Alphabet Inc Valuation – January 2019 $GOOG $GOOGL

Company Profile (excerpt from Reuters): Alphabet Inc., incorporated on July 23, 2015, is a holding company. The Company’s businesses include Google Inc. (Google) and its Internet products, such as Access, Calico, CapitalG, GV, Nest, Verily, Waymo and X. The Company’s segments include Google and Other Bets. The Google segment includes its Internet products, such as Search, Ads, Commerce, Maps, YouTube, Google Cloud, Android, Chrome and Google Play, as well as its hardware initiatives. The Google segment is engaged in advertising, sales of digital content, applications and cloud offerings, and sales of hardware products. The Other Bets segment is engaged in the sales of Internet and television services through Google Fiber, sales of Nest products and services, and licensing and research and development (R&D) services through Verily.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of GOOG – 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 $737,370,483,663 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 4.14 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 125.75% Pass
6. Moderate PEmg Ratio PEmg < 20 37.35 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 4.14 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.04 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $28.31
MG Growth Estimate 8.64%
MG Value $729.60
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $410.45
MG Value based on 0% Growth $240.61
Market Implied Growth Rate 14.42%
Current Price $1,057.19
% of Intrinsic Value 144.90%

Alphabet Inc Class C 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 lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $17.96 in 2014 to an estimated $28.31 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.42% 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 below the price.

At the time of valuation, further research into Alphabet Inc Class C revealed the company was trading above its Graham Number of $447.56. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 37.35, which was below the industry average of 91.28, 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 $103.9.

Alphabet Inc Class C receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $103.90
Graham Number $447.56
PEmg 37.35
Current Ratio 4.14
PB Ratio 4.67
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $129,702,000,000
Total Current Liabilities $31,301,000,000
Long-Term Debt $3,948,000,000
Total Assets $221,538,000,000
Intangible Assets $20,343,000,000
Total Liabilities $51,698,000,000
Shares Outstanding (Diluted Average) 750,744,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $40.56
Dec2017 $18.00
Dec2016 $27.85
Dec2015 $22.84
Dec2014 $20.57
Dec2013 $18.79
Dec2012 $16.16
Dec2011 $14.89
Dec2010 $13.17
Dec2009 $10.22
Dec2008 $6.66
Dec2007 $6.65
Dec2006 $4.98
Dec2005 $2.51
Dec2004 $0.73
Dec2003 $0.21
Dec2002 $0.21
Dec2001 $0.02
Dec2000 -$0.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $28.31
Dec2017 $21.99
Dec2016 $23.07
Dec2015 $20.00
Dec2014 $17.96
Dec2013 $15.99
Dec2012 $13.80
Dec2011 $11.85
Dec2010 $9.66
Dec2009 $7.34
Dec2008 $5.37
Dec2007 $4.16
Dec2006 $2.52
Dec2005 $1.10
Dec2004 $0.33
Dec2003 $0.11
Dec2002 $0.05

Recommended Reading:

Other ModernGraham posts about the company

Alphabet Inc. Valuation – October 2015 Update $GOOG $GOOGL
The Best Companies of the Software Industry – August 2015
The 16 Best Stocks For Value Investors This Week – 8/1/15
Google Inc. Analysis – July 2015 Update $GOOGL
Google Inc. Quarterly Stock Valuation – September 2014 $GOOGL

Other ModernGraham posts about related companies

Shutterstock Inc Valuation – August 2018 $SSTK
Twitter Inc Valuation – June 2018 $TWTR
Salesforce.com Inc Valuation – June 2018 $CRM
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Facebook Inc Valuation – March 2018 $FB
Salesforce.com Inc Valuation – April 2017 $CRM
Paypal Holdings Inc Valuation – Initial Coverage $PYPL
Netflix Inc Valuation – February 2017 $NFLX
Shutterstock Inc Valuation – Initial Coverage $SSTK
Synchronoss Technologies Inc Valuation – Initial Coverage $SNCR

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.

