US Bancorp Valuation – March 2019 #USB

Company Profile (excerpt from Reuters): U.S. Bancorp, incorporated on April 2, 1929, is a multi-state financial services holding company. The Company provides a full range of financial services, including lending and depository services, cash management, capital markets, and trust and investment management services. It also engages in credit card services, merchant and automated teller machine (ATM) processing, mortgage banking, insurance, brokerage and leasing. The Company’s banking subsidiary, U.S. Bank National Association, is engaged in the general banking business, principally in domestic markets. U.S. Bank National Association provides a range of products and services to individuals, businesses, institutional organizations, governmental entities and other financial institutions.

USB Chart

USB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of USB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $81,855,808,103 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 69.13% Pass
5. Moderate PEmg Ratio PEmg < 20 13.24 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.60 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 $3.86
MG Growth Estimate 4.20%
MG Value $65.26
Opinion Fairly Valued
MG Grade A-
MG Value based on 3% Growth $56.00
MG Value based on 0% Growth $32.83
Market Implied Growth Rate 2.37%
Current Price $51.14
% of Intrinsic Value 78.36%

U.S. Bancorp qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.02 in 2015 to an estimated $3.86 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 2.37% 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 U.S. Bancorp revealed the company was trading below its Graham Number of $51.57. The company pays a dividend of $1.34 per share, for a yield of 2.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.24, which was below the industry average of 16.75, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

U.S. Bancorp fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $51.57
PEmg 13.24
PB Ratio 1.60
Dividend Yield 2.62%
TTM Dividend $1.34
Number of Consecutive Years of Dividend Growth 8

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
Long-Term Debt & Capital Lease Obligation $41,340,000,000
Total Assets $467,374,000,000
Intangible Assets $12,761,000,000
Total Liabilities $415,717,000,000
Shares Outstanding (Diluted Average) 1,617,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.24
Dec2018 $4.14
Dec2017 $3.51
Dec2016 $3.24
Dec2015 $3.16
Dec2014 $3.08
Dec2013 $3.00
Dec2012 $2.84
Dec2011 $2.46
Dec2010 $1.73
Dec2009 $0.97
Dec2008 $1.61
Dec2007 $2.43
Dec2006 $2.61
Dec2005 $2.42
Dec2004 $2.18
Dec2003 $1.93
Dec2002 $1.65
Dec2001 $0.88
Dec2000 $1.50
Dec1999 $2.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.86
Dec2018 $3.59
Dec2017 $3.28
Dec2016 $3.13
Dec2015 $3.02
Dec2014 $2.84
Dec2013 $2.54
Dec2012 $2.19
Dec2011 $1.85
Dec2010 $1.66
Dec2009 $1.75
Dec2008 $2.17
Dec2007 $2.41
Dec2006 $2.32
Dec2005 $2.05
Dec2004 $1.79
Dec2003 $1.60

Recommended Reading:

Other ModernGraham posts about the company

US Bancorp Valuation – May 2018 $USB
12 Best Stocks for Value Investors This Week – 2/4/17
U.S. Bancorp Valuation – February 2017 $USB
15 Best Undervalued Stocks of the Week – 8/20/16
US Bancorp Valuation – August 2016 $USB

Other ModernGraham posts about related companies

Citizens Financial Group Inc Valuation – February 2019 $CFG
BB&T Corp Valuation – February 2019 $BBT
M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY

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.

Citizens Financial Group Inc Valuation – February 2019 $CFG

Company Profile (excerpt from Reuters): Citizens Financial Group, Inc., incorporated on November 21, 1984, is a retail bank holding company. The Company operates through two segments: Consumer Banking and Commercial Banking. The Company delivers a range of retail and commercial banking products and services to individuals, institutions and companies. As of December 31, 2016, the Company operated approximately 1,200 branches operating in an 11-state banking footprint across the New England, Mid-Atlantic and Midwest regions and through its online, telephone and mobile banking platforms. As of December 31, 2016, it also maintained more than 100 retail and commercial non-branch offices located in its branch banking footprint and in other states and the District of Columbia. The Company’s primary subsidiaries include Citizens Bank, N.A. (CBNA), a national banking association and Citizens Bank of Pennsylvania (CBPA), a Pennsylvania-chartered savings bank.

