Broadridge Financial Solutions Inc Valuation – April 2019 #BR

Company Profile (excerpt from Reuters): Broadridge Financial Solutions, Inc. (Broadridge), incorporated on December 6, 2006, is a provider of investor communications and technology-driven solutions to banks, broker-dealers, mutual funds and corporate issuers. The Company’s segments include Investor Communication Solutions, and Global Technology and Operations. The Company’s services include investor and customer communications, securities processing, and data and analytics solutions. The Company delivers a range of solutions that helps its clients serve their retail and institutional customers across the entire investment lifecycle, including pre-trade, trade, and post-trade processing functionality. The Company serves a client base across four client groups: capital markets, asset management, wealth management and corporations.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BR – April 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 $12,145,347,942 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.02 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 185.25% Pass
6. Moderate PEmg Ratio PEmg < 20 31.08 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.13 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 1.02 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 78.56 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 $3.37
MG Growth Estimate 11.73%
MG Value $107.83
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $48.93
MG Value based on 0% Growth $28.68
Market Implied Growth Rate 11.29%
Current Price $104.87
% of Intrinsic Value 97.25%

Broadridge Financial Solutions, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, 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 $1.89 in 2015 to an estimated $3.37 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 11.29% 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 Broadridge Financial Solutions, Inc. revealed the company was trading above its Graham Number of $29.75. The company pays a dividend of $1.46 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 31.08, which was above the industry average of 21.66. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-10.65.

Broadridge Financial Solutions, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$10.65
Graham Number $29.75
PEmg 31.08
Current Ratio 1.02
PB Ratio 11.13
Current Dividend $1.46
Dividend Yield 1.39%
Number of Consecutive Years of Dividend Growth 12

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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $966,400,000
Total Current Liabilities $951,200,000
Long-Term Debt $1,194,100,000
Total Assets $3,357,600,000
Intangible Assets $1,699,700,000
Total Liabilities $2,235,000,000
Shares Outstanding (Diluted Average) 119,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.18
Jun2018 $3.56
Jun2017 $2.70
Jun2016 $2.53
Jun2015 $2.32
Jun2014 $2.12
Jun2013 $1.69
Jun2012 $0.97
Jun2011 $1.32
Jun2010 $1.37
Jun2009 $1.58
Jun2008 $1.36
Jun2007 $1.42
Jun2006 $1.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.37
Jun2018 $2.86
Jun2017 $2.43
Jun2016 $2.18
Jun2015 $1.89
Jun2014 $1.62
Jun2013 $1.37
Jun2012 $1.25
Jun2011 $1.40
Jun2010 $1.42
Jun2009 $1.33
Jun2008 $1.07
Jun2007 $0.79
Jun2006 $0.40

Recommended Reading:

Other ModernGraham posts about the company

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

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Charles Schwab Corp Valuation – March 2019 #SCHW
Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN
S&P Global Inc Valuation – March 2019 #SPGI
Equifax Inc Valuation – March 2019 #EFX

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.

T.Rowe Price Group Inc Valuation – March 2019 #TROW

Company Profile (excerpt from Reuters): T. Rowe Price Group, Inc., incorporated on February 4, 2000, is a financial services holding company. The Company provides global investment management services through its subsidiaries to investors across the world. The Company provides an array of Company sponsored the United States mutual funds, other sponsored pooled investment vehicles, sub advisory services, separate account management, recordkeeping, and related services to individuals, advisors, institutions, financial intermediaries and retirement plan sponsors.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TROW – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,699,005,370 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 6.99 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 119.75% Pass
6. Moderate PEmg Ratio PEmg < 20 16.37 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.97 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 6.99 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.11
MG Growth Estimate 6.95%
MG Value $136.92
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $88.66
MG Value based on 0% Growth $51.97
Market Implied Growth Rate 3.94%
Current Price $100.12
% of Intrinsic Value 73.12%

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 $4.18 in 2015 to an estimated $6.11 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.94% 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 T. Rowe Price Group Inc revealed the company was trading above its Graham Number of $59.52. The company pays a dividend of $2.8 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 16.37, which was below the industry average of 21.22, 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 $1.69.

