.81 $46.19 69.14% 20.62 2.90%
LLTC Linear Technology Corporation E 7/12/2016 $19.97 $65.00 325.49% 33.16 1.88%
LOW Lowe’s Companies, Inc. S 3/26/2017 $131.33 $73.85 56.23% 21.53 1.80%
MCD McDonald’s Corporation S 11/20/2016 $49.98 $158.36 316.85% 30.99 2.25%
MDT Medtronic plc. Ordinary Shares D 7/12/2016 $34.43 $83.52 242.58% 25.31 1.82%
MKC McCormick & Company, Incorporated S 1/3/2017 $49.74 $96.23 193.47% 28.90 1.76%
MMM 3M Co E 12/13/2016 $135.24 $204.55 151.25% 27.09 2.13%
NEE NextEra Energy Inc S 12/21/2016 $79.43 $150.45 189.41% 27.76 2.25%
NNN National Retail Properties, Inc. S 12/4/2016 $20.46 $41.19 201.32% 33.49 4.27%
PBCT People’s United Financial, Inc. D 6/20/2016 $22.89 $16.58 72.43% 19.98 4.04%
PEP PepsiCo, Inc. S 7/13/2016 $43.65 $118.26 270.93% 28.57 2.42%
PG Procter & Gamble Co S 7/8/2016 $17.20 $92.86 539.88% 26.99 2.85%
PH Parker-Hannifin Corp D 7/15/2016 $81.86 $155.15 189.53% 24.09 1.62%
PPG PPG Industries, Inc. S 1/16/2017 $215.75 $102.39 47.46% 18.28 1.48%
PX Praxair, Inc. S 8/21/2017 $54.64 $131.21 240.14% 23.60 2.29%
ROST Ross Stores, Inc. E 6/21/2016 $71.19 $58.56 82.26% 24.92 0.80%
SHW Sherwin-Williams Co S 7/12/2016 $386.46 $329.62 85.29% 32.83 0.86%
SKT Tanger Factory Outlet Centers Inc. S 1/16/2017 $61.57 $24.10 39.14% 15.06 5.06%
SON Sonoco Products Co E 2/6/2017 $32.94 $47.62 144.57% 20.89 3.02%
SPGI S&P Global Inc S 2/8/2017 $135.28 $149.99 110.87% 35.97 0.94%
SWK Stanley Black & Decker, Inc. E 4/10/2017 $177.76 $137.07 77.11% 22.54 1.65%
SYY SYSCO Corporation S 1/25/2017 $13.77 $51.17 371.60% 28.59 2.42%
TDS Telephone & Data Systems, Inc. S 4/12/2017 $0.00 $28.54 N/A 60.72 2.07%
TGT Target Corporation S 3/7/2017 $18.93 $56.56 298.78% 16.39 4.10%
TROW T. Rowe Price Group Inc D 7/16/2017 $122.94 $82.37 67.00% 16.57 2.62%
TSE:CNR Canadian National Railway Company S 1/30/2017 $118.66 $99.91 84.20% 22.20 1.50%
UTX United Technologies Corporation D 5/18/2016 $174.94 $115.28 65.90% 15.07 2.22%
VFC VF Corp E 8/1/2016 $62.96 $62.95 99.98% 23.14 2.27%
WBA Walgreens Boots Alliance Inc S 7/6/2016 $61.94 $80.60 130.13% 24.65 1.76%
WMT Wal-Mart Stores Inc S 5/20/2016 $39.55 $79.71 201.54% 17.60 2.46%

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To view the MG Value and PEmg information,  you must be logged in as a premium member.  Clicking on the company name will take you to the company’s latest valuation.

For the investor type, a “D” indicates the company is suitable for the Defensive Investor, an “E” indicates the company is suitable for the Enterprising Investor, and an “S” indicates the company is considered speculative at this time.