CFG Chart

CFG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CFG – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,102,493,955 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
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 412.66% Pass
5. Moderate PEmg Ratio PEmg < 20 11.44 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.83 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 $3.21
MG Growth Estimate 15.00%
MG Value $123.51
Opinion Undervalued
MG Grade A-
MG Value based on 3% Growth $46.52
MG Value based on 0% Growth $27.27
Market Implied Growth Rate 1.47%
Current Price $36.70
% of Intrinsic Value 29.71%

Citizens Financial Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and 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 Undervalued after growing its EPSmg (normalized earnings) from $-0.08 in 2015 to an estimated $3.21 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.47% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Citizens Financial Group Inc revealed the company was trading below its Graham Number of $60.22. The company pays a dividend of $0.98 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 11.44, which was below the industry average of 16.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Citizens Financial Group Inc fares extremely well in the ModernGraham grading system, scoring an A-.

Stage 3: Information for Further Research

Graham Number $60.22
PEmg 11.44
PB Ratio 0.83
Dividend Yield 2.67%
TTM Dividend $0.98
Number of Consecutive Years of Dividend Growth 5

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
Long-Term Debt & Capital Lease Obligation $14,433,000,000
Total Assets $160,518,000,000
Intangible Assets $6,923,000,000
Total Liabilities $139,701,000,000
Shares Outstanding (Diluted Average) 469,103,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.76
Dec2018 $3.52
Dec2017 $3.25
Dec2016 $1.97
Dec2015 $1.55
Dec2014 $1.55
Dec2013 -$6.12
Dec2012 $1.15
Dec2011 $0.90

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.21
Dec2018 $2.74
Dec2017 $1.72
Dec2016 $0.64
Dec2015 -$0.08
Dec2014 -$0.76
Dec2013 -$1.55
Dec2012 $0.62
Dec2011 $0.30

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – January 2019
Most Undervalued Stocks of the S&P 500 – August 2018
Best Stocks Below Their Graham Number – August 2018
10 Undervalued Stocks for the Enterprising Investor – July 2018
Best Stocks Below Their Graham Number – June 2018

Other ModernGraham posts about related companies

M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY
Citigroup Inc Valuation – January 2019 $C
People’s United Financial Inc Valuation – January 2019 $PBCT

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.

BB&T Corp Valuation – February 2019 $BBT

Company Profile (excerpt from Reuters): BB&T Corporation, incorporated on September 24, 1968, is a financial holding company. The Company conducts its business operations primarily through its bank subsidiary, Branch Banking and Trust Company (Branch Bank), and other nonbank subsidiaries. Its segments include Community Banking, Residential Mortgage Banking, Dealer Financial Services, Specialized Lending, Insurance Holdings and Financial Services. Branch Bank provided a range of banking and trust services for retail and commercial clients in its geographic markets, including small and mid-size businesses, public agencies, local governments and individuals, through 2,196 offices, as of December 31, 2016. Its subsidiaries offer a variety of services targeted to retail and commercial clients. Its insurance operations primarily consist of a wholesale/agency network. Its retail services include asset management, automobile lending, bankcard lending, consumer finance, home equity lending, home mortgage lending, insurance, investment brokerage services, payment solutions and sales finance, among others. Its commercial services include asset management, association services, capital market services, commercial deposit services, commercial finance, corporate banking, floor plan lending, insurance, merchant services, real estate lending and payment solutions, among others.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BBT – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $38,717,309,082 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 88.22% Pass
5. Moderate PEmg Ratio PEmg < 20 14.55 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.30 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 $3.48
MG Growth Estimate 5.92%
MG Value $70.83
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $50.52
MG Value based on 0% Growth $29.61
Market Implied Growth Rate 3.03%
Current Price $50.70
% of Intrinsic Value 71.58%

BB&T Corporation qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.5 in 2015 to an estimated $3.48 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.03% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into BB&T Corporation revealed the company was trading below its Graham Number of $56.92. The company pays a dividend of $1.56 per share, for a yield of 3.1%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.55, which was below the industry average of 16.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

BB&T Corporation fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $56.92
PEmg 14.55
PB Ratio 1.30
Dividend Yield 3.08%
TTM Dividend $1.56
Number of Consecutive Years of Dividend Growth 8