T. Rowe Price Group Inc fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $1.69
Graham Number $59.52
PEmg 16.37
Current Ratio 6.99
PB Ratio 3.97
Current Dividend $2.80
Dividend Yield 2.80%
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,974,800,000
Total Current Liabilities $282,700,000
Long-Term Debt $0
Total Assets $7,689,300,000
Intangible Assets $665,700,000
Total Liabilities $1,565,000,000
Shares Outstanding (Diluted Average) 243,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.12
Dec2018 $7.27
Dec2017 $5.97
Dec2016 $4.75
Dec2015 $4.63
Dec2014 $4.55
Dec2013 $3.90
Dec2012 $3.36
Dec2011 $2.92
Dec2010 $2.53
Dec2009 $1.65
Dec2008 $1.82
Dec2007 $2.40
Dec2006 $1.90
Dec2005 $1.58
Dec2004 $1.26
Dec2003 $0.88
Dec2002 $0.76
Dec2001 $0.76
Dec2000 $1.04
Dec1999 $0.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.11
Dec2018 $5.89
Dec2017 $5.05
Dec2016 $4.47
Dec2015 $4.18
Dec2014 $3.79
Dec2013 $3.23
Dec2012 $2.75
Dec2011 $2.38
Dec2010 $2.09
Dec2009 $1.87
Dec2008 $1.92
Dec2007 $1.85
Dec2006 $1.47
Dec2005 $1.19
Dec2004 $0.98
Dec2003 $0.85

Recommended Reading:

Other ModernGraham posts about the company

Best Dividend Paying Stocks for Dividend Growth Investors – February 2019
Best Dividend Paying Stocks for Dividend Growth Investors – August 2018
Best Dividend Paying Stocks for Dividend Growth Investors – June 2018
T. Rowe Price Group Inc Valuation – June 2018 $TROW
Best Dividend Paying Stocks for Dividend Growth Investors – August 2017

Other ModernGraham posts about related companies

Moody’s Corp Valuation – March 2019 #MCO
Charles Schwab Corp Valuation – March 2019 #SCHW
Willis Towers Watson PLC Valuation – March 2019 #WLTW
Paypal Holdings Inc Valuation – March 2019 #PYPL
Synchrony Financial Valuation – March 2019 #SYF
CBRE Group Inc Valuation – March 2019 #CBRE
Franklin Resources Inc Valuation – March 2019 #BEN
S&P Global Inc Valuation – March 2019 #SPGI
Equifax Inc Valuation – March 2019 #EFX
CME Group Inc Valuation – March 2019 #CME

Disclaimer:

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

International Paper Co Valuation – March 2019 #IP

Company Profile (excerpt from Reuters): International Paper Company, incorporated on June 23, 1941, is a paper and packaging company with primary markets and manufacturing operations in North America, Europe, Latin America, Russia, Asia, Africa and the Middle East. The Company’s segments include Industrial Packaging, Global Cellulose Fibers, Printing Papers and Consumer Packaging. As of December 31, 2016, the Company operated 29 pulp, paper and packaging mills, 170 converting and packaging plants, 16 recycling plants and three bag facilities in the United States. As of December 31, 2016, the production facilities in Canada, Europe, Asia, Africa, India, Latin America included 17 pulp, paper and packaging mills, 68 converting and packaging plants, and two recycling plants. As of December 31, 2016, the Company operated a printing and packaging products distribution business principally through 12 branches in Asia. The Company sells packaging products, paper products and other products directly to end users and converters, as well as through agents, resellers and paper distributors.

IP Chart

IP data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of IP – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,950,583,989 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.49 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 129.44% Pass
6. Moderate PEmg Ratio PEmg < 20 10.33 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.48 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 1.49 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.35 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 $4.34
MG Growth Estimate 15.00%
MG Value $167.17
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $62.96
MG Value based on 0% Growth $36.91
Market Implied Growth Rate 0.91%
Current Price $44.85
% of Intrinsic Value 26.83%

International Paper Co 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 $2.15 in 2015 to an estimated $4.34 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.91% 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 above the price.

At the time of valuation, further research into International Paper Co revealed the company was trading above its Graham Number of $44.07. The company pays a dividend of $1.93 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 10.33, which was below the industry average of 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 $-47.06.

