Cooper-Standard Holdings Inc Valuation – August 2018 $CPS

Company Profile (excerpt from Reuters): Cooper-Standard Holdings Inc., incorporated on September 10, 2004, is a holding company. The Company designs, manufactures and sells sealing, fuel and brake delivery, fluid transfer and anti-vibration systems for use in passenger vehicles and light trucks manufactured by global original equipment manufacturers (OEMs). The Company operates through four segments: North America, Europe, Asia Pacific and South America. The Company’s products are used in passenger vehicles and light trucks. As of December 31, 2016, the Company’s operations were conducted through 123 leased and joint venture facilities in 20 countries (North America: Canada, Mexico and the United States; Asia Pacific: China, India, Japan, South Korea and Thailand; Europe: Czech Republic, France, Germany, Italy, the Netherlands, Poland, Romania, Serbia, Spain, Sweden and the United Kingdom, and South America: Brazil), of which 90 are manufacturing facilities and 33 have design, engineering, administrative or logistics designations.
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ModernGraham Valuation of CPS – 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 $2,340,159,355 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.78 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 545.80% Pass
6. Moderate PEmg Ratio PEmg < 20 17.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.82 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 1.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.19 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 $7.96
MG Growth Estimate 15.00%
MG Value $306.46
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $115.42
MG Value based on 0% Growth $67.66
Market Implied Growth Rate 4.33%
Current Price $136.54
% of Intrinsic Value 44.55%

Cooper-Standard Holdings Common Stock does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the 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 $2.75 in 2014 to an estimated $7.96 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.33% 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 Cooper-Standard Holdings Common Stock revealed the company was trading above its Graham Number of $105.65. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 17.15, 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 $-23.06.

ChoicePoint Inc. Common Stock receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$23.06
Graham Number $105.65
PEmg 17.15
Current Ratio 1.78
PB Ratio 2.82
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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Most Recent Balance Sheet Figures

Balance Sheet Information 6/1/2018
Total Current Assets $1,388,544,000
Total Current Liabilities $781,261,000
Long-Term Debt $723,002,000
Total Assets $2,700,283,000
Intangible Assets $231,915,000
Total Liabilities $1,812,164,000
Shares Outstanding (Diluted Average) 18,372,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.75
Dec2017 $7.21
Dec2016 $7.42
Dec2015 $6.08
Dec2014 $2.39
Dec2013 $2.24
Dec2012 $4.14
Dec2011 $3.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.96
Dec2017 $6.07
Dec2016 $5.15
Dec2015 $3.93
Dec2014 $2.75
Dec2013 $2.64
Dec2012 $2.43
Dec2011 $1.31

Recommended Reading:

Other ModernGraham posts about the company

Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS

Other ModernGraham posts about related companies

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
General Motors Co Valuation – April 2018 $GM
O’Reilly Automotive Inc Valuation – April 2018 $ORLY

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.

Dana Inc Valuation – Initial Coverage $DAN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Dana Inc (DAN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Dana Incorporated, formerly Dana Holding Corporation, is a global provider of technology driveline, sealing and thermal-management products. The Company operates in four segments: Light Vehicle Driveline Technologies (Light Vehicle), Commercial Vehicle Driveline Technologies (Commercial Vehicle), Off-Highway Driveline Technologies (Off-Highway) and Power Technologies. It has operations in North America, South America, Europe and Asia pacific. Its Light Vehicle segment offers products, such as front axles, rear axles, driveshafts/propshafts, differentials, torque couplings and modular assemblies. Its Commercial Vehicle segment offers products, such as steer axles, drive axles, drive shafts and tire inflation systems. Its Off-Highway segment offers products, such as front axles, rear axles, drive shafts, transmissions, torque converters, tire inflation systems and electronic controls. Its Power Technologies segment offers products, including gaskets and cover modules.