Parker-Hannifin Corp Valuation – January 2019 $PH

Company Profile (excerpt from Reuters): Parker-Hannifin Corporation, incorporated on December 30, 1938, is a manufacturer of motion and control technologies and systems, providing precision engineered solutions for a range of mobile, industrial and aerospace markets. The Company operates through segments: Diversified Industrial and Aerospace Systems. The Diversified Industrial Segment is an aggregation of several business units, which manufacture motion-control and fluid power system components for builders and users of various types of manufacturing, packaging, processing, transportation, agricultural, construction, and military vehicles and equipment. The Aerospace Systems Segment produces hydraulic, fuel, pneumatic and electro-mechanical systems and components, which are utilized on domestic commercial, military and general aviation aircrafts.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of PH – 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 $20,028,374,412 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.60 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 48.03% Pass
6. Moderate PEmg Ratio PEmg < 20 18.33 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.34 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 1.60 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.17 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.26
MG Growth Estimate 3.15%
MG Value $122.19
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $119.74
MG Value based on 0% Growth $70.19
Market Implied Growth Rate 4.91%
Current Price $151.33
% of Intrinsic Value 123.84%

Parker-Hannifin 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 PB ratio. 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 $6.83 in 2015 to an estimated $8.26 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.91% 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 Parker-Hannifin Corp revealed the company was trading above its Graham Number of $101.81. The company pays a dividend of $2.74 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 18.33, which was below the industry average of 23.62, 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 $-29.85.

Parker-Hannifin Corp performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$29.85
Graham Number $101.81
PEmg 18.33
Current Ratio 1.60
PB Ratio 3.34
Current Dividend $2.74
Dividend Yield 1.81%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $5,298,082,000
Total Current Liabilities $3,308,521,000
Long-Term Debt $4,313,221,000
Total Assets $15,425,042,000
Intangible Assets $7,441,245,000
Total Liabilities $9,317,936,000
Shares Outstanding (Diluted Average) 134,664,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.41
Jun2018 $7.83
Jun2017 $7.25
Jun2016 $5.89
Jun2015 $6.97
Jun2014 $6.87
Jun2013 $6.26
Jun2012 $7.45
Jun2011 $6.37
Jun2010 $3.40
Jun2009 $3.13
Jun2008 $5.53
Jun2007 $4.68
Jun2006 $3.71
Jun2005 $3.35
Jun2004 $1.94
Jun2003 $1.12
Jun2002 $0.75
Jun2001 $1.97
Jun2000 $2.21
Jun1999 $1.89

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.26
Jun2018 $7.11
Jun2017 $6.71
Jun2016 $6.53
Jun2015 $6.83
Jun2014 $6.53
Jun2013 $6.01
Jun2012 $5.65
Jun2011 $4.71
Jun2010 $3.95
Jun2009 $4.17
Jun2008 $4.41
Jun2007 $3.55
Jun2006 $2.72
Jun2005 $2.09
Jun2004 $1.50
Jun2003 $1.39

Recommended Reading:

Other ModernGraham posts about the company

Parker-Hannifin Corp Valuation – March 2018 $PH
Parker-Hannifin Corp Valuation – July 2016 $PH
Parker Hannifin Corp Valuation – January 2016 Update $PH
Dividend Growth Stocks for the Intelligent Investor – November 2015
Dividend Growth Stocks for the Intelligent Investor – October 2015

Other ModernGraham posts about related companies

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Lennox International Inc Valuation – October 2018 $LII
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Regal Beloit Corp Valuation – August 2018 $RBC
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SPX Corp Valuation – August 2018 $SPXC
AGCO Corp Valuation – August 2018 $AGCO
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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.

Ligand Pharmaceuticals Inc Valuation – September 2018 $LGND

Company Profile (excerpt from Reuters): Ligand Pharmaceuticals Incorporated (Ligand), incorporated on September 28, 1987, is a biopharmaceutical company that focuses on developing and acquiring technologies that help pharmaceutical companies discover and develop medicines. The Company is involved in the development and licensing of biopharmaceutical assets. The Company employs research technologies, such as nuclear receptor assays, high throughput computer screening, formulation science, liver targeted pro-drug technologies and antibody discovery technologies to assist companies in their work towards obtaining prescription drug approvals. As of December 31, 2016, it had partnerships and license agreements with over 85 pharmaceutical and biotechnology companies, and over 140 various programs under license with it were in various stages of commercialization and development. It has contributed research and technologies for approved medicines that treat cancer, osteoporosis, fungal infections and low blood platelets, among others. Its partners have programs in clinical development targeting seizure, coma, cancer, diabetes, cardiovascular disease, muscle wasting, liver disease and kidney disease, among others. The Company is developing a small molecule glucagon receptor antagonist for the treatment of Type II diabetes mellitus.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of LGND – September 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 $5,371,771,546 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.34 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 -5378.57% Fail
6. Moderate PEmg Ratio PEmg < 20 64.93 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.04 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 2.34 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.70 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.92
MG Growth Estimate 15.00%
MG Value $150.92
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $56.84
MG Value based on 0% Growth $33.32
Market Implied Growth Rate 28.22%
Current Price $254.54
% of Intrinsic Value 168.66%