International Paper Co performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$47.06
Graham Number $44.07
PEmg 10.33
Current Ratio 1.49
PB Ratio 2.48
Current Dividend $1.93
Dividend Yield 4.29%
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 12/1/2018
Total Current Assets $6,996,000,000
Total Current Liabilities $4,694,000,000
Long-Term Debt $10,015,000,000
Total Assets $33,576,000,000
Intangible Assets $3,374,000,000
Total Liabilities $26,193,000,000
Shares Outstanding (Diluted Average) 407,900,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.75
Dec2018 $4.85
Dec2017 $5.13
Dec2016 $2.18
Dec2015 $2.23
Dec2014 $1.29
Dec2013 $3.11
Dec2012 $1.80
Dec2011 $3.03
Dec2010 $1.59
Dec2009 $1.55
Dec2008 -$3.05
Dec2007 $2.70
Dec2006 $2.18
Dec2005 $2.21
Dec2004 -$0.07
Dec2003 $0.63
Dec2002 -$1.83
Dec2001 -$2.50
Dec2000 $0.32
Dec1999 $0.44

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.34
Dec2018 $3.80
Dec2017 $3.12
Dec2016 $2.11
Dec2015 $2.15
Dec2014 $2.13
Dec2013 $2.44
Dec2012 $1.73
Dec2011 $1.52
Dec2010 $0.84
Dec2009 $0.68
Dec2008 $0.43
Dec2007 $1.96
Dec2006 $1.26
Dec2005 $0.43
Dec2004 -$0.53
Dec2003 -$0.71

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Companies for the Defensive Dividend Stock Investor – February 2019
10 Undervalued Companies for the Defensive Dividend Stock Investor – July 2018
International Paper Co Valuation – June 2018 $IP
International Paper Co Valuation – March 2017 $IP
International Paper Co Valuation – December 2015 Update $IP

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Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP

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.

Ball Corporation Valuation – February 2019 $BLL

Company Profile (excerpt from Reuters): Ball Corporation (Ball), incorporated on December 19, 1922, is a supplier of metal packaging to the beverage, food, personal care and household products industries. The Company’s packaging products are produced for a range of end uses and are manufactured in facilities around the world. Its segments include beverage packaging, North and Central America; beverage packaging, South America; beverage packaging, Europe; food and aerosol packaging; aerospace, and other. Its major product line is aluminum and steel beverage containers. It also produces steel food, aerosol containers, extruded aluminum aerosol containers and aluminum slugs. It sells its packaging products to multinational beverage, food, personal care and household products companies. Its aerospace business is engaged in the design, development and manufacture of aerospace systems for civil, commercial and national cyber security aerospace markets. It produces spacecraft, instruments and sensors, radio frequency systems and components, data exploitation solutions and a range of aerospace technologies and products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BLL – 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 $18,465,563,018 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 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 20.83% Fail
6. Moderate PEmg Ratio PEmg < 20 36.45 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.30 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -42.00 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.50
MG Growth Estimate 2.25%
MG Value $19.42
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $21.68
MG Value based on 0% Growth $12.71
Market Implied Growth Rate 13.97%
Current Price $54.50
% of Intrinsic Value 280.58%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.3 in 2015 to an estimated $1.5 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.97% 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 Ball Corporation revealed the company was trading above its Graham Number of $23.31. The company pays a dividend of $0.4 per share, for a yield of 0.7% Its PEmg (price over earnings per share – ModernGraham) was 36.45, which was above the industry average of 17.32. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-26.14.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.14
Graham Number $23.31
PEmg 36.45
Current Ratio 0.96
PB Ratio 5.30
Current Dividend $0.40
Dividend Yield 0.73%
Number of Consecutive Years of Dividend Growth 2

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $3,940,000,000
Total Current Liabilities $4,095,000,000
Long-Term Debt $6,510,000,000
Total Assets $16,554,000,000
Intangible Assets $6,663,000,000
Total Liabilities $12,992,000,000
Shares Outstanding (Diluted Average) 346,274,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.30
Dec2018 $1.29
Dec2017 $1.05
Dec2016 $0.81
Dec2015 $1.00
Dec2014 $1.65
Dec2013 $1.37
Dec2012 $1.25
Dec2011 $1.32
Dec2010 $1.28
Dec2009 $1.02
Dec2008 $0.83
Dec2007 $0.69
Dec2006 $0.79
Dec2005 $0.62
Dec2004 $0.66
Dec2003 $0.50
Dec2002 $0.34
Dec2001 -$0.12
Dec2000 $0.03
Dec1999 $0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.50
Dec2018 $1.12
Dec2017 $1.08
Dec2016 $1.13
Dec2015 $1.30
Dec2014 $1.42
Dec2013 $1.29
Dec2012 $1.21
Dec2011 $1.14
Dec2010 $1.01
Dec2009 $0.84
Dec2008 $0.74
Dec2007 $0.68
Dec2006 $0.65
Dec2005 $0.52
Dec2004 $0.41
Dec2003 $0.25

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Ball Corporation Valuation – April 2018 $BLL
Ball Corporation Valuation – December 2016 $BLL
Ball Corporation Analysis – 2015 Update $BLL
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Ball Corporation Annual Valuation – 2014 $BLL

Other ModernGraham posts about related companies

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KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS

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.