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
Long-Term Debt & Capital Lease Obligation $23,709,000,000
Total Assets $225,697,000,000
Intangible Assets $11,684,000,000
Total Liabilities $195,519,000,000
Shares Outstanding (Diluted Average) 775,402,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.06
Dec2018 $3.91
Dec2017 $2.74
Dec2016 $2.77
Dec2015 $2.56
Dec2014 $2.72
Dec2013 $2.19
Dec2012 $2.70
Dec2011 $1.83
Dec2010 $1.16
Dec2009 $1.15
Dec2008 $2.71
Dec2007 $3.14
Dec2006 $2.81
Dec2005 $3.00
Dec2004 $2.80
Dec2003 $2.07
Dec2002 $2.72
Dec2001 $2.12
Dec2000 $1.53
Dec1999 $1.71

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.48
Dec2018 $3.11
Dec2017 $2.67
Dec2016 $2.62
Dec2015 $2.50
Dec2014 $2.35
Dec2013 $2.05
Dec2012 $1.95
Dec2011 $1.72
Dec2010 $1.84
Dec2009 $2.31
Dec2008 $2.89
Dec2007 $2.91
Dec2006 $2.75
Dec2005 $2.66
Dec2004 $2.41
Dec2003 $2.16

Recommended Reading:

Other ModernGraham posts about the company

BB&T Corporation Valuation – April 2018 $BBT
BB&T Corporation Valuation – November 2016 $BBT
Best Stocks to Invest In: the Bank Industry – August 2016
10 Best Stocks For Value Investors This Week – 5/21/16
BB&T Corporation Valuation – May 2016 $BBT

Other ModernGraham posts about related companies

M&T Bank Corp Valuation – February 2019 $MTB
Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY
Citigroup Inc Valuation – January 2019 $C
People’s United Financial Inc Valuation – January 2019 $PBCT

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.

M&T Bank Corp Valuation – February 2019 $MTB

Company Profile (excerpt from Reuters): M&T Bank Corporation (M&T), incorporated on November 6, 1969, is a bank holding company. As of December 31, 2016, M&T had two bank subsidiaries: Manufacturers and Traders Trust Company (M&T Bank) and Wilmington Trust, National Association (Wilmington Trust, N.A.). The Company, along with its subsidiaries, offers a range of retail and commercial banking, trust and wealth management, and investment services. The Company’s segments are Business Banking, Commercial Banking, Commercial Real Estate, Discretionary Portfolio, Residential Mortgage Banking and Retail Banking.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MTB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $23,018,662,800 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 79.83% Pass
5. Moderate PEmg Ratio PEmg < 20 14.59 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.54 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 $11.24
MG Growth Estimate 7.66%
MG Value $267.86
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $163.01
MG Value based on 0% Growth $95.56
Market Implied Growth Rate 3.04%
Current Price $164.00
% of Intrinsic Value 61.23%

M&T Bank Corporation qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $7.44 in 2015 to an estimated $11.24 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.04% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into M&T Bank Corporation revealed the company was trading below its Graham Number of $178.26. The company pays a dividend of $3.55 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.59, which was below the industry average of 16.24, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

M&T Bank Corporation fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $178.26
PEmg 14.59
PB Ratio 1.54
Dividend Yield 2.16%
TTM Dividend $3.55
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
Long-Term Debt & Capital Lease Obligation $8,444,914,000
Total Assets $120,097,403,000
Intangible Assets $4,640,179,000
Total Liabilities $104,637,212,000
Shares Outstanding (Diluted Average) 145,271,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.75
Dec2018 $12.76
Dec2017 $8.70
Dec2016 $7.78
Dec2015 $7.18
Dec2014 $7.42
Dec2013 $8.20
Dec2012 $7.54
Dec2011 $6.35
Dec2010 $5.69
Dec2009 $2.89
Dec2008 $5.01
Dec2007 $5.95
Dec2006 $7.37
Dec2005 $6.73
Dec2004 $6.00
Dec2003 $4.95
Dec2002 $4.78
Dec2001 $3.82
Dec2000 $3.44
Dec1999 $3.28

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $11.24
Dec2018 $9.58
Dec2017 $7.95
Dec2016 $7.59
Dec2015 $7.44
Dec2014 $7.39
Dec2013 $6.97
Dec2012 $6.06
Dec2011 $5.28
Dec2010 $4.95
Dec2009 $4.92
Dec2008 $6.03
Dec2007 $6.42
Dec2006 $6.43
Dec2005 $5.73
Dec2004 $5.01
Dec2003 $4.37