Ligand Pharmaceuticals Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the lack of earnings stability over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.36 in 2014 to an estimated $3.92 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 28.22% 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 Ligand Pharmaceuticals Inc. revealed the company was trading above its Graham Number of $54.33. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 64.93, which was above the industry average of 41.98. Finally, the company was trading above its Net Current Asset Value (NCAV) of $9.9.

Ligand Pharmaceuticals 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) $9.90
Graham Number $54.33
PEmg 64.93
Current Ratio 2.34
PB Ratio 10.04
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,480,470,000
Total Current Liabilities $632,850,000
Long-Term Debt $595,912,000
Total Assets $1,858,284,000
Intangible Assets $328,399,000
Total Liabilities $1,238,471,000
Shares Outstanding (Diluted Average) 24,438,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.94
Dec2017 $0.53
Dec2016 -$0.08
Dec2015 $10.83
Dec2014 $0.56
Dec2013 $0.55
Dec2012 -$0.03
Dec2011 $0.49
Dec2010 -$0.53
Dec2009 -$0.10
Dec2008 -$6.18
Dec2007 $17.22
Dec2006 -$2.34
Dec2005 -$2.94
Dec2004 -$3.66
Dec2003 -$8.16
Dec2002 -$4.56
Dec2001 -$4.32
Dec2000 -$8.10
Dec1999 -$9.48
Dec1998 -$17.52

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.92
Dec2017 $2.43
Dec2016 $3.04
Dec2015 $3.90
Dec2014 $0.36
Dec2013 $0.20
Dec2012 -$0.41
Dec2011 $0.33
Dec2010 $0.70
Dec2009 $1.25
Dec2008 $1.43
Dec2007 $3.50
Dec2006 -$3.69
Dec2005 -$4.48
Dec2004 -$5.42
Dec2003 -$6.51
Dec2002 -$6.72

Recommended Reading:

Other ModernGraham posts about the company

Ligand Pharmaceuticals Inc Valuation – Initial Coverage $LGND

Other ModernGraham posts about related companies

Supernus Pharmaceuticals Inc Valuation – August 2018 $SUPN
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Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI
Akorn Inc Valuation – July 2018 $AKRX
Mallinckrodt PLC Valuation – July 2018 $MNK
Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Biogen Inc Valuation – June 2018 $BIIB
Mylan NV Valuation – June 2018 $MYL
Amgen Inc Valuation – June 2018 $AMGN
Celgene Corp Valuation – June 2018 $CELG

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.

Supernus Pharmaceuticals Inc Valuation – August 2018 $SUPN

Company Profile (excerpt from Reuters): Supernus Pharmaceuticals, Inc., incorporated on March 30, 2005, is a pharmaceutical company focused on developing and commercializing products for the treatment of central nervous system (CNS) diseases. The Company offers Oxtellar XR (extended-release oxcarbazepine) and Trokendi XR (extended-release topiramate), its two treatments for patients with epilepsy. In addition, it is developing multiple product candidates in psychiatry to address unmet medical needs and market opportunities for the treatment of impulsive aggression (IA) and for the treatment of attention deficit hyperactivity disorder (ADHD). It is developing SPN-810 (molindone hydrochloride) to treat IA in patients having ADHD. It is developing SPN-812 (viloxazine hydrochloride) as a candidate to treat patients having ADHD.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SUPN – 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 $2,246,336,172 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.74 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 21.91% Fail
6. Moderate PEmg Ratio PEmg < 20 33.72 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.04 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 2.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.78 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.29
MG Growth Estimate 15.00%
MG Value $49.67
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $18.71
MG Value based on 0% Growth $10.97
Market Implied Growth Rate 12.61%
Current Price $43.50
% of Intrinsic Value 87.59%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $-0.89 in 2014 to an estimated $1.29 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 12.61% 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 Supernus Pharmaceuticals Inc revealed the company was trading above its Graham Number of $14.89. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 33.72, which was below the industry average of 42.68, 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 $-3.28.

