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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:

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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

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Regions Financial Corp Valuation – January 2019 $RF
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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.

CF Industries Holdings Inc Valuation – February 2019 $CF

Company Profile (excerpt from Reuters): CF Industries Holdings, Inc., incorporated on April 15, 2005, is a manufacturer and distributor of nitrogen fertilizer, and other nitrogen products. The Company’s nitrogen fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Its other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to the Company’s industrial customers, and compound fertilizer products (nitrogen, phosphorus and potassium or NPKs). The Company’s segments include ammonia, granular urea, UAN, AN and other.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CF – February 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $9,940,168,299 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.03 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 -79.13% Fail
6. Moderate PEmg Ratio PEmg < 20 33.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.64 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 2.03 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.81 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.30
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $18.79
MG Value based on 0% Growth $11.02
Market Implied Growth Rate 12.37%
Current Price $43.07
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.93 in 2014 to an estimated $1.3 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 12.37% 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 CF Industries Holdings, Inc. revealed the company was trading above its Graham Number of $19.57. The company pays a dividend of $1.2 per share, for a yield of 2.8%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 33.23, which was below the industry average of 34.35, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-22.94.

CF Industries 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) -$22.94
Graham Number $19.57
PEmg 33.23
Current Ratio 2.03
PB Ratio 1.64
Current Dividend $1.20
Dividend Yield 2.79%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $1,597,000,000
Total Current Liabilities $788,000,000
Long-Term Debt $4,697,000,000
Total Assets $13,156,000,000
Intangible Assets $2,480,000,000
Total Liabilities $6,993,000,000
Shares Outstanding (Diluted Average) 235,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.11
Dec2017 $1.53
Dec2016 -$1.19
Dec2015 $2.96
Dec2014 $5.42
Dec2013 $4.95
Dec2012 $5.72
Dec2011 $4.40
Dec2010 $1.07
Dec2009 $1.48
Dec2008 $2.43
Dec2007 $1.31
Dec2006 $0.12
Dec2005 -$0.14
Dec2004 $0.25
Dec2003 -$0.07
Dec2002 -$0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.30
Dec2017 $1.84
Dec2016 $2.52
Dec2015 $4.48
Dec2014 $4.93
Dec2013 $4.30
Dec2012 $3.65
Dec2011 $2.46
Dec2010 $1.42
Dec2009 $1.41
Dec2008 $1.18
Dec2007 $0.47
Dec2006 $0.04
Dec2005 -$0.01
Dec2004 $0.04
Dec2003 -$0.05
Dec2002 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

CF Industries Holdings Inc Valuation – April 2018 $CF
CF Industries Holdings Inc Valuation – August 2016 $CF
CF Industries Valuation – March 2016 $CF
10 Companies Benjamin Graham Would Invest In Today – March 2016
10 Most Undervalued Companies for the Defensive Investor – February 2016

Other ModernGraham posts about related companies

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CF Industries Holdings Inc Valuation – April 2018 $CF
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Monsanto Company Valuation – March 2017 $MON
Mosaic Company Valuation – February 2017 $MOS
Scotts Miracle-Gro Inc Valuation – Initial Coverage $SMG
Intrepid Potash Inc Valuation – Initial Coverage $IPI
CF Industries Holdings Inc Valuation – August 2016 $CF

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.