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ModernGraham Valuation of DAN – April 2017

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 $2,510,360,302 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.82 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 -161.84% Fail
6. Moderate PEmg Ratio PEmg < 20 8.11 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.23 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 1.82 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.55 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 $2.17
MG Growth Estimate 15.00%
MG Value $83.42
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $31.42
MG Value based on 0% Growth $18.42
Market Implied Growth Rate -0.20%
Current Price $17.57
% of Intrinsic Value 21.06%

Dana Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. 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. 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 $0.25 in 2013 to an estimated $2.17 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.2% annual earnings loss 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 Dana Inc revealed the company was trading above its Graham Number of $17.53. The company pays a dividend of $0.24 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 8.11, which was below the industry average of 18.18, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-9.67.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$9.67
Graham Number $17.53
PEmg 8.11
Current Ratio 1.82
PB Ratio 2.23
Current Dividend $0.24
Dividend Yield 1.37%
Number of Consecutive Years of Dividend Growth 3

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ModernGraham tagged articles Morningstar
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GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $2,284,000,000
Total Current Liabilities $1,253,000,000
Long-Term Debt $1,595,000,000
Total Assets $4,860,000,000
Intangible Assets $199,000,000
Total Liabilities $3,703,000,000
Shares Outstanding (Diluted Average) 146,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.70
Dec2016 $4.36
Dec2015 $0.99
Dec2014 $1.84
Dec2013 -$0.09
Dec2012 $1.40
Dec2011 $1.02
Dec2010 -$0.15
Dec2009 -$4.19
Dec2008 -$7.06
Dec2007 -$3.68
Dec2006 -$4.92
Dec2005 -$10.73
Dec2004 $0.41
Dec2003 $1.53
Dec2002 -$1.03
Dec2001 -$1.77
Dec2000 $2.18
Dec1999 $3.08
Dec1998 $3.20
Dec1997 $1.94

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.17
Dec2016 $2.17
Dec2015 $1.06
Dec2014 $1.00
Dec2013 $0.25
Dec2012 -$0.32
Dec2011 -$1.72
Dec2010 -$3.40
Dec2009 -$5.39
Dec2008 -$5.72
Dec2007 -$4.53
Dec2006 -$4.28
Dec2005 -$3.42
Dec2004 $0.25
Dec2003 $0.38
Dec2002 $0.24
Dec2001 $1.16

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Linamar Corp Valuation – Initial Coverage $TSE:LNR
AutoNation Inc Valuation – March 2017 $AN
Superior Industries International Inc Valuation – Initial Coverage $SUP
Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A
LKQ Corporation Valuation – Initial Coverage $LKQ
Lithia Motors Inc Valuation – Initial Coverage $LAD
Delphi Automotive PLC Valuation – February 2017 $DLPH
Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP

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.

Linamar Corp Valuation – Initial Coverage $TSE:LNR

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – March 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Linamar Corp (TSE:LNR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Linamar Corporation is a Canada-based diversified manufacturing company of engineered products powering vehicles, motion, work and lives. The Company operates through two segments: the Powertrain/Driveline and the Industrial. The segments are divided into four operating groups: Machining & Assembly, Light Metal Casting, Forging and Skyjack. The Company’s Machining and Assembly, Casting and Forging operating groups focus on precision metallic components, modules and systems for engine, transmission, driveline and body systems designed for global vehicle and industrial markets. The Company’s Skyjack operating group is noted for its mobile industrial equipment, notably its aerial work platforms and tele handlers. The Company provides core engine components, including cylinder blocks and heads, camshafts and connecting rods. For transmission, it builds differential assemblies, gear sets, shaft and shell assemblies, as well as clutch modules.

LNR Chart

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-LNR – March 2017

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 $3,930,918,802 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.69 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 1200.58% Pass
6. Moderate PEmg Ratio PEmg < 20 8.70 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.53 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.69 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.40 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 $6.93
MG Growth Estimate 15.00%
MG Value $266.91
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $100.52
MG Value based on 0% Growth $58.93
Market Implied Growth Rate 0.10%
Current Price $60.31
% of Intrinsic Value 22.60%