Supernus Pharmaceuticals 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) -$3.28
Graham Number $14.89
PEmg 33.72
Current Ratio 2.74
PB Ratio 6.04
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $284,516,000
Total Current Liabilities $103,934,000
Long-Term Debt $321,920,000
Total Assets $852,799,000
Intangible Assets $33,794,000
Total Liabilities $462,307,000
Shares Outstanding (Diluted Average) 54,203,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.89
Dec2017 $1.08
Dec2016 $1.76
Dec2015 $0.28
Dec2014 -$0.26
Dec2013 -$2.90
Dec2012 -$2.72
Dec2011 $3.88

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.29
Dec2017 $0.66
Dec2016 $0.04
Dec2015 -$0.66
Dec2014 -$0.89
Dec2013 -$0.92
Dec2012 $0.13
Dec2011 $1.29

Recommended Reading:

Other ModernGraham posts about the company

Supernus Pharmaceuticals Inc Valuation – Initial Coverage $SUPN

Other ModernGraham posts about related companies

Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI
Akorn Inc Valuation – July 2018 $AKRX
Mallinckrodt PLC Valuation – July 2018 $MNK
Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Biogen Inc Valuation – June 2018 $BIIB
Mylan NV Valuation – June 2018 $MYL
Amgen Inc Valuation – June 2018 $AMGN
Celgene Corp Valuation – June 2018 $CELG
Allergan PLC Valuation – May 2018 $AGN
Incyte Corp Valuation – April 2018 $INCY

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.

Murphy Oil Corp Valuation – August 2018 $MUR

Company Profile (excerpt from Reuters): Murphy Oil Corporation (Murphy), incorporated on June 29, 1964, is an oil and gas exploration and production company. The Company’s exploration and production business explores for and produces crude oil, natural gas and natural gas liquids across the world. The Company’s exploration and production activities are subdivided into four geographic segments: the United States, Canada, Malaysia and all other countries. The Company explores for and produces crude oil, natural gas and natural gas liquids around the world. This business maintains upstream operating offices in several locations around the world, including Houston, Texas, Calgary, Alberta, and Kuala Lumpur, Malaysia.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MUR – 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 $5,542,518,868 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.46 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 -114.11% Fail
6. Moderate PEmg Ratio PEmg < 20 -18.64 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.16 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 1.46 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 7.04 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$1.68
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth -$24.33
MG Value based on 0% Growth -$14.26
Market Implied Growth Rate -13.57%
Current Price $31.27
% of Intrinsic Value N/A

Murphy Oil 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, insufficient earnings stability or 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, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $5.13 in 2014 to an estimated $-1.68 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Murphy Oil Corporation revealed the company was trading above its Graham Number of $30.85. The company pays a dividend of $1 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was -18.64, which was below the industry average of 59.52, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.75.

Murphy Oil Corporation 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) -$22.75
Graham Number $30.85
PEmg -18.64
Current Ratio 1.46
PB Ratio 1.16
Current Dividend $1.00
Dividend Yield 3.20%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,315,355,000
Total Current Liabilities $903,557,000
Long-Term Debt $2,897,345,000
Total Assets $9,945,449,000
Intangible Assets $0
Total Liabilities $5,273,811,000
Shares Outstanding (Diluted Average) 173,983,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.58
Dec2017 -$1.81
Dec2016 -$1.60
Dec2015 -$13.03
Dec2014 $5.03
Dec2013 $5.94
Dec2012 $4.99
Dec2011 $4.49
Dec2010 $4.13
Dec2009 $4.35
Dec2008 $9.06
Dec2007 $4.01
Dec2006 $3.41
Dec2005 $4.55
Dec2004 $3.77
Dec2003 $1.59
Dec2002 $0.61
Dec2001 $1.81
Dec2000 $1.64
Dec1999 $0.67
Dec1998 -$0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$1.68
Dec2017 -$2.57
Dec2016 -$1.88
Dec2015 -$0.85
Dec2014 $5.13
Dec2013 $5.05
Dec2012 $4.87
Dec2011 $4.94
Dec2010 $5.11
Dec2009 $5.43
Dec2008 $5.63
Dec2007 $3.76
Dec2006 $3.36
Dec2005 $3.04
Dec2004 $2.15
Dec2003 $1.32
Dec2002 $1.10