Cullen/Frost Bankers Inc Valuation – July 2018 $CFR

Company Profile (excerpt from Reuters): Cullen/Frost Bankers, Inc., incorporated on January 25, 1966, is a financial holding company and a bank holding company. The Company, through its subsidiaries, provides a range of products and services throughout Texas markets. The Company’s segments include Banking, Frost Wealth Advisors and Non-Banks. The Banking segment includes both commercial and consumer banking services, and Frost Insurance Agency. Commercial banking services are provided to corporations and other business clients and include a range of lending and cash management products. Consumer banking services include direct lending and depository services. Frost Insurance Agency provides insurance brokerage services to individuals and businesses covering corporate and personal property and casualty products, as well as group health and life insurance products and human resources consulting services. The Frost Wealth Advisors segment includes fee-based services within private trust, retirement services, and financial management services, including personal wealth management and securities brokerage services. The Non-Banks segment includes the direct and indirect ownership of its banking and non-banking subsidiaries and the issuance of debt and equity.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CFR – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $7,231,845,441 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 66.93% Pass
5. Moderate PEmg Ratio PEmg < 20 21.01 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.27 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 $5.42
MG Growth Estimate 5.74%
MG Value $108.23
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $78.53
MG Value based on 0% Growth $46.04
Market Implied Growth Rate 6.25%
Current Price $113.78
% of Intrinsic Value 105.12%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $3.92 in 2014 to an estimated $5.42 for 2018. This level of demonstrated earnings growth supports the market’s implied estimate of 6.25% 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 Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $84.91. The company pays a dividend of $2.25 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 21.01, which was above the industry average of 20.05.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $84.91
PEmg 21.01
PB Ratio 2.27
Dividend Yield 1.98%
TTM Dividend $2.25
Number of Consecutive Years of Dividend Growth 20

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Long-Term Debt & Capital Lease Obligation $234,789,000
Total Assets $31,459,232,000
Intangible Assets $659,637,000
Total Liabilities $28,215,802,000
Shares Outstanding (Diluted Average) 64,662,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.45
Dec2017 $5.51
Dec2016 $4.70
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.42
Dec2017 $4.77
Dec2016 $4.33
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92

Recommended Reading:

Other ModernGraham posts about the company

Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

Other ModernGraham posts about related companies

Wells Fargo & Co Valuation – June 2018 $WFC
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Comerica Inc Valuation – June 2018 $CMA
SVB Financial Group Valuation – June 2018 $SIVB
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

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.

Canfor Corp Valuation – July 2018 $TSE:CFP

Company Profile (excerpt from Reuters): Canfor Corporation is an integrated forest products company. The Company produces softwood lumber, pulp and paper products, remanufactured lumber products, engineered wood products, wood pellets and energy. Its segments include lumber, and pulp and paper. Its lumber segment includes logging operations, and manufacturing and sale of various grades, widths and lengths of lumber, engineered wood products, wood chips and wood pellets. Its lumber operations also include a finger-joint plant, two glulam plants, a whole-log chipping plant and a trucking division. The Pulp and Paper segment consists of three northern softwood market Kraft pulp mills and the Taylor pulp mill, all of which are owned and operated by Canfor Pulp Products Inc. (CPPI) in British Columbia. Its pulp and paper segment includes purchase of residual fiber, and production and sale of pulp and paper products, including Northern Bleached Softwood Kraft and Bleached Chemi-Thermo Mechanical Pulp, as well as energy revenues.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CFP – July 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,789,572,834 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.46 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -2278.79% Fail
6. Moderate PEmg Ratio PEmg < 20 13.18 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.70 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 2.46 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.46 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $2.18
MG Growth Estimate 15.00%
MG Value $83.88
Opinion Undervalued
MG Grade B+
MG Value based on 3% Growth $31.59
MG Value based on 0% Growth $18.52
Market Implied Growth Rate 2.34%
Current Price $28.72
% of Intrinsic Value 34.24%

Canfor Corporation 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, and the poor dividend history. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.88 in 2014 to an estimated $2.18 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.34% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Canfor Corporation revealed the company was trading below its Graham Number of $32.18. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 13.17, which was below the industry average of 20.82, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-0.99.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$0.99
Graham Number $32.18
PEmg 13.17
Current Ratio 2.46
PB Ratio 1.70
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $1,429,500,000
Total Current Liabilities $582,000,000
Long-Term Debt $392,600,000
Total Assets $3,725,100,000
Intangible Assets $752,300,000
Total Liabilities $1,556,400,000
Shares Outstanding (Diluted Average) 128,626,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $3.42
Dec2017 $2.63
Dec2016 $1.14
Dec2015 $0.18
Dec2014 $1.28
Dec2013 $1.61
Dec2012 $0.18
Dec2011 -$0.40
Dec2010 $0.57
Dec2009 -$0.50
Dec2008 -$2.42
Dec2007 -$2.53
Dec2006 $3.31
Dec2005 $0.67
Dec2004 $3.22
Dec2003 $1.65
Dec2002 $0.07
Dec2001 $0.19
Dec2000 $1.28
Dec1999 $1.66
Dec1998 -$3.49