Recommended Reading:

Other ModernGraham posts about the company

M&T Bank Corp Valuation – April 2018 $MTB
Best Stocks to Invest In: the Bank Industry – August 2016
9 Best Stocks For Value Investors This Week – 7/23/16
M&T Bank Corp Valuation – July 2016 $MTB
5 Undervalued Companies for Enterprising Investors Near 52 Week Lows – February 2016

Other ModernGraham posts about related companies

Bank of America Corp Valuation – January 2019 $BAC
Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY
Citigroup Inc Valuation – January 2019 $C
People’s United Financial Inc Valuation – January 2019 $PBCT
JPMorgan Chase & Co Valuation – November 2018 $JPM

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.

Bank of America Corp Valuation – January 2019 $BAC

Company Profile (excerpt from Reuters): Bank of America Corporation, incorporated on July 31, 1998, is a bank holding company (BHC) and a financial holding company. The Company is a financial institution, serving individual consumers, small- and middle-market businesses, institutional investors, corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. The Company, through its banking and various non-bank subsidiaries, throughout the United States and in international markets, provides a range of banking and non-bank financial services and products through its business segments: Consumer Banking, Global Wealth & Investment Management (GWIM), Global Banking, Global Markets and All Other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BAC – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $286,017,419,982 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -6372.73% Fail
5. Moderate PEmg Ratio PEmg < 20 13.42 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.11 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 $2.20
MG Growth Estimate 15.00%
MG Value $84.85
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $31.96
MG Value based on 0% Growth $18.73
Market Implied Growth Rate 2.46%
Current Price $29.58
% of Intrinsic Value 34.86%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.76 in 2015 to an estimated $2.2 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.46% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Bank of America Corp revealed the company was trading below its Graham Number of $39.29. The company pays a dividend of $0.54 per share, for a yield of 1.8% Its PEmg (price over earnings per share – ModernGraham) was 13.42, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $39.29
PEmg 13.42
PB Ratio 1.11
Dividend Yield 1.83%
TTM Dividend $0.54
Number of Consecutive Years of Dividend Growth 5

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
Long-Term Debt & Capital Lease Obligation $229,340,000,000
Total Assets $2,354,507,000,000
Intangible Assets $68,951,000,000
Total Liabilities $2,089,182,000,000
Shares Outstanding (Diluted Average) 9,996,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.73
Dec2018 $2.61
Dec2017 $1.56
Dec2016 $1.49
Dec2015 $1.31
Dec2014 $0.42
Dec2013 $0.90
Dec2012 $0.25
Dec2011 $0.01
Dec2010 -$0.37
Dec2009 -$0.29
Dec2008 $0.54
Dec2007 $3.29
Dec2006 $4.59
Dec2005 $4.04
Dec2004 $3.69
Dec2003 $3.57
Dec2002 $2.96
Dec2001 $2.09
Dec2000 $2.26
Dec1999 $2.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.20
Dec2018 $1.79
Dec2017 $1.30
Dec2016 $1.07
Dec2015 $0.76
Dec2014 $0.41
Dec2013 $0.30
Dec2012 $0.01
Dec2011 $0.14
Dec2010 $0.65
Dec2009 $1.59
Dec2008 $2.76
Dec2007 $3.86
Dec2006 $4.02
Dec2005 $3.58
Dec2004 $3.20
Dec2003 $2.85

Recommended Reading:

Other ModernGraham posts about the company

10 Undervalued Stocks for the Enterprising Investor – April 2018
Best Stocks Below Their Graham Number – April 2018
Bank of America Corp Valuation – March 2018 $BAC
Best Stocks Below Their Graham Number – August 2016
Best Stocks to Invest In: the Bank Industry – August 2016

Other ModernGraham posts about related companies

Fifth Third Bancorp Valuation – January 2019 $FITB
Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY
Citigroup Inc Valuation – January 2019 $C
People’s United Financial Inc Valuation – January 2019 $PBCT
JPMorgan Chase & Co Valuation – November 2018 $JPM
CVB Financial Corp Valuation – September 2018 $CVBF

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.