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Murphy Oil Corporation Valuation – March 2017 $MUR
Murphy Oil Corporation Valuation – November 2015 Update $MUR
26 Companies in the Spotlight This Week – 11/22/14
Murphy Oil Corporation Annual Valuation – 2014 $MUR

Other ModernGraham posts about related companies

Tidewater Inc Valuation – August 2018 $TDW
Carrizo Oil & Gas Inc Valuation – August 2018 $CRZO
Denbury Resources Inc Valuation – August 2018 $DNR
California Resources Corp Valuation – August 2018 $CRC
Crew Energy Inc Valuation – August 2018 $TSE-CR
Superior Energy Services Inc Valuation – August 2018 $SPN
Crescent Point Energy Corp Valuation – August 2018 $TSE-CPG
Kelt Exploration Ltd Valuation – August 2018 $TSE-KEL
Canadian Natural Resources Ltd Valuation – August 2018 $TSE:CNQ
SM Energy Co Valuation – August 2018 $SM

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.

Delphi Technologies PLC Valuation – August 2018 $DLPH

Company Profile (excerpt from Reuters): Delphi Technologies PLC is a United Kingdom-based company that develops designs and manufactures powertrain technologies for original equipment manufacturers (OEMs). The Company also offers full suite of aftermarket products. The Company segments Products & Service Solutions (PSS).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DLPH – 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 $3,197,170,999 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.59 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 45649900.00% Pass
6. Moderate PEmg Ratio PEmg < 20 13.89 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.02 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 1.59 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.02 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 $2.59
MG Growth Estimate 15.00%
MG Value $99.79
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $37.58
MG Value based on 0% Growth $22.03
Market Implied Growth Rate 2.70%
Current Price $36.01
% of Intrinsic Value 36.09%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0 in 2014 to an estimated $2.59 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.7% 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 above the price.

At the time of valuation, further research into Delphi Technologies PLC revealed the company was trading above its Graham Number of $8.45. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 13.89, which was below the industry average of 18.51, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-15.26.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$15.26
Graham Number $8.45
PEmg 13.89
Current Ratio 1.59
PB Ratio 10.02
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,991,000,000
Total Current Liabilities $1,251,000,000
Long-Term Debt $1,498,000,000
Total Assets $3,670,000,000
Intangible Assets $77,000,000
Total Liabilities $3,350,000,000
Shares Outstanding (Diluted Average) 89,050,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.14
Dec2017 $3.21
Dec2016 $1.78

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.59
Dec2017 $1.54
Dec2016 $0.59

Recommended Reading:

Other ModernGraham posts about the company

Delphi Automotive PLC Valuation – February 2017 $DLPH
Delphi Automotive PLC Valuation – August 2016 $DLPH
Delphi Automotive Analysis – 2015 Update $DLPH
17 Companies in the Spotlight This Week – June 21, 2014
Delphi Automotive Annual Valuation – 2014 $DLPH

Other ModernGraham posts about related companies

Cooper-Standard Holdings Inc Valuation – August 2018 $CPS
Copart Inc Valuation – August 2018 $CPRT
Standard Motor Products Inc Valuation – August 2018 $SMP
Harley-Davidson Inc Valuation – June 2018 $HOG
Advance Auto Parts Inc Valuation – June 2018 $AAP
LKQ Corporation – June 2018 $LKQ
Aptiv PLC Valuation – Initial Coverage May 2018 $APTV
BorgWarner Inc Valuation – April 2018 $BWA
CarMax Inc Valuation – April 2018 $KMX
Ford Motor Company Valuation – April 2018 $F

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.

Spectrum Pharmaceuticals Inc Valuation – August 2018 $SPPI

Company Profile (excerpt from Reuters): Spectrum Pharmaceuticals, Inc., incorporated on November 18, 2002, is a biotechnology company. The Company operates through developing and commercializing oncology and hematology drug products segment. It has a product portfolio consisting of both commercial stage and development stage products that address various cancer types. The Company has six approved oncology/hematology products that target different types of cancer, including non-Hodgkin’s lymphoma (NHL), advanced metastatic colorectal cancer (mCRC), acute lymphoblastic leukemia (ALL) and multiple myeloma (MM). It also has three drugs in mid-to-late stage development, which include ROLONTIS for chemotherapy-induced neutropenia; QAPZOLA for immediate intravesical instillation in post-transurethral resection of bladder tumors in patients with non-muscle invasive bladder cancer (NMIBC), and POZIOTINIB, a pan- human epidermal growth factor receptor (HER) inhibitor used in the treatment of patients with a range of solid tumors, including breast and lung cancer.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPPI – 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 $2,345,273,926 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.97 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 438.60% Pass
6. Moderate PEmg Ratio PEmg < 20 -22.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.90 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 2.97 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg -$0.98
MG Growth Estimate -4.25%
MG Value $1.56
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth -$14.20
MG Value based on 0% Growth -$8.32
Market Implied Growth Rate -15.58%
Current Price $22.20
% of Intrinsic Value 1425.02%