Linamar Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years. The Enterprising Investor is only concerned with the level of debt relative to the net current assets. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.22 in 2013 to an estimated $6.93 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.1% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Linamar Corporation revealed the company was trading below its Graham Number of $83.15. 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 8.7, which was below the industry average of 18.47, 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 $-7.49.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$7.49
Graham Number $83.15
PEmg 8.70
Current Ratio 1.69
PB Ratio 1.53
Current Dividend $0.40
Dividend Yield 0.66%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $2,142,900,000
Total Current Liabilities $1,266,290,000
Long-Term Debt $1,228,035,000
Total Assets $5,227,170,000
Intangible Assets $736,378,000
Total Liabilities $2,636,909,000
Shares Outstanding (Diluted Average) 65,925,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.82
Dec2016 $7.92
Dec2015 $6.63
Dec2014 $4.90
Dec2013 $3.52
Dec2012 $2.25
Dec2011 $1.56
Dec2010 $1.40
Dec2009 -$0.73
Dec2008 $1.05
Dec2007 $1.57
Dec2006 $1.40
Dec2005 $1.41
Dec2004 $1.31
Dec2003 $0.57
Dec2002 $0.81
Dec2001 $0.60
Dec2000 $1.12
Dec1999 $0.92
Dec1998 $1.17
Dec1997 $1.51

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.93
Dec2016 $6.01
Dec2015 $4.62
Dec2014 $3.32
Dec2013 $2.22
Dec2012 $1.42
Dec2011 $0.99
Dec2010 $0.78
Dec2009 $0.63
Dec2008 $1.32
Dec2007 $1.39
Dec2006 $1.23
Dec2005 $1.08
Dec2004 $0.91
Dec2003 $0.74
Dec2002 $0.85
Dec2001 $0.94

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

AutoNation Inc Valuation – March 2017 $AN
Superior Industries International Inc Valuation – Initial Coverage $SUP
Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A
LKQ Corporation Valuation – Initial Coverage $LKQ
Lithia Motors Inc Valuation – Initial Coverage $LAD
Delphi Automotive PLC Valuation – February 2017 $DLPH
Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR

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.

AutoNation Inc Valuation – March 2017 $AN

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how AutoNation Inc (AN) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): AutoNation, Inc. (AutoNation) is an automotive retailer in the United States. The Company offers a range of automotive products and services, including new vehicles, used vehicles, parts and service, which includes automotive repair and maintenance services, as well as wholesale parts and collision businesses, and automotive finance and insurance products, including vehicle service and other protection products, as well as the arranging of financing for vehicle purchases through third-party finance sources. It operates through three segments: Domestic, Import and Premium Luxury. Its Domestic segment consists of retail automotive franchises that sell new vehicles manufactured by General Motors, Ford and FCA US. The Import segment consists of retail automotive franchises that sell new vehicles manufactured primarily by Toyota, Honda and Nissan. The Premium Luxury segment consists of retail automotive franchises that sell new vehicles manufactured by Mercedes-Benz, BMW, Audi and Lexus.

AN Chart

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ModernGraham Valuation of AN – March 2017

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 $4,539,433,107 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.81 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 -362.61% Fail
6. Moderate PEmg Ratio PEmg < 20 11.91 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.01 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 -1.45 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $3.76
MG Growth Estimate 9.20%
MG Value $101.23
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $54.57
MG Value based on 0% Growth $31.99
Market Implied Growth Rate 1.71%
Current Price $44.84
% of Intrinsic Value 44.29%

AutoNation, Inc. does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets, and the lack of 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 $2.33 in 2013 to an estimated $3.76 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.71% 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 AutoNation, Inc. revealed the company was trading above its Graham Number of $43.16. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 11.91, which was below the industry average of 18.47, 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 $-29.24.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$29.24
Graham Number $43.16
PEmg 11.91
Current Ratio 0.81
PB Ratio 2.01
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $4,714,800,000
Total Current Liabilities $5,829,200,000
Long-Term Debt $1,611,100,000
Total Assets $10,060,000,000
Intangible Assets $2,109,500,000
Total Liabilities $7,749,700,000
Shares Outstanding (Diluted Average) 103,800,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.62
Dec2016 $4.15
Dec2015 $3.89
Dec2014 $3.52
Dec2013 $3.04
Dec2012 $2.52
Dec2011 $1.91
Dec2010 $1.43
Dec2009 $1.12
Dec2008 -$6.99
Dec2007 $1.39
Dec2006 $1.38
Dec2005 $1.85
Dec2004 $1.59
Dec2003 $1.67
Dec2002 $1.19
Dec2001 $0.69
Dec2000 $0.91
Dec1999 $0.66
Dec1998 $1.06
Dec1997 $1.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.76
Dec2016 $3.70
Dec2015 $3.31
Dec2014 $2.84
Dec2013 $2.33
Dec2012 $1.32
Dec2011 $0.40
Dec2010 -$0.35
Dec2009 -$0.91
Dec2008 -$1.33
Dec2007 $1.52
Dec2006 $1.57
Dec2005 $1.58
Dec2004 $1.37
Dec2003 $1.18
Dec2002 $0.92
Dec2001 $0.81