Fifth Third Bancorp Valuation – January 2019 $FITB

Company Profile (excerpt from Reuters): Fifth Third Bancorp, incorporated on October 7, 1974, is a bank holding company and a financial holding company. The Company conducts its principal lending, deposit gathering, transaction processing and service advisory activities through its banking and non-banking subsidiaries from banking centers located throughout the Midwestern and Southeastern regions of the United States. The Company operates through four segments: Commercial Banking, Branch Banking, Consumer Lending, and Wealth and Asset Management. The Company diversifies its loan and lease portfolio by offering a range of loan and lease products with various payment terms and rate structures. It offers commercial and industrial loans, commercial mortgage loans, commercial construction loans, commercial leases, residential mortgage loans, home equity, automobile loans, credit card, and other consumer loans and leases. The Company offers various types of deposits, such as demand deposits, interest checking deposits, savings deposits, money market deposits, transaction deposits and other time deposits. As of December 31, 2016, the Company’s total deposits were $103.8 billion. As of December 31, 2016, the Company’s total loans were $92.8 billion.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of FITB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $17,701,621,200 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 199.60% Pass
5. Moderate PEmg Ratio PEmg < 20 11.21 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.16 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 $2.41
MG Growth Estimate 7.26%
MG Value $55.48
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $34.94
MG Value based on 0% Growth $20.48
Market Implied Growth Rate 1.35%
Current Price $27.00
% of Intrinsic Value 48.67%

Fifth Third Bancorp qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.62 in 2014 to an estimated $2.41 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.35% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Fifth Third Bancorp revealed the company was trading below its Graham Number of $36.08. The company pays a dividend of $0.6 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 11.21, which was below the industry average of 14.65, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Fifth Third Bancorp fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $36.08
PEmg 11.21
PB Ratio 1.16
Dividend Yield 2.22%
TTM Dividend $0.60
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
Long-Term Debt & Capital Lease Obligation $14,460,000,000
Total Assets $141,685,000,000
Intangible Assets $3,500,000,000
Total Liabilities $125,835,000,000
Shares Outstanding (Diluted Average) 679,199,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.67
Dec2017 $2.83
Dec2016 $1.93
Dec2015 $2.01
Dec2014 $1.66
Dec2013 $2.02
Dec2012 $1.66
Dec2011 $1.18
Dec2010 $0.63
Dec2009 $0.67
Dec2008 -$3.91
Dec2007 $1.99
Dec2006 $2.13
Dec2005 $2.77
Dec2004 $2.68
Dec2003 $3.03
Dec2002 $2.59
Dec2001 $1.70
Dec2000 $1.83
Dec1999 $1.43
Dec1998 $1.19

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.41
Dec2017 $2.22
Dec2016 $1.89
Dec2015 $1.82
Dec2014 $1.62
Dec2013 $1.48
Dec2012 $0.82
Dec2011 $0.31
Dec2010 $0.01
Dec2009 $0.05
Dec2008 $0.20
Dec2007 $2.34
Dec2006 $2.56
Dec2005 $2.70
Dec2004 $2.57
Dec2003 $2.38
Dec2002 $1.95

Recommended Reading:

Other ModernGraham posts about the company

Fifth Third Bancorp Valuation – March 2018 $FITB
Best Stocks Below Their Graham Number – March 2017
Best Stocks to Invest In: the Bank Industry – August 2016
10 Most Undervalued Companies for the Enterprising Investor – July 2016
9 Best Stocks For Value Investors This Week – 7/8/16

Other ModernGraham posts about related companies

Zions Bancorp Valuation – January 2019 $ZION
Regions Financial Corp Valuation – January 2019 $RF
Huntington Bancshares Inc Valuation – January 2019 $HBAN
PNC Financial Services Group Inc Valuation – January 2019 $PNC
KeyCorp Valuation – January 2019 $KEY
Citigroup Inc Valuation – January 2019 $C
People’s United Financial Inc Valuation – January 2019 $PBCT
JPMorgan Chase & Co Valuation – November 2018 $JPM
CVB Financial Corp Valuation – September 2018 $CVBF
Customers Bancorp Inc Valuation – September 2018 $CUBI

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.

SVB Financial Group Valuation – June 2018 $SIVB

Company Profile (excerpt from Reuters): SVB Financial Group (SVB Financial), incorporated on March 22, 1999, is a diversified financial services company, as well as a bank holding and a financial holding company. The Company operates through three segments: Global Commercial Bank, SVB Private Bank and SVB Capital. The Company, through its subsidiaries and divisions, offers a range of banking and financial products and services to clients across the United States. The Company offers services in the technology, life science/healthcare, private equity/venture capital and wine industries.