Spectrum Pharmaceuticals, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability 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 stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $-0.17 in 2014 to an estimated $-0.98 for 2018. This level of negative earnings does not support a positive valuation.As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Spectrum Pharmaceuticals, Inc. revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was -22.67, which was below the industry average of 42.68, 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 $1.56.

Spectrum Pharmaceuticals, 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) $1.56
Graham Number $0.00
PEmg -22.67
Current Ratio 2.97
PB Ratio 6.90
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 $277,028,000
Total Current Liabilities $93,422,000
Long-Term Debt $0
Total Assets $444,273,000
Intangible Assets $148,546,000
Total Liabilities $119,979,000
Shares Outstanding (Diluted Average) 100,810,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$1.04
Dec2017 -$1.07
Dec2016 -$0.96
Dec2015 -$0.81
Dec2014 -$0.71
Dec2013 -$1.02
Dec2012 $1.46
Dec2011 $0.86
Dec2010 -$0.95
Dec2009 -$0.48
Dec2008 -$0.45
Dec2007 -$1.17
Dec2006 -$0.96
Dec2005 -$1.06
Dec2004 -$0.98
Dec2003 -$4.83
Dec2002 -$12.34
Dec2001 -$36.50
Dec2000 -$109.25
Dec1999 -$92.00
Dec1998 -$51.75

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate -$0.98
Dec2017 -$0.94
Dec2016 -$0.72
Dec2015 -$0.41
Dec2014 -$0.17
Dec2013 $0.06
Dec2012 $0.43
Dec2011 -$0.20
Dec2010 -$0.75
Dec2009 -$0.71
Dec2008 -$0.86
Dec2007 -$1.31
Dec2006 -$2.27
Dec2005 -$5.66
Dec2004 -$16.23
Dec2003 -$32.90
Dec2002 -$51.41

Recommended Reading:

Other ModernGraham posts about the company

Spectrum Pharmaceuticals Inc Valuation – Initial Coverage $SPPI

Other ModernGraham posts about related companies

Akorn Inc Valuation – July 2018 $AKRX
Mallinckrodt PLC Valuation – July 2018 $MNK
Bristol-Myers Squibb Company Valuation – June 2018 $BMY
Biogen Inc Valuation – June 2018 $BIIB
Mylan NV Valuation – June 2018 $MYL
Amgen Inc Valuation – June 2018 $AMGN
Celgene Corp Valuation – June 2018 $CELG
Allergan PLC Valuation – May 2018 $AGN
Incyte Corp Valuation – April 2018 $INCY
Regeneron Pharmaceuticals Inc Valuation – April 2018 $REGN

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.

Suburban Propane Partners LP Valuation – June 2018 $SPH

Company Profile (excerpt from Reuters): Suburban Propane Partners, L.P., incorporated on December 18, 1995, is s a marketer and distributor of a range of products. The Company specializes in the distribution of propane, fuel oil and refined fuels, as well as the marketing of natural gas and electricity in deregulated markets. The Company’s segments include Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. In support of its marketing and distribution operations, the Company installs and services a range of home comfort equipment, particularly in the areas of heating and ventilation. The Company conducts its business through Suburban Propane, L.P., which operates its propane business and assets (the Operating Partnership), and its direct and indirect subsidiaries. As of September 24, 2016, it had sold approximately 414.8 million gallons of propane and 30.9 million gallons of fuel oil and refined fuels to retail customers.