Westrock Co Valuation – February 2019 $WRK

Company Profile (excerpt from Reuters): WestRock Company, incorporated on March 6, 2015, is a multinational provider of paper and packaging solutions for consumer and corrugated packaging markets. The Company also develops real estate in the Charleston, South Carolina region. The Company’s segments include Corrugated Packaging, Consumer Packaging, and Land and Development. The Corrugated Packaging segment consists of its containerboard mill and corrugated packaging operations, as well as its recycling operations. The Consumer Packaging segment consists of consumer mills, folding carton, beverage, merchandising displays, and partition operations. The Land and Development segment is engaged in the development and sale of real estate primarily in Charleston, South Carolina.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of WRK – 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 $10,296,639,282 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.40 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 128.38% Pass
6. Moderate PEmg Ratio PEmg < 20 11.01 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.90 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 1.40 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 6.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.66
MG Growth Estimate 2.32%
MG Value $48.11
Opinion Fairly Valued
MG Grade C+
MG Value based on 3% Growth $53.10
MG Value based on 0% Growth $31.13
Market Implied Growth Rate 1.26%
Current Price $40.32
% of Intrinsic Value 83.81%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.17 in 2015 to an estimated $3.66 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 1.26% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Westrock Co revealed the company was trading below its Graham Number of $59.42. The company pays a dividend of $1.72 per share, for a yield of 4.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.01, which was below the industry average of 17.32, 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 $-53.28.

Westrock Co receives an average overall rating in the ModernGraham grading system, scoring a C+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$53.28
Graham Number $59.42
PEmg 11.01
Current Ratio 1.40
PB Ratio 0.90
Current Dividend $1.72
Dividend Yield 4.27%
Number of Consecutive Years of Dividend Growth 6

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $5,226,000,000
Total Current Liabilities $3,729,900,000
Long-Term Debt $9,728,000,000
Total Assets $30,666,900,000
Intangible Assets $11,672,300,000
Total Liabilities $19,051,400,000
Shares Outstanding (Diluted Average) 259,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.49
Sep2018 $7.34
Sep2017 $2.77
Sep2016 -$1.56
Sep2015 $2.93
Sep2014 $3.29
Sep2013 $4.98
Sep2012 $1.72
Sep2011 $1.39
Sep2010 $2.85
Sep2009 $2.86
Sep2008 $1.07
Sep2007 $1.04
Sep2006 $0.39
Sep2005 $0.25
Sep2004 $0.25
Sep2003 $0.42
Sep2002 $0.39
Sep2001 $0.46
Sep2000 -$0.23
Sep1999 $0.57

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.66
Sep2018 $3.48
Sep2017 $1.86
Sep2016 $1.70
Sep2015 $3.17
Sep2014 $3.14
Sep2013 $2.97
Sep2012 $1.96
Sep2011 $2.00
Sep2010 $2.09
Sep2009 $1.51
Sep2008 $0.76
Sep2007 $0.56
Sep2006 $0.33
Sep2005 $0.31
Sep2004 $0.32
Sep2003 $0.34

Recommended Reading:

Other ModernGraham posts about the company

10 Most Overvalued Stocks of the S&P 500 – July 2018
WestRock Co Valuation – April 2018 $WRK
WestRock Co Valuation – December 2016 $WRK
10 Best Dividend Paying Stocks for the Defensive Investor – August 2016
14 Best Undervalued Stocks of the Week – 8/6/16

Other ModernGraham posts about related companies

Packaging Corp of America Valuation – January 2019 $PKG
Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS
Owens-Illinois Inc Valuation – June 2018 $OI
International Paper Co Valuation – June 2018 $IP

Disclaimer:

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

Sealed Air Corp Valuation – February 2019 $SEE

Company Profile (excerpt from Reuters): Sealed Air Corporation, incorporated on January 29, 1996, is engaged in food safety and security, facility hygiene and product protection business. The Company serves a range of end markets, including food and beverage processing, food service, retail, healthcare and industrial, and commercial and consumer applications. The Company’s segments are Food Care (includes Corporate, Medical Applications and New Ventures businesses), Product Care and Corporate.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SEE – 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 $6,636,362,622 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.04 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -261.02% Fail
6. Moderate PEmg Ratio PEmg < 20 16.84 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 -18.93 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 1.04 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 48.89 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 $2.51
MG Growth Estimate 15.00%
MG Value $96.66
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $36.40
MG Value based on 0% Growth $21.34
Market Implied Growth Rate 4.17%
Current Price $42.28
% of Intrinsic Value 43.74%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.05 in 2015 to an estimated $2.51 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.17% 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 Sealed Air Corp revealed the company was trading above its Graham Number of $0. The company pays a dividend of $0.64 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 16.84, which was below the industry average of 17.32, 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 $-24.63.

Sealed Air Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$24.63
Graham Number $0.00
PEmg 16.84
Current Ratio 1.04
PB Ratio -18.93
Current Dividend $0.64
Dividend Yield 1.51%
Number of Consecutive Years of Dividend Growth 3

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $1,554,800,000
Total Current Liabilities $1,488,600,000
Long-Term Debt $3,236,500,000
Total Assets $5,050,200,000
Intangible Assets $2,049,300,000
Total Liabilities $5,398,800,000
Shares Outstanding (Diluted Average) 156,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.69
Dec2018 $1.20
Dec2017 $4.29
Dec2016 $2.46
Dec2015 $1.62
Dec2014 $1.20
Dec2013 $0.58
Dec2012 -$7.32
Dec2011 $0.80
Dec2010 $1.44
Dec2009 $1.35
Dec2008 $0.99
Dec2007 $1.89
Dec2006 $1.47
Dec2005 $1.35
Dec2004 $1.13
Dec2003 $1.00
Dec2002 -$2.15
Dec2001 $0.61
Dec2000 $0.97
Dec1999 $0.84

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.51
Dec2018 $2.33
Dec2017 $2.61
Dec2016 $1.08
Dec2015 $0.05
Dec2014 -$0.71
Dec2013 -$1.32
Dec2012 -$1.69
Dec2011 $1.18
Dec2010 $1.39
Dec2009 $1.38
Dec2008 $1.38
Dec2007 $1.51
Dec2006 $1.06
Dec2005 $0.70
Dec2004 $0.36
Dec2003 $0.07

Recommended Reading:

Other ModernGraham posts about the company

Sealed Air Corp Valuation – April 2018 $SEE
Sealed Air Corp Valuation – November 2016 $SEE
30 Companies in the Spotlight This Week – 5/23/15
Sealed Air Corporation Annual Valuation – 2015 $SEE
17 Companies in the Spotlight This Week – 5/10/14

Other ModernGraham posts about related companies

Packaging Corp of America Valuation – January 2019 $PKG
Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS
Owens-Illinois Inc Valuation – June 2018 $OI
International Paper Co Valuation – June 2018 $IP

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.

Packaging Corp of America Valuation – January 2019 $PKG

Company Profile (excerpt from Reuters): Packaging Corporation of America (PCA), incorporated on January 25, 1999, is a producer of containerboard products and uncoated freesheet. The Company operates through three segments: Packaging, Paper, and Corporate and Other. The Packaging segment produces a range of corrugated packaging products. The Paper segment manufactures and sells a range of papers, including communication-based papers and pressure sensitive papers. As of December 31, 2016, the Company operated five containerboard mills, three paper mills and 94 corrugated products manufacturing plants.

Downloadable PDF version of this valuation:

ModernGraham Valuation of PKG – 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 $8,853,452,267 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.76 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 217.02% Pass
6. Moderate PEmg Ratio PEmg < 20 14.93 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.48 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 2.76 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.84 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 $6.28
MG Growth Estimate 14.37%
MG Value $233.77
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $91.02
MG Value based on 0% Growth $53.36
Market Implied Growth Rate 3.21%
Current Price $93.70
% of Intrinsic Value 40.08%

Packaging Corp Of America 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 is only concerned with the level of debt relative to the net 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 $3.21 in 2014 to an estimated $6.28 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.21% 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 Packaging Corp Of America revealed the company was trading above its Graham Number of $63.49. The company pays a dividend of $2.52 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 14.93, which was below the industry average of 15.32, 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 $-19.74.