SIVB Chart

SIVB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SIVB – June 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $16,831,404,501 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 342.11% Pass
5. Moderate PEmg Ratio PEmg < 20 32.66 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.74 Fail
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 Fail
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $9.73
MG Growth Estimate 15.00%
MG Value $374.55
Opinion Fairly Valued
MG Grade D
MG Value based on 3% Growth $141.07
MG Value based on 0% Growth $82.69
Market Implied Growth Rate 12.08%
Current Price $317.73
% of Intrinsic Value 84.83%

SVB Financial Group 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 lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $4.47 in 2014 to an estimated $9.73 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 12.08% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on 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 SVB Financial Group revealed the company was trading above its Graham Number of $156.32. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 32.66, which was above the industry average of 21.57.

SVB Financial Group scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Graham Number $156.32
PEmg 32.66
PB Ratio 3.74
Dividend Yield 0.00%
TTM Dividend $0.00
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Long-Term Debt & Capital Lease Obligation $695,731,000
Total Assets $53,500,787,000
Intangible Assets $0
Total Liabilities $48,941,063,000
Shares Outstanding (Diluted Average) 53,685,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $13.73
Dec2017 $9.20
Dec2016 $7.31
Dec2015 $6.62
Dec2014 $5.31
Dec2013 $4.67
Dec2012 $3.91
Dec2011 $3.94
Dec2010 $2.24
Dec2009 $0.66
Dec2008 $2.16
Dec2007 $3.37
Dec2006 $2.38
Dec2005 $2.40
Dec2004 $1.70
Dec2003 $0.35
Dec2002 $1.21
Dec2001 $1.79
Dec2000 $3.23
Dec1999 $1.23
Dec1998 $0.69

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $9.73
Dec2017 $7.36
Dec2016 $6.15
Dec2015 $5.34
Dec2014 $4.47
Dec2013 $3.73
Dec2012 $3.03
Dec2011 $2.56
Dec2010 $1.96
Dec2009 $1.95
Dec2008 $2.53
Dec2007 $2.49
Dec2006 $1.90
Dec2005 $1.60
Dec2004 $1.36
Dec2003 $1.31
Dec2002 $1.74

Recommended Reading:

Other ModernGraham posts about the company

SVB Financial Group Valuation – Initial Coverage $SIVB

Other ModernGraham posts about related companies

US Bancorp Valuation – May 2018 $USB
Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC
Fifth Third Bancorp Valuation – March 2018 $FITB
Regions Financial Corp Valuation – March 2018 $RF
Huntington Bancshares Inc Valuation – March 2018 $HBAN
Zions Bancorp Valuation – March 2018 $ZION

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.

US Bancorp Valuation – May 2018 $USB

Company Profile (excerpt from Reuters): U.S. Bancorp, incorporated on April 2, 1929, is a multi-state financial services holding company. The Company provides a full range of financial services, including lending and depository services, cash management, capital markets, and trust and investment management services. It also engages in credit card services, merchant and automated teller machine (ATM) processing, mortgage banking, insurance, brokerage and leasing. The Company’s banking subsidiary, U.S. Bank National Association, is engaged in the general banking business, principally in domestic markets. U.S. Bank National Association provides a range of products and services to individuals, businesses, institutional organizations, governmental entities and other financial institutions.

USB Chart

USB data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of USB – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $83,522,451,199 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 107.56% Pass
5. Moderate PEmg Ratio PEmg < 20 14.50 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.72 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 $3.53
MG Growth Estimate 3.66%
MG Value $55.86
Opinion Fairly Valued
MG Grade B
MG Value based on 3% Growth $51.19
MG Value based on 0% Growth $30.01
Market Implied Growth Rate 3.00%
Current Price $51.18
% of Intrinsic Value 91.62%

U.S. Bancorp qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.84 in 2014 to an estimated $3.53 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 3% 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 U.S. Bancorp revealed the company was trading above its Graham Number of $48.45. The company pays a dividend of $1.16 per share, for a yield of 2.3%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.5, which was below the industry average of 21.11, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