SPH Chart

SPH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SPH – 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 $1,440,571,709 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.41 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 -85.03% Fail
6. Moderate PEmg Ratio PEmg < 20 29.94 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.31 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.41 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 17.94 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.78
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $11.38
MG Value based on 0% Growth $6.67
Market Implied Growth Rate 10.72%
Current Price $23.49
% of Intrinsic Value N/A

Suburban Propane Partners LP 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 growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $1.53 in 2014 to an estimated $0.78 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.72% 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 Suburban Propane Partners LP revealed the company was trading above its Graham Number of $13.16. The company pays a dividend of $3.55 per share, for a yield of 15.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 29.94, which was above the industry average of 22.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-21.88.

Suburban Propane Partners LP receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$21.88
Graham Number $13.16
PEmg 29.94
Current Ratio 1.41
PB Ratio 2.31
Current Dividend $3.55
Dividend Yield 15.11%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $246,854,000
Total Current Liabilities $175,266,000
Long-Term Debt $1,284,574,000
Total Assets $2,227,981,000
Intangible Assets $1,287,339,000
Total Liabilities $1,598,728,000
Shares Outstanding (Diluted Average) 61,793,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.85
Sep2017 $0.62
Sep2016 $0.24
Sep2015 $1.38
Sep2014 $1.56
Sep2013 $1.34
Sep2012 $0.02
Sep2011 $3.22
Sep2010 $3.24
Sep2009 $4.96
Sep2008 $4.70
Sep2007 $3.89
Sep2006 $2.83
Sep2005 -$0.38
Sep2004 $0.84
Sep2003 $1.86
Sep2002 $2.12
Sep2001 $2.14
Sep2000 $1.70
Sep1999 $0.83
Sep1998 $1.30

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.78
Sep2017 $0.84
Sep2016 $0.94
Sep2015 $1.36
Sep2014 $1.53
Sep2013 $1.86
Sep2012 $2.49
Sep2011 $3.82
Sep2010 $4.05
Sep2009 $4.04
Sep2008 $3.18
Sep2007 $2.21
Sep2006 $1.40
Sep2005 $0.89
Sep2004 $1.60
Sep2003 $1.90
Sep2002 $1.81

Recommended Reading:

Other ModernGraham posts about the company

Suburban Propane Partners Valuation – June 2016 $SPH
Suburban Propane Partners LP Annual Valuation – 2015 $SPH
14 Companies in the Spotlight This Week – 1/4/14
ModernGraham Valuation: Suburban Propane Partners LP (SPH)

Other ModernGraham posts about related companies

Public Service Enterprise Group Inc Valuation – June 2018 $PEG
Eversource Energy Valuation – June 2018 $ES
PPL Corp Valuation – June 2018 $PPL
Entergy Corp Valuation – June 2018 $ETR
Pinnacle West Capital Corp Valuation – June 2018 $PNW
NiSource Inc Valuation – June 2018 $NI
American Electric Power Co Valuation – June 2018 $AEP
American Water Works Co Inc Valuation – June 2018 $AWK
Alliant Energy Corp Valuation – June 2018 $LNT
Consolidated Edison Inc Valuation – June 2018 $ED

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.

IPG Photonics Corp Valuation – June 2018 $IPGP

Company Profile (excerpt from Reuters): IPG Photonics Corporation, incorporated on December 2, 1998, is a developer and manufacturer of a line of fiber lasers, fiber amplifiers, diode lasers, laser systems and optical accessories that are used for various applications. The Company offers a line of lasers and amplifiers, which are used in materials processing, communications and medical applications. The Company sells its products globally to original equipment manufacturers (OEMs), system integrators and end users. The Company’s manufacturing facilities are located in the United States, Germany and Russia. The Company offers laser-based systems for certain markets and applications. The Company also makes packaged diodes, direct diode lasers, laser systems and communications components and systems. Its products are designed to be used as general-purpose energy or light sources.

IPGP Chart

IPGP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IPGP – 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 $13,261,465,405 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 9.54 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 432.79% Pass
6. Moderate PEmg Ratio PEmg < 20 39.29 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 6.35 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 9.54 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.03 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.29
MG Growth Estimate 15.00%
MG Value $242.01
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $91.15
MG Value based on 0% Growth $53.43
Market Implied Growth Rate 15.40%
Current Price $246.98
% of Intrinsic Value 102.05%

IPG Photonics 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 lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.01 in 2014 to an estimated $6.29 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 15.4% 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 IPG Photonics Corporation revealed the company was trading above its Graham Number of $83.87. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 39.29, which was below the industry average of 55.37, 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 $27.4.