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.18
Dec2017 $1.49
Dec2016 $0.91
Dec2015 $0.72
Dec2014 $0.88
Dec2013 $0.55
Dec2012 -$0.16
Dec2011 -$0.57
Dec2010 -$0.54
Dec2009 -$0.83
Dec2008 -$0.52
Dec2007 $0.71
Dec2006 $2.15
Dec2005 $1.43
Dec2004 $1.64
Dec2003 $0.89
Dec2002 $0.32

Recommended Reading:

Other ModernGraham posts about the company

5 Undervalued Canadian Stocks for Intelligent Investors – February 2017
Canfor Corporation Valuation – Initial Coverage $TSE:CFP

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First Solar Inc. Valuation – November 2015 Update $FSLR
First Solar Inc. Annual Valuation – 2014 $FSLR

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

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
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

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
KeyCorp Valuation – March 2018 $KEY
Canadian Western Bank Valuation – March 2018 $TSE-CWB

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.

CF Industries Holdings Inc Valuation – April 2018 $CF

Company Profile (excerpt from Reuters): CF Industries Holdings, Inc., incorporated on April 15, 2005, is a manufacturer and distributor of nitrogen fertilizer, and other nitrogen products. The Company’s nitrogen fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Its other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to the Company’s industrial customers, and compound fertilizer products (nitrogen, phosphorus and potassium or NPKs). The Company’s segments include ammonia, granular urea, UAN, AN and other.

CF Chart

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CF – April 2018

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $8,914,310,731 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.53 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 -90.21% Fail
6. Moderate PEmg Ratio PEmg < 20 36.75 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.52 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 2.53 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 5.30 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.04
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $15.07
MG Value based on 0% Growth $8.83
Market Implied Growth Rate 14.13%
Current Price $38.20
% of Intrinsic Value N/A

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

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.93 in 2014 to an estimated $1.04 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 14.13% 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 CF Industries Holdings, Inc. revealed the company was trading above its Graham Number of $10.83. The company pays a dividend of $1.2 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 36.75, which was above the industry average of 18.2. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-35.67.

CF Industries 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) -$35.67
Graham Number $10.83
PEmg 36.75
Current Ratio 2.53
PB Ratio 2.52
Current Dividend $1.20
Dividend Yield 3.14%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2017
Total Current Assets $1,465,000,000
Total Current Liabilities $580,000,000
Long-Term Debt $4,692,000,000
Total Assets $13,463,000,000
Intangible Assets $2,500,000,000
Total Liabilities $9,884,000,000
Shares Outstanding (Diluted Average) 236,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.34
Dec2017 $1.53
Dec2016 -$1.19
Dec2015 $2.96
Dec2014 $5.42
Dec2013 $4.95
Dec2012 $5.72
Dec2011 $4.40
Dec2010 $1.07
Dec2009 $1.48
Dec2008 $2.43
Dec2007 $1.31
Dec2006 $0.12
Dec2005 -$0.14
Dec2004 $0.25
Dec2003 -$0.07
Dec2002 -$0.10

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.04
Dec2017 $1.84
Dec2016 $2.52
Dec2015 $4.48
Dec2014 $4.93
Dec2013 $4.30
Dec2012 $3.65
Dec2011 $2.46
Dec2010 $1.42
Dec2009 $1.41
Dec2008 $1.18
Dec2007 $0.47
Dec2006 $0.04
Dec2005 -$0.01
Dec2004 $0.04
Dec2003 -$0.05
Dec2002 -$0.03

Recommended Reading:

Other ModernGraham posts about the company

CF Industries Holdings Inc Valuation – August 2016 $CF
CF Industries Valuation – March 2016 $CF
10 Companies Benjamin Graham Would Invest In Today – March 2016
10 Most Undervalued Companies for the Defensive Investor – February 2016
10 Low PE Stocks for the Defensive Investor – February 2016

Other ModernGraham posts about related companies

LSB Industries Inc Valuation – Initial Coverage $LXU
Monsanto Company Valuation – March 2017 $MON
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Intrepid Potash Inc Valuation – Initial Coverage $IPI
CF Industries Holdings Inc Valuation – August 2016 $CF
CF Industries Valuation – March 2016 $CF
Monsanto Company Valuation – January 2016 Update $MON
Mosaic Company Valuation – October 2015 Update $MOS
CF Industries Holdings Inc. Analysis – September 2015 Update $CF

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.