Recommended Reading:

Other ModernGraham posts about the company

AutoNation Inc Valuation – November 2015 Update $AN
22 Companies in the Spotlight This Week – 11/29/14
AutoNation Inc. Annual Valuation – 2014 $AN

Other ModernGraham posts about related companies

Superior Industries International Inc Valuation – Initial Coverage $SUP
Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A
LKQ Corporation Valuation – Initial Coverage $LKQ
Lithia Motors Inc Valuation – Initial Coverage $LAD
Delphi Automotive PLC Valuation – February 2017 $DLPH
Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA

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.

Superior Industries International Inc Valuation – Initial Coverage $SUP

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Superior Industries International Inc (SUP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Superior Industries International, Inc. is engaged in the design and manufacture of aluminum wheels for sale to original equipment manufacturers (OEMs). The Company supplies cast aluminum wheels to automobile and light truck manufacturers, with wheel manufacturing operations in the United States and Mexico. The Company offers wheels in a range of finishes, which include Bright Machined, Polished Face with Painted Window, Fully Painted, Premium Paint, Polished, Chrome Clad and Mirror Finish Ultra Bright Machining. The Company’s products, which are manufactured in its North American facilities, are delivered primarily to automotive assembly operations in North America for global OEMs. Its OEM aluminum wheels are primarily sold for factory installation, as either optional or standard equipment, on various vehicle models. As of December 31, 2015, the Company operated five manufacturing facilities in the United States and Mexico.

SUP Chart

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ModernGraham Valuation of SUP – March 2017

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 $650,874,289 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.95 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -269.38% Fail
6. Moderate PEmg Ratio PEmg < 20 19.77 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.68 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.95 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 $1.33
MG Growth Estimate 3.24%
MG Value $19.90
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $19.26
MG Value based on 0% Growth $11.29
Market Implied Growth Rate 5.63%
Current Price $26.25
% of Intrinsic Value 131.92%

Superior Industries International Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, insufficient earnings stability or growth over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $1.09 in 2013 to an estimated $1.33 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.63% 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 Superior Industries International Inc revealed the company was trading above its Graham Number of $25.53. The company pays a dividend of $0.72 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 19.77, which was above the industry average of 18.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $4.31.

Superior Industries International Inc receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $4.31
Graham Number $25.53
PEmg 19.77
Current Ratio 2.95
PB Ratio 1.68
Current Dividend $0.72
Dividend Yield 2.74%
Number of Consecutive Years of Dividend Growth 0

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $254,100,000
Total Current Liabilities $86,000,000
Long-Term Debt $0
Total Assets $542,800,000
Intangible Assets $0
Total Liabilities $144,600,000
Shares Outstanding (Diluted Average) 25,428,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.85
Dec2016 $1.62
Dec2015 $0.90
Dec2014 $0.33
Dec2013 $0.83
Dec2012 $1.13
Dec2011 $2.46
Dec2010 $1.93
Dec2009 -$3.53
Dec2008 -$0.98
Dec2007 $0.35
Dec2006 -$0.40
Dec2005 -$0.27
Dec2004 $1.99
Dec2003 $2.97
Dec2002 $3.07
Dec2001 $2.10
Dec2000 $3.04
Dec1999 $2.62
Dec1998 $1.88
Dec1997 $1.96

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.33
Dec2016 $1.03
Dec2015 $0.87
Dec2014 $1.01
Dec2013 $1.09
Dec2012 $0.88
Dec2011 $0.52
Dec2010 -$0.47
Dec2009 -$1.44
Dec2008 -$0.22
Dec2007 $0.42
Dec2006 $0.79
Dec2005 $1.58
Dec2004 $2.55
Dec2003 $2.81
Dec2002 $2.67
Dec2001 $2.42

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A
LKQ Corporation Valuation – Initial Coverage $LKQ
Lithia Motors Inc Valuation – Initial Coverage $LAD
Delphi Automotive PLC Valuation – February 2017 $DLPH
Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $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.