Packaging Corp Of America performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$19.74
Graham Number $63.49
PEmg 14.93
Current Ratio 2.76
PB Ratio 3.48
Current Dividend $2.52
Dividend Yield 2.69%
Number of Consecutive Years of Dividend Growth 7

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 $2,114,700,000
Total Current Liabilities $766,500,000
Long-Term Debt $2,482,900,000
Total Assets $6,500,000,000
Intangible Assets $1,262,600,000
Total Liabilities $3,969,800,000
Shares Outstanding (Diluted Average) 94,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.74
Dec2017 $7.07
Dec2016 $4.75
Dec2015 $4.47
Dec2014 $3.99
Dec2013 $4.52
Dec2012 $1.64
Dec2011 $1.57
Dec2010 $2.00
Dec2009 $2.60
Dec2008 $1.31
Dec2007 $1.61
Dec2006 $1.20
Dec2005 $0.49
Dec2004 $0.64
Dec2003 -$0.14
Dec2002 $0.45
Dec2001 $0.98
Dec2000 $1.33
Dec1999 $0.32
Dec1998 $0.76

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.28
Dec2017 $5.35
Dec2016 $4.29
Dec2015 $3.78
Dec2014 $3.21
Dec2013 $2.70
Dec2012 $1.80
Dec2011 $1.86
Dec2010 $1.92
Dec2009 $1.73
Dec2008 $1.21
Dec2007 $1.03
Dec2006 $0.67
Dec2005 $0.43
Dec2004 $0.49
Dec2003 $0.47
Dec2002 $0.77

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Companies for the Defensive Investor Near 52 Week Lows – August 2018
5 Undervalued Stocks for Value Investors with a High Beta – July 2018
Packaging Corp of America Valuation – Initial Coverage $PKG

Other ModernGraham posts about related companies

Schweitzer-Mauduit International Inc Valuation – September 2018 $SWM
KapStone Paper and Packaging Corp Valuation – August 2018 $KS
Sonoco Products Co Valuation – August 2018 $SON
Silgan Holdings Inc Valuation – August 2018 $SLGN
Clearwater Paper Corp Valuation – July 2018 $CLW
Intertape Polymer Group Valuation – July 2018 $TSE-ITP
Bemis Co Inc Valuation – June 2018 $BMS
Owens-Illinois Inc Valuation – June 2018 $OI
International Paper Co Valuation – June 2018 $IP
Ball Corporation Valuation – April 2018 $BLL

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.

Investment Technology Group Inc Valuation – July 2018 $ITG

Company Profile (excerpt from Reuters): Investment Technology Group, Inc. (ITG), incorporated on March 10, 1994, is a financial technology company that helps brokers and asset managers improve returns for investors around the world. The Company operates through four segments: U.S. Operations, Canadian Operations, European Operations and Asia Pacific Operations. These four operating segments provide categories of products and services, such as Execution Services, Workflow Technology and Analytics.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ITG – 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 $734,712,447 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.45 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 -73.45% Fail
6. Moderate PEmg Ratio PEmg < 20 60.30 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.10 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 1.45 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.01 Pass
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $0.37
MG Growth Estimate 15.00%
MG Value $14.32
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $5.39
MG Value based on 0% Growth $3.16
Market Implied Growth Rate 25.90%
Current Price $22.43
% of Intrinsic Value 156.61%

Investment Technology Group 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 ratio. The Enterprising Investor has concerns regarding the low current ratio, and the lack of earnings stability over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $-1.16 in 2014 to an estimated $0.37 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 25.9% 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 Investment Technology Group revealed the company was trading above its Graham Number of $17.42. The company pays a dividend of $0.28 per share, for a yield of 1.2% Its PEmg (price over earnings per share – ModernGraham) was 60.3, which was above the industry average of 21.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $5.69.