U.S. Bancorp performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

Graham Number $48.45
PEmg 14.50
PB Ratio 1.72
Dividend Yield 2.27%
TTM Dividend $1.16
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 3/1/2018
Long-Term Debt & Capital Lease Obligation $33,201,000,000
Total Assets $460,119,000,000
Intangible Assets $12,828,000,000
Total Liabilities $410,932,000,000
Shares Outstanding (Diluted Average) 1,657,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.96
Dec2017 $3.51
Dec2016 $3.24
Dec2015 $3.16
Dec2014 $3.08
Dec2013 $3.00
Dec2012 $2.84
Dec2011 $2.46
Dec2010 $1.73
Dec2009 $0.97
Dec2008 $1.61
Dec2007 $2.43
Dec2006 $2.61
Dec2005 $2.42
Dec2004 $2.18
Dec2003 $1.93
Dec2002 $1.65
Dec2001 $0.88
Dec2000 $1.50
Dec1999 $2.06
Dec1998 $1.78

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.53
Dec2017 $3.28
Dec2016 $3.13
Dec2015 $3.02
Dec2014 $2.84
Dec2013 $2.54
Dec2012 $2.19
Dec2011 $1.85
Dec2010 $1.66
Dec2009 $1.75
Dec2008 $2.17
Dec2007 $2.41
Dec2006 $2.32
Dec2005 $2.05
Dec2004 $1.79
Dec2003 $1.60
Dec2002 $1.48

Recommended Reading:

Other ModernGraham posts about the company

12 Best Stocks for Value Investors This Week – 2/4/17
U.S. Bancorp Valuation – February 2017 $USB
15 Best Undervalued Stocks of the Week – 8/20/16
US Bancorp Valuation – August 2016 $USB
Best Stocks to Invest In: the Bank Industry – August 2016

Other ModernGraham posts about related companies

Bank of New York Mellon Corp Valuation – May 2018 $BK
Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC
Fifth Third Bancorp Valuation – March 2018 $FITB
Regions Financial Corp Valuation – March 2018 $RF
Huntington Bancshares Inc Valuation – March 2018 $HBAN
Zions Bancorp Valuation – March 2018 $ZION
State Street Corp Valuation – March 2018 $STT

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.

Bank of New York Mellon Corp Valuation – May 2018 $BK

Company Profile (excerpt from Reuters): The Bank of New York Mellon Corporation, incorporated on February 9, 2007, is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management.

BK Chart

BK data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of BK – May 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $55,043,947,962 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 269.62% Pass
5. Moderate PEmg Ratio PEmg < 20 15.81 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.33 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 $3.45
MG Growth Estimate 11.76%
MG Value $110.36
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $49.98
MG Value based on 0% Growth $29.30
Market Implied Growth Rate 3.65%
Current Price $54.49
% of Intrinsic Value 49.37%

Bank of New York Mellon Corp is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.93 in 2014 to an estimated $3.45 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.65% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Bank of New York Mellon Corp revealed the company was trading below its Graham Number of $57.58. The company pays a dividend of $0.86 per share, for a yield of 1.6% Its PEmg (price over earnings per share – ModernGraham) was 15.81, which was below the industry average of 21.11, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Bank of New York Mellon Corp performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Graham Number $57.58
PEmg 15.81
PB Ratio 1.33
Dividend Yield 1.58%
TTM Dividend $0.86
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 3/1/2018
Long-Term Debt & Capital Lease Obligation $27,939,000,000
Total Assets $373,597,000,000
Intangible Assets $20,966,000,000
Total Liabilities $331,869,000,000
Shares Outstanding (Diluted Average) 1,021,731,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.96
Dec2017 $3.72
Dec2016 $3.15
Dec2015 $2.71
Dec2014 $2.15
Dec2013 $1.73
Dec2012 $1.73
Dec2011 $2.03
Dec2010 $2.06
Dec2009 -$1.16
Dec2008 $1.20
Dec2007 $2.18
Dec2006 $3.94
Dec2005 $2.03
Dec2004 $1.85
Dec2003 $1.52
Dec2002 $1.24
Dec2001 $1.81
Dec2000 $1.92
Dec1999 $2.27
Dec1998 $1.53