Canadian Tire Corp Limited Valuation – Initial Coverage $TSE:CTC.A

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Canadian Tire Corp Limited (TSE:CTC.A) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Canadian Tire Corporation, Limited is a Canada-based company that operates through a range of businesses. The Company’s segments include Retail segment, the CT REIT segment and the Financial Services segment. The Retail segment operates retail banners, including Canadian Tire, PartSource, Petroleum, Mark’s and various FGL Sports banners. The CT REIT segment is engaged in owning, developing and leasing income-producing commercial properties. Its portfolio of properties consists of over 290 properties located across each of the provinces and two territories of Canada. Its property portfolio includes Canadian Tire stores, retail developments anchored by a Canadian Tire store, Canadian Tire distribution centers, a mixed-use commercial property, and development lands. Its Financial Services segment markets a range of Canadian Tire-branded credit cards, including the Canadian Tire Options MasterCard, the Cash Advantage MasterCard, the Gas Advantage MasterCard and the Sport Chek MasterCard.

CTC.A Chart

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ModernGraham Valuation of TSE-CTC.A – February 2017

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 $10,939,153,299 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.85 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 97.73% Pass
6. Moderate PEmg Ratio PEmg < 20 16.93 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.24 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 1.85 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.67 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 $9.02
MG Growth Estimate 7.29%
MG Value $208.09
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $130.74
MG Value based on 0% Growth $76.64
Market Implied Growth Rate 4.21%
Current Price $152.64
% of Intrinsic Value 73.35%

Canadian Tire Corporation Limited 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 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 $6.07 in 2013 to an estimated $9.02 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.21% 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 Canadian Tire Corporation Limited revealed the company was trading above its Graham Number of $125.89. The company pays a dividend of $2.3 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 16.93, which was below the industry average of 18.47, 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 $-23.8.

Canadian Tire Corporation Limited performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$23.80
Graham Number $125.89
PEmg 16.93
Current Ratio 1.85
PB Ratio 2.24
Current Dividend $2.30
Dividend Yield 1.51%
Number of Consecutive Years of Dividend Growth 7

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Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $8,637,700,000
Total Current Liabilities $4,680,900,000
Long-Term Debt $2,667,100,000
Total Assets $15,302,800,000
Intangible Assets $1,280,300,000
Total Liabilities $10,364,200,000
Shares Outstanding (Diluted Average) 72,556,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $10.09
Dec2016 $9.22
Dec2015 $8.61
Dec2014 $7.59
Dec2013 $6.91
Dec2012 $6.10
Dec2011 $5.71
Dec2010 $5.42
Dec2009 $4.10
Dec2008 $4.60
Dec2007 $5.05
Dec2006 $4.31
Dec2005 $3.98
Dec2004 $3.53
Dec2003 $2.95
Dec2002 $2.53
Dec2001 $2.23
Dec2000 $1.89
Dec1999 $1.89
Dec1998 $2.09
Dec1997 $1.79

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.02
Dec2016 $8.22
Dec2015 $7.47
Dec2014 $6.72
Dec2013 $6.07
Dec2012 $5.49
Dec2011 $5.12
Dec2010 $4.78
Dec2009 $4.44
Dec2008 $4.51
Dec2007 $4.30
Dec2006 $3.77
Dec2005 $3.34
Dec2004 $2.89
Dec2003 $2.48
Dec2002 $2.21
Dec2001 $2.02

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

LKQ Corporation Valuation – Initial Coverage $LKQ
Lithia Motors Inc Valuation – Initial Coverage $LAD
Delphi Automotive PLC Valuation – February 2017 $DLPH
Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $F
CarMax Inc Valuation – November 2016 $KMX

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.

LKQ Corporation Valuation – Initial Coverage $LKQ

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how LKQ Corporation (LKQ) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): LKQ Corporation (LKQ) is a global distributor of vehicle products, including replacement parts, components and systems used in the repair and maintenance of vehicles, as well as specialty vehicle products and accessories. The company distributes a range of products to collision and mechanical repair shops, including aftermarket collision and mechanical products, and recycled collision and mechanical products. It operates through four segments: Wholesale – North America; Europe; Specialty, and Self Service. Its wholesale automobile product operations sell five product types (aftermarket, recycled, remanufactured, refurbished and original equipment manufacturers (OEMs) parts). The European wholesale operating segment includes Euro Car Parts Holdings Limited (ECP). The Specialty operating segment includes Keystone Automotive Holdings, Inc. (Keystone Specialty). The Company’s self service segment retail operations sell parts from older cars and light-duty trucks directly to consumers.