Ticker Name with Link Investor Type Latest Valuation Date MG Value Recent Price Price as a percent of Value PEmg Ratio Div. Yield
ADM Archer Daniels Midland Company E 1/3/2017 $41.56 2.84%
ADP Automatic Data Processing E 11/20/2016 $102.89 2.06%
AFL AFLAC Incorporated D 12/19/2016 $79.71 2.06%
ALB Albemarle Corporation E 3/18/2017 $113.48 1.08%
AOS A. O. Smith Corp E 6/11/2016 $53.75 1.51%
APD Air Products & Chemicals, Inc. S 1/27/2017 $145.15 2.34%
BCR C R Bard Inc E 3/21/2017 $319.42 0.31%
BDX Becton Dickinson and Co S 1/8/2017 $199.17 1.33%
BEN Franklin Resources, Inc. D 2/24/2017 $41.77 1.77%
BF.B Brown-Forman Corporation S 2/2/2017 $50.90 1.34%
BMS Bemis Company, Inc. E 7/1/2016 $41.68 2.71%
CAH Cardinal Health Inc S 7/3/2016 $64.36 2.41%
CFR Cullen/Frost Bankers, Inc. E 12/8/2016 $85.00 2.52%
CHRW C.H. Robinson Worldwide Inc S 8/29/2016 $66.86 2.50%
CINF Cincinnati Financial Corporation E 5/21/2016 $76.98 2.42%
CL Colgate-Palmolive Company S 4/8/2017 $71.61 2.16%
CLX Clorox Co S 1/28/2017 $138.83 2.24%
CSL Carlisle Companies, Inc. E 2/27/2017 $92.40 1.41%
CTAS Cintas Corporation E 7/21/2016 $133.87 0.78%
CVX Chevron Corporation S 3/15/2017 $105.78 4.06%
CWT California Water Service Group S 3/26/2017 $36.90 1.87%
DCI Donaldson Company, Inc. E 7/17/2017 $46.63 1.48%
DOV Dover Corp D 7/8/2016 $83.70 1.98%
ECL Ecolab Inc. S 6/26/2016 $130.40 1.04%
ED Consolidated Edison, Inc. S 2/26/2017 $83.75 3.20%
EMR Emerson Electric Co. S 2/12/2016 $58.00 3.26%
EPD Enterprise Products Partners L.P. S 8/27/2016 $24.98 6.20%
ESS Essex Property Trust Inc S 3/14/2017 $264.20 2.42%
EXPD Expeditors International of Washington E 6/25/2016 $54.98 1.31%
GPC Genuine Parts Company E 7/8/2016 $82.67 3.02%
GWW W W Grainger Inc E 1/12/2017 $158.41 3.02%
HP Helmerich & Payne, Inc. S 6/23/2016 $43.25 6.36%
HRL Hormel Foods Corp E 3/9/2017 $33.93 1.80%
IBM International Business Machines Corp. S 3/13/2017 $140.33 3.92%
ITW Illinois Tool Works Inc. E 8/13/2017 $135.60 1.77%
JKHY Jack Henry & Associates, Inc. S 1/30/2017 $99.30 1.10%
JNJ Johnson & Johnson E 1/16/2017 $133.45 2.32%
KMB Kimberly Clark Corp S 6/24/2016 $122.68 2.90%
KO The Coca-Cola Co S 7/28/2016 $45.68 2.93%
LECO Lincoln Electric Holdings, Inc. E 3/8/2017 $85.16 1.54%
LEG Leggett & Platt, Inc. E 3/26/2017 $46.19 2.90%
LLTC Linear Technology Corporation E 7/12/2016 $65.00 1.88%
LOW Lowe’s Companies, Inc. S 3/26/2017 $73.85 1.80%
MCD McDonald’s Corporation S 11/20/2016 $158.36 2.25%
MDT Medtronic plc. Ordinary Shares D 7/12/2016 $83.52 1.82%
MKC McCormick & Company, Incorporated S 1/3/2017 $96.23 1.76%
MMM 3M Co E 12/13/2016 $204.55 2.13%
NEE NextEra Energy Inc S 12/21/2016 $150.45 2.25%
NNN National Retail Properties, Inc. S 12/4/2016 $41.19 4.27%
PBCT People’s United Financial, Inc. D 6/20/2016 $16.58 4.04%
PEP PepsiCo, Inc. S 7/13/2016 $118.26 2.42%
PG Procter & Gamble Co S 7/8/2016 $92.86 2.85%
PH Parker-Hannifin Corp D 7/15/2016 $155.15 1.62%
PPG PPG Industries, Inc. S 1/16/2017 $102.39 1.48%
PX Praxair, Inc. S 8/21/2017 $131.21 2.29%
ROST Ross Stores, Inc. E 6/21/2016 $58.56 0.80%
SHW Sherwin-Williams Co S 7/12/2016 $329.62 0.86%
SKT Tanger Factory Outlet Centers Inc. S 1/16/2017 $24.10 5.06%
SON Sonoco Products Co E 2/6/2017 $47.62 3.02%
SPGI S&P Global Inc S 2/8/2017 $149.99 0.94%
SWK Stanley Black & Decker, Inc. E 4/10/2017 $137.07 1.65%
SYY SYSCO Corporation S 1/25/2017 $51.17 2.42%
TDS Telephone & Data Systems, Inc. S 4/12/2017 $28.54 2.07%
TGT Target Corporation S 3/7/2017 $56.56 4.10%
TROW T. Rowe Price Group Inc D 7/16/2017 $82.37 2.62%
TSE:CNR Canadian National Railway Company S 1/30/2017 $99.91 1.50%
UTX United Technologies Corporation D 5/18/2016 $115.28 2.22%
VFC VF Corp E 8/1/2016 $62.95 2.27%
WBA Walgreens Boots Alliance Inc S 7/6/2016 $80.60 1.76%
WMT Wal-Mart Stores Inc S 5/20/2016 $79.71 2.46%

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Disclaimer: 

The author held a long position in Dover Corporation and People’s United Financial Inc 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 and all readers are encouraged to speak to a registered investment adviser prior to making any investing decisions.  Please also read our full disclaimer.

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