Investment Technology Group 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) $5.69
Graham Number $17.42
PEmg 60.30
Current Ratio 1.45
PB Ratio 2.10
Current Dividend $0.28
Dividend Yield 1.25%
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 3/1/2018
Total Current Assets $631,207,000
Total Current Liabilities $435,222,000
Long-Term Debt $2,509,000
Total Assets $800,668,000
Intangible Assets $66,064,000
Total Liabilities $437,731,000
Shares Outstanding (Diluted Average) 33,993,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.21
Dec2017 -$1.19
Dec2016 -$0.79
Dec2015 $2.63
Dec2014 $1.40
Dec2013 $0.82
Dec2012 -$6.45
Dec2011 -$4.42
Dec2010 $0.55
Dec2009 $0.97
Dec2008 $2.61
Dec2007 $2.48
Dec2006 $2.21
Dec2005 $1.60
Dec2004 $0.96
Dec2003 $0.89
Dec2002 $1.51
Dec2001 $1.62
Dec2000 $1.34
Dec1999 $0.95
Dec1998 $0.94

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.37
Dec2017 $0.16
Dec2016 $0.40
Dec2015 $0.26
Dec2014 -$1.16
Dec2013 -$2.19
Dec2012 -$2.92
Dec2011 -$0.62
Dec2010 $1.44
Dec2009 $1.92
Dec2008 $2.25
Dec2007 $1.92
Dec2006 $1.57
Dec2005 $1.28
Dec2004 $1.16
Dec2003 $1.27
Dec2002 $1.39

Recommended Reading:

Other ModernGraham posts about the company

Investment Technology Group Valuation – Initial Coverage $ITG

Other ModernGraham posts about related companies

Canadian General Investments Ltd Valuation – July 2018 $TSE-CGI
SLM Corp Valuation – July 2018 $SLM
IGM Financial Inc Valuation – July 2018 $TSE-IGM
Main Street Capital Corp Valuation – July 2018 $MAIN
Legg Mason Inc Valuation – June 2018 $LM
T. Rowe Price Group Inc Valuation – June 2018 $TROW
Moody’s Corporation – June 2018 $MCO
Charles Schwab Corp Valuation – June 2018 $SCHW
Willis Towers Watson PLC Valuation – Initial Coverage June 2018 $WLTW
PayPal Holdings Inc Valuation – June 2018 $PYPL

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.

Stifel Financial Corp Valuation – July 2018 $SF

Company Profile (excerpt from Reuters): Stifel Financial Corp., incorporated on December 31, 1981, is a financial holding company. The Company operates through three segments: Global Wealth Management, Institutional Group and Other. The Company’s principal subsidiary is Stifel, Nicolaus & Company, Incorporated (Stifel), a full-service retail and institutional wealth management and investment banking company. Its principal activities are private client services, including securities transaction and financial planning services; institutional equity and fixed income sales, trading, research and municipal finance; investment banking services, including mergers and acquisitions, public offerings and private placements, and retail and commercial banking, including personal and commercial lending programs. The Global Wealth Management segment consists of two businesses, such as the Private Client Group and Stifel Bank. The Private Client Group includes branch offices and independent contractor offices of its broker-dealer subsidiaries located throughout the United States. These branches provide securities brokerage services, including the sale of equities, mutual funds, fixed income products and insurance, as well as offers banking products to its private clients through Stifel Bank, which provides residential, consumer and commercial lending, as well as the Federal Deposit Insurance Corporation (FDIC)-insured deposit accounts to customers of its broker-dealer subsidiaries and to the general public. The Institutional Group segment includes research, equity and fixed income institutional sales and trading, investment banking, public finance, and syndicate. The Other segment includes interest income from stock borrow activities and interest income, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SF – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,807,434,857 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Fail
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 175.45% Pass
5. Moderate PEmg Ratio PEmg < 20 19.36 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.48 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

 

EPSmg $2.73
MG Growth Estimate 5.72%
MG Value $54.50
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $39.61
MG Value based on 0% Growth $23.22
Market Implied Growth Rate 5.43%
Current Price $52.89
% of Intrinsic Value 97.04%

Stifel Financial Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $1.98 in 2014 to an estimated $2.73 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 5.43% 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.

At the time of valuation, further research into Stifel Financial Corp revealed the company was trading below its Graham Number of $65.28. The company pays a dividend of $0.2 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 19.36, which was below the industry average of 21.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Stifel Financial Corp performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $65.28
PEmg 19.36
PB Ratio 1.48
Dividend Yield 0.38%
TTM Dividend $0.20
Number of Consecutive Years of Dividend Growth 1

 

Useful Links:

 