LKQ Chart

LKQ data by YCharts

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ModernGraham Valuation of LKQ – March 2017

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,972,124,064 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.95 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 239.13% Pass
6. Moderate PEmg Ratio PEmg < 20 21.02 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.86 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 2.95 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.39 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $1.51
MG Growth Estimate 12.60%
MG Value $50.91
Opinion Undervalued
MG Grade D+
MG Value based on 3% Growth $21.90
MG Value based on 0% Growth $12.84
Market Implied Growth Rate 6.26%
Current Price $31.75
% of Intrinsic Value 62.36%

LKQ Corporation does not satisfy the requirements of either the Enterprising Investor or 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 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 $0.82 in 2013 to an estimated $1.51 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.26% 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 above the price.

At the time of valuation, further research into LKQ Corporation revealed the company was trading above its Graham Number of $21.29. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 21.02, which was above the industry average of 18.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.17.

LKQ 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) -$4.17
Graham Number $21.29
PEmg 21.02
Current Ratio 2.95
PB Ratio 2.86
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $3,567,594,000
Total Current Liabilities $1,210,785,000
Long-Term Debt $3,275,662,000
Total Assets $8,303,199,000
Intangible Assets $3,639,000,000
Total Liabilities $4,860,250,000
Shares Outstanding (Diluted Average) 309,784,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.80
Dec2016 $1.50
Dec2015 $1.38
Dec2014 $1.25
Dec2013 $1.02
Dec2012 $0.87
Dec2011 $0.71
Dec2010 $0.58
Dec2009 $0.45
Dec2008 $0.36
Dec2007 $0.28
Dec2006 $0.20
Dec2005 $0.16
Dec2004 $0.12
Dec2003 $0.10
Dec2002 -$0.25
Dec2001 $0.03
Dec2000 -$0.01

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.51
Dec2016 $1.31
Dec2015 $1.16
Dec2014 $1.00
Dec2013 $0.82
Dec2012 $0.68
Dec2011 $0.55
Dec2010 $0.43
Dec2009 $0.34
Dec2008 $0.26
Dec2007 $0.20
Dec2006 $0.13
Dec2005 $0.07
Dec2004 $0.02
Dec2003 -$0.03
Dec2002 -$0.08
Dec2001 $0.01

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Delphi Automotive PLC Valuation – February 2017 $DLPH
Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $F
CarMax Inc Valuation – November 2016 $KMX
Advance Auto Parts Inc Valuation – November 2016 $AAP
General Motors Company Valuation – November 2016 $GM

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.

Lithia Motors Inc Valuation – Initial Coverage $LAD

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Lithia Motors Inc (LAD) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Lithia Motors, Inc. is an operator of automotive franchises and a retailer of new and used vehicles and services. The Company operates in three segments: Domestic, Import and Luxury. Its Domestic segment consists of retail automotive franchises that sell new vehicles of Chrysler, General Motors and Ford. Its Import segment consists of retail automotive franchises that sell new vehicles manufactured primarily by Honda, Toyota, Subaru, Nissan and Volkswagen. Its Luxury segment consists of retail automotive franchises that sell new vehicles of BMW, Mercedes-Benz and Lexus. Its franchises in each segment sell used vehicles, parts and automotive services, and automotive finance and insurance products. Its operations involve the use, handling, storage and contracting for recycling and disposal of materials, such as motor oil and filters, transmission fluids, antifreeze, refrigerants, paints, thinners, batteries, cleaning products, lubricants, degreasing agents, tires and fuel.