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.45
Dec2017 $3.02
Dec2016 $2.55
Dec2015 $2.19
Dec2014 $1.93
Dec2013 $1.64
Dec2012 $1.46
Dec2011 $1.30
Dec2010 $1.17
Dec2009 $1.03
Dec2008 $2.16
Dec2007 $2.53
Dec2006 $2.51
Dec2005 $1.76
Dec2004 $1.64
Dec2003 $1.61
Dec2002 $1.68

Recommended Reading:

Other ModernGraham posts about the company

15 Best Stocks for Value Investors This Week – 1/14/17
Bank of New York Mellon Corp Valuation – January 2017 $BK
10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016
5 Best Undervalued Stocks of the Week – 8/14/16
Bank of New York Mellon Corp Valuation – August 2016 $BK

Other ModernGraham posts about related companies

Citizens Financial Group Inc Valuation – April 2018 $CFG
BB&T Corporation Valuation – April 2018 $BBT
M&T Bank Corp Valuation – April 2018 $MTB
Bank of America Corp Valuation – March 2018 $BAC
Fifth Third Bancorp Valuation – March 2018 $FITB
Regions Financial Corp Valuation – March 2018 $RF
Huntington Bancshares Inc Valuation – March 2018 $HBAN
Zions Bancorp Valuation – March 2018 $ZION
State Street Corp Valuation – March 2018 $STT
PNC Financial Services Group Inc Valuation – March 2018 $PNC

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.

Citizens Financial Group Inc Valuation – April 2018 $CFG

Company Profile (excerpt from Reuters): Citizens Financial Group, Inc., incorporated on November 21, 1984, is a retail bank holding company. The Company operates through two segments: Consumer Banking and Commercial Banking. The Company delivers a range of retail and commercial banking products and services to individuals, institutions and companies. As of December 31, 2016, the Company operated approximately 1,200 branches operating in an 11-state banking footprint across the New England, Mid-Atlantic and Midwest regions and through its online, telephone and mobile banking platforms. As of December 31, 2016, it also maintained more than 100 retail and commercial non-branch offices located in its branch banking footprint and in other states and the District of Columbia. The Company’s primary subsidiaries include Citizens Bank, N.A. (CBNA), a national banking association and Citizens Bank of Pennsylvania (CBPA), a Pennsylvania-chartered savings bank.

CFG Chart

CFG data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CFG – April 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,415,835,425 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
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 28399900.00% Pass
5. Moderate PEmg Ratio PEmg < 20 15.67 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.02 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 $2.67
MG Growth Estimate 15.00%
MG Value $102.82
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $38.72
MG Value based on 0% Growth $22.70
Market Implied Growth Rate 3.59%
Current Price $41.86
% of Intrinsic Value 40.71%

Citizens Financial Group Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years, and 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 Undervalued after growing its EPSmg (normalized earnings) from $-0.89 in 2014 to an estimated $2.67 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.59% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Citizens Financial Group Inc revealed the company was trading below its Graham Number of $55.04. 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 15.67, which was below the industry average of 22.06, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Citizens Financial Group Inc performs fairly well in the ModernGraham grading system, scoring a B+.

Stage 3: Information for Further Research

Graham Number $55.04
PEmg 15.67
PB Ratio 1.02
Dividend Yield 1.53%
TTM Dividend $0.64
Number of Consecutive Years of Dividend Growth 4

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Long-Term Debt & Capital Lease Obligation $11,765,000,000
Total Assets $152,336,000,000
Intangible Assets $6,887,000,000
Total Liabilities $132,066,000,000
Shares Outstanding (Diluted Average) 493,552,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.30
Dec2017 $3.25
Dec2016 $1.97
Dec2015 $1.55
Dec2014 $1.55
Dec2013 -$6.12
Dec2012 $1.15

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.67
Dec2017 $1.72
Dec2016 $0.64
Dec2015 -$0.14
Dec2014 -$0.89
Dec2013 -$1.73
Dec2012 $0.38

Recommended Reading:

Other ModernGraham posts about the company

Citizens Financial Group Inc Valuation – Initial Coverage $CFG

Other ModernGraham posts about related companies

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Regions Financial Corp Valuation – March 2018 $RF
Huntington Bancshares Inc Valuation – March 2018 $HBAN
Zions Bancorp Valuation – March 2018 $ZION
State Street Corp Valuation – March 2018 $STT
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KeyCorp Valuation – March 2018 $KEY
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Disclaimer:

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

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