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Long-Term Debt & Capital Lease Obligation $2,225,695,000
Total Assets $21,715,342,000
Intangible Assets $1,103,257,000
Total Liabilities $18,797,802,000
Shares Outstanding (Diluted Average) 81,789,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.95
Dec2017 $2.14
Dec2016 $1.00
Dec2015 $1.18
Dec2014 $2.31
Dec2013 $2.20
Dec2012 $2.20
Dec2011 $1.34
Dec2010 $0.03
Dec2009 $1.57
Dec2008 $1.32
Dec2007 $0.83
Dec2006 $0.49
Dec2005 $0.69
Dec2004 $0.84
Dec2003 $0.61
Dec2002 $0.11
Dec2001 $0.08
Dec2000 $0.40
Dec1999 $0.34
Dec1998 $0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.73
Dec2017 $1.67
Dec2016 $1.55
Dec2015 $1.83
Dec2014 $1.98
Dec2013 $1.70
Dec2012 $1.39
Dec2011 $1.00
Dec2010 $0.84
Dec2009 $1.15
Dec2008 $0.91
Dec2007 $0.70
Dec2006 $0.61
Dec2005 $0.60
Dec2004 $0.50
Dec2003 $0.33
Dec2002 $0.20

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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.

CI Financial Corp Valuation – July 2018 $TSE:CIX

Company Profile (excerpt from Reuters): CI Financial Corp. (CI) is a wealth management and investment fund company. The Company is engaged in management, marketing, distribution and administration of mutual funds, segregated funds, exchange-traded funds, structured products and other fee-earning investment products for Canadian investors. CI operates through two segments: Asset Management and Asset Administration. The Company’s Asset Management segment provides the majority of CI’s income and derives its revenue principally from the fees earned on the management of various families of mutual, segregated, pooled, exchange-traded and closed-end funds, structured products and discretionary accounts. CI’s Asset Administration segment derives its revenue principally from commissions and fees earned on the sale of mutual funds and other financial products and ongoing service to clients. The Company’s products are distributed primarily through brokers, independent financial planners and insurance advisors, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CIX – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,104,398,878 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 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 87.77% Pass
6. Moderate PEmg Ratio PEmg < 20 11.17 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.41 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.81 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -3.84 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 $2.06
MG Growth Estimate 5.45%
MG Value $39.99
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $29.88
MG Value based on 0% Growth $17.52
Market Implied Growth Rate 1.34%
Current Price $23.02
% of Intrinsic Value 57.57%

CI Financial Corp 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 $1.51 in 2014 to an estimated $2.06 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.34% 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 CI Financial Corp revealed the company was trading above its Graham Number of $20.21. The company pays a dividend of $1.4 per share, for a yield of 6.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.17, which was below the industry average of 21.47, 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 $-6.06.

CI Financial Corp performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.06
Graham Number $20.21
PEmg 11.17
Current Ratio 0.81
PB Ratio 3.41
Current Dividend $1.40
Dividend Yield 6.08%
Number of Consecutive Years of Dividend Growth 8

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Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $992,498,000
Total Current Liabilities $1,226,032,000
Long-Term Debt $896,323,000
Total Assets $4,450,387,000
Intangible Assets $3,374,753,000
Total Liabilities $2,628,370,000
Shares Outstanding (Diluted Average) 269,970,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.40
Dec2017 $1.89
Dec2016 $1.85
Dec2015 $1.98
Dec2014 $1.84
Dec2013 $1.50
Dec2012 $1.24
Dec2011 $1.31
Dec2010 $1.13
Dec2009 $0.83
Dec2008 $1.61
Dec2007 $2.21
May2006 $1.08
May2005 $0.97
May2004 $0.82
May2003 $0.31
May2002 -$0.35
May2001 $0.06
May2000 -$0.01
May1999 $0.06
May1998 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.06
Dec2017 $1.86
Dec2016 $1.80
Dec2015 $1.70
Dec2014 $1.51
Dec2013 $1.30
Dec2012 $1.21
Dec2011 $1.27
Dec2010 $1.29
Dec2009 $1.36
Dec2008 $1.53
Dec2007 $1.35
May2006 $0.80
May2005 $0.56
May2004 $0.29
May2003 $0.02
May2002 -$0.09

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Canadian General Investments Ltd Valuation – July 2018 $TSE-CGI
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Legg Mason Inc Valuation – June 2018 $LM
T. Rowe Price Group Inc Valuation – June 2018 $TROW
Moody’s Corporation – June 2018 $MCO
Charles Schwab Corp Valuation – June 2018 $SCHW
Willis Towers Watson PLC Valuation – Initial Coverage June 2018 $WLTW
PayPal Holdings Inc Valuation – June 2018 $PYPL

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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