LAD Chart

LAD data by YCharts

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To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

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ModernGraham Valuation of LAD – February 2017

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 $2,511,996,603 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.17 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 -277.17% Fail
6. Moderate PEmg Ratio PEmg < 20 16.15 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.88 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 1.17 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.44 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 $6.10
MG Growth Estimate 15.00%
MG Value $234.95
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $88.49
MG Value based on 0% Growth $51.87
Market Implied Growth Rate 3.82%
Current Price $98.53
% of Intrinsic Value 41.94%

Lithia Motors Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. 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 $0.94 in 2012 to an estimated $6.1 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.82% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Lithia Motors Inc revealed the company was trading above its Graham Number of $75.64. The company pays a dividend of $0.9 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 16.15, which was below the industry average of 18.47, 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 $-26.29.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$26.29
Graham Number $75.64
PEmg 16.15
Current Ratio 1.17
PB Ratio 2.88
Current Dividend $0.90
Dividend Yield 0.91%
Number of Consecutive Years of Dividend Growth 3

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $2,032,698,000
Total Current Liabilities $1,735,179,000
Long-Term Debt $727,191,000
Total Assets $3,563,606,000
Intangible Assets $382,241,000
Total Liabilities $2,697,516,000
Shares Outstanding (Diluted Average) 25,290,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.39
Dec2015 $6.91
Dec2014 $5.26
Dec2013 $4.05
Dec2012 $3.07
Dec2011 $2.21
Dec2010 $0.52
Dec2009 $0.41
Dec2008 -$12.51
Dec2007 $1.06
Dec2006 $1.77
Dec2005 $2.54
Dec2004 $2.27
Dec2003 $1.93
Dec2002 $1.80
Dec2001 $1.60
Dec2000 $1.76
Dec1999 $1.60
Dec1998 $1.14
Dec1997 $0.82
Dec1996 $0.81

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.10
Dec2015 $5.07
Dec2014 $3.78
Dec2013 $2.71
Dec2012 $0.94
Dec2011 -$0.64
Dec2010 -$1.96
Dec2009 -$2.58
Dec2008 -$3.04
Dec2007 $1.76
Dec2006 $2.10
Dec2005 $2.18
Dec2004 $1.96
Dec2003 $1.78
Dec2002 $1.67
Dec2001 $1.53
Dec2000 $1.40

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $F
CarMax Inc Valuation – November 2016 $KMX
Advance Auto Parts Inc Valuation – November 2016 $AAP
General Motors Company Valuation – November 2016 $GM
Delphi Automotive PLC Valuation – August 2016 $DLPH

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 Automotive PLC Valuation – February 2017 $DLPH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Delphi Automotive PLC (DLPH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Delphi Automotive PLC is a global technology company serving the automotive sector. The Company designs and manufactures vehicle components, and provides electrical and electronic, powertrain and active safety technology solutions to the global automotive and commercial vehicle markets. The Company’s segments include Electrical/Electronic Architecture, Powertrain Systems, and Electronics and Safety. The Electrical/Electronic Architecture segment provides complete design of the vehicle’s electrical architecture, including connectors, wiring assemblies and harnesses, electrical centers and hybrid high voltage and safety distribution systems. The Powertrain Systems segment offers products for engine management systems (EMS). The Electronics and Safety segment offers a range of electronic and safety equipment and software in the areas of controls, security, infotainment, communications and safety systems.

DLPH Chart

DLPH data by YCharts

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ModernGraham Valuation of DLPH – February 2017

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 $20,865,878,060 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.31 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 1628.26% Pass
6. Moderate PEmg Ratio PEmg < 20 14.82 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 8.74 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 1.31 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.11 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 $5.18
MG Growth Estimate 12.23%
MG Value $170.59
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $75.05
MG Value based on 0% Growth $44.00
Market Implied Growth Rate 3.16%
Current Price $76.69
% of Intrinsic Value 44.95%

Delphi Automotive 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, the poor dividend history, 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 $2.85 in 2013 to an estimated $5.18 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.16% 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 Automotive PLC revealed the company was trading above its Graham Number of $35.31. The company pays a dividend of $1.16 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 14.82, which was below the industry average of 18.47, 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 $-16.34.