IPG Photonics 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) $27.40
Graham Number $83.87
PEmg 39.29
Current Ratio 9.54
PB Ratio 6.35
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 $1,864,886,000
Total Current Liabilities $195,560,000
Long-Term Debt $44,466,000
Total Assets $2,498,007,000
Intangible Assets $104,989,000
Total Liabilities $352,638,000
Shares Outstanding (Diluted Average) 55,182,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.29
Dec2017 $6.36
Dec2016 $4.85
Dec2015 $4.53
Dec2014 $3.79
Dec2013 $2.97
Dec2012 $2.81
Dec2011 $2.41
Dec2010 $1.13
Dec2009 $0.12
Dec2008 $0.79
Dec2007 $0.65
Dec2006 $0.26
Dec2005 $0.16
Dec2004 $0.01
Dec2003 -$0.93
Dec2002 -$2.13
Dec2001 -$2.17

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.29
Dec2017 $5.02
Dec2016 $4.17
Dec2015 $3.65
Dec2014 $3.01
Dec2013 $2.38
Dec2012 $1.87
Dec2011 $1.28
Dec2010 $0.67
Dec2009 $0.43
Dec2008 $0.51
Dec2007 $0.26
Dec2006 -$0.13
Dec2005 -$0.56
Dec2004 -$0.96
Dec2003 -$1.31
Dec2002 -$1.29

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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.

Amphenol Corp Valuation – May 2018 $APH

Company Profile (excerpt from Reuters): Amphenol Corporation (Amphenol), incorporated on December 19, 1986, is a designer, manufacturer and marketer of electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor- based products, and coaxial and specialty cable. The Company operates through two segments, which include Interconnect Products and Assemblies, and Cable Products and Solutions.

APH Chart

APH data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of APH – 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 $26,272,800,512 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.80 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 111.43% Pass
6. Moderate PEmg Ratio PEmg < 20 32.67 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.02 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 1.80 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.42 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 $2.70
MG Growth Estimate 6.35%
MG Value $57.17
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $39.10
MG Value based on 0% Growth $22.92
Market Implied Growth Rate 12.08%
Current Price $88.10
% of Intrinsic Value 154.11%

Amphenol 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 Overvalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.7 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.08% 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 Amphenol Corporation revealed the company was trading above its Graham Number of $31.92. The company pays a dividend of $0.7 per share, for a yield of 0.8% Its PEmg (price over earnings per share – ModernGraham) was 32.67, which was below the industry average of 49.78, 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 $-4.74.

Amphenol 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) -$4.74
Graham Number $31.92
PEmg 32.67
Current Ratio 1.80
PB Ratio 7.02
Current Dividend $0.70
Dividend Yield 0.79%
Number of Consecutive Years of Dividend Growth 6

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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $3,937,100,000
Total Current Liabilities $2,184,700,000
Long-Term Debt $2,489,400,000
Total Assets $9,403,700,000
Intangible Assets $4,580,500,000
Total Liabilities $5,435,800,000
Shares Outstanding (Diluted Average) 316,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.47
Dec2017 $2.06
Dec2016 $2.61
Dec2015 $2.41
Dec2014 $2.21
Dec2013 $1.96
Dec2012 $1.69
Dec2011 $1.53
Dec2010 $1.41
Dec2009 $0.92
Dec2008 $1.17
Dec2007 $0.97
Dec2006 $0.70
Dec2005 $0.57
Dec2004 $0.46
Dec2003 $0.30
Dec2002 $0.23
Dec2001 $0.24
Dec2000 $0.32
Dec1999 $0.12
Dec1998 $0.13

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.70
Dec2017 $2.29
Dec2016 $2.33
Dec2015 $2.11
Dec2014 $1.89
Dec2013 $1.66
Dec2012 $1.45
Dec2011 $1.29
Dec2010 $1.12
Dec2009 $0.94
Dec2008 $0.89
Dec2007 $0.70
Dec2006 $0.53
Dec2005 $0.42
Dec2004 $0.33
Dec2003 $0.26
Dec2002 $0.23

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Other ModernGraham posts about the company

5 Best Stocks for Value Investors This Week – 2/25/17
Amphenol Corp Valuation – February 2017 $APH
21 Best Undervalued Stocks of the Week – 8/27/16
Amphenol Corporation Valuation – August 2016 $APH
19 Best Stocks For Value Investors This Week – 1/9/16

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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.

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