Delphi Automotive 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) -$16.34
Graham Number $35.31
PEmg 14.82
Current Ratio 1.31
PB Ratio 8.74
Current Dividend $1.16
Dividend Yield 1.51%
Number of Consecutive Years of Dividend Growth 2

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2016
Total Current Assets $5,419,000,000
Total Current Liabilities $4,148,000,000
Long-Term Debt $3,959,000,000
Total Assets $12,292,000,000
Intangible Assets $2,748,000,000
Total Liabilities $9,891,000,000
Shares Outstanding (Diluted Average) 273,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.25
Dec2016 $4.59
Dec2015 $5.06
Dec2014 $4.48
Dec2013 $3.89
Dec2012 $3.33
Dec2011 $2.72
Dec2010 $0.92

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.18
Dec2016 $4.52
Dec2015 $4.28
Dec2014 $3.62
Dec2013 $2.85
Dec2012 $2.02
Dec2011 $1.15
Dec2010 $0.31

Recommended Reading:

Other ModernGraham posts about the company

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 – Initial Coverage $CPS
Copart Inc Valuation – Initial Coverage $CPRT
Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $F
CarMax Inc Valuation – November 2016 $KMX
Advance Auto Parts Inc Valuation – November 2016 $AAP
General Motors Company Valuation – November 2016 $GM
Delphi Automotive PLC Valuation – August 2016 $DLPH

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.

Cooper-Standard Holdings Inc Valuation – Initial Coverage $CPS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Cooper-Standard Holdings Inc (CPS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cooper-Standard Holdings Inc. is a holding company. The Company, through its subsidiaries, manufactures sealing, fuel and brake delivery, fluid transfer and anti-vibration systems components for use in passenger vehicles and light trucks. The Company operates through four segments, which include North America, Europe, South America and Asia Pacific. The Company’s principal products within each of these segments are sealing systems, fuel and brake delivery systems, fluid transfer systems and anti-vibration systems. The sealing systems protect vehicle interiors from weather, dust and noise intrusion. Its fuel and brake delivery systems sense, deliver and control fluids to fuel and brake systems. Its fluid transfer systems sense, deliver and control fluid and vapors for optimal powertrain and heating, ventilation and air conditioning (HVAC) operation. The Company’s anti-vibration systems control and isolate noise and vibration in the vehicle.

CPS Chart

CPS data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

Learn More About Premium Membership

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

ModernGraham Valuation of CPS – February 2017

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 $1,815,673,047 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.70 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 54433.33% Pass
6. Moderate PEmg Ratio PEmg < 20 19.47 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.77 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 1.70 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.41 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 $5.30
MG Growth Estimate 15.00%
MG Value $204.20
Opinion Undervalued
MG Grade D+
MG Value based on 3% Growth $76.91
MG Value based on 0% Growth $45.08
Market Implied Growth Rate 5.49%
Current Price $103.27
% of Intrinsic Value 50.57%

Cooper-Standard Holdings Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability over the last ten years, 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 $2.43 in 2012 to an estimated $5.3 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 5.49% 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 Cooper-Standard Holdings Inc revealed the company was trading above its Graham Number of $83.9. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 19.47, which was above the industry average of 18.47. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.08.

Cooper-Standard Holdings 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) -$27.08
Graham Number $83.90
PEmg 19.47
Current Ratio 1.70
PB Ratio 2.77
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

[/not-level-free]

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $1,255,397,000
Total Current Liabilities $740,224,000
Long-Term Debt $726,688,000
Total Assets $2,463,304,000
Intangible Assets $256,742,000
Total Liabilities $1,763,450,000
Shares Outstanding (Diluted Average) 18,761,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.89
Dec2015 $6.08
Dec2014 $2.39
Dec2013 $2.24
Dec2012 $4.14
Dec2011 $3.93

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.30
Dec2015 $3.93
Dec2014 $2.75
Dec2013 $2.64
Dec2012 $2.43
Dec2011 $1.31

Recommended Reading:

Other ModernGraham posts about the company

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

Other ModernGraham posts about related companies

Standard Motor Products Inc Valuation – Initial Coverage $SMP
Harman International Industries Inc Valuation – January 2017 $HAR
BorgWarner Inc Valuation – December 2016 $BWA
Ford Motor Company Valuation – November 2016 $F
CarMax Inc Valuation – November 2016 $KMX
Advance Auto Parts Inc Valuation – November 2016 $AAP
General Motors Company Valuation – November 2016 $GM
Delphi Automotive PLC Valuation – August 2016 $DLPH
Carmax Inc Valuation – August 2016 $KMX
BorgWarner Inc Valuation – August 2016 $BWA

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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