TCF Financial Corp Valuation – Initial Coverage $TCB

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 TCF Financial Corp (TCB) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): TCF Financial Corporation (TCF) is a bank holding company. The Company’s principal subsidiary is TCF National Bank (TCF Bank). The Company operates in three segments: Consumer Banking, Wholesale Banking and Enterprise Services. Consumer Banking comprises all of the Company’s consumer-facing businesses. The Consumer Banking segment includes retail banking, consumer real estate and auto finance. Wholesale Banking comprises commercial real estate and business lending, leasing and equipment finance and inventory finance. TCF’s consumer banking strategy is primarily to generate deposits to use for funding high credit quality secured loans and leases. Enterprise Services comprises corporate treasury, corporate functions and the Holding Company. As of December 31, 2016, the Company’s total securities available for sale were $1.4 billion. As of December 31, 2016, the Company’s total loans were $17.8 billion. As of December 31, 2016, the Company’s total deposits were $17.2 billion.

TCB Chart

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ModernGraham Valuation of TCB – 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 all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $2,746,821,864 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 27.76% Fail
5. Moderate PEmg Ratio PEmg < 20 14.76 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.10 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 $1.08
MG Growth Estimate 15.00%
MG Value $41.61
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $15.67
MG Value based on 0% Growth $9.19
Market Implied Growth Rate 3.13%
Current Price $15.95
% of Intrinsic Value 38.34%

TCF Financial Corporation 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 $0.23 in 2013 to an estimated $1.08 for 2017. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.13% 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 TCF Financial Corporation revealed the company was trading below its Graham Number of $18.02. The company pays a dividend of $0.3 per share, for a yield of 1.9% Its PEmg (price over earnings per share – ModernGraham) was 14.76, which was below the industry average of 21.43, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

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

Stage 3: Information for Further Research

Graham Number $18.02
PEmg 14.76
PB Ratio 1.10
Dividend Yield 1.88%
TTM Dividend $0.30
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
Long-Term Debt & Capital Lease Obligation $1,073,181,000
Total Assets $21,441,326,000
Intangible Assets $227,348,000
Total Liabilities $19,013,843,000
Shares Outstanding (Diluted Average) 167,807,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.14
Dec2016 $1.15
Dec2015 $1.07
Dec2014 $0.94
Dec2013 $0.82
Dec2012 -$1.37
Dec2011 $0.71
Dec2010 $1.08
Dec2009 $0.54
Dec2008 $1.01
Dec2007 $2.12
Dec2006 $1.90
Dec2005 $2.00
Dec2004 $1.86
Dec2003 $1.53
Dec2002 $1.58
Dec2001 $1.35
Dec2000 $1.18
Dec1999 $1.00
Dec1998 $0.88
Dec1997 $0.85

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.08
Dec2016 $0.87
Dec2015 $0.64
Dec2014 $0.42
Dec2013 $0.23
Dec2012 $0.09
Dec2011 $0.91
Dec2010 $1.12
Dec2009 $1.26
Dec2008 $1.67
Dec2007 $1.96
Dec2006 $1.85
Dec2005 $1.77
Dec2004 $1.60
Dec2003 $1.42
Dec2002 $1.31
Dec2001 $1.14

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

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Sterling Bancorp Valuation – Initial Coverage $STL
S&T Bancorp Inc Valuation – Initial Coverage $STBA
Central Pacific Financial Corp Valuation – Initial Coverage $CPF
Synovus Financial Corp Valuation – Initial Coverage $SNV
U.S. Bancorp Valuation – February 2017 $USB
Columbia Banking System Inc Valuation – Initial Coverage $COLB

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.

Cullen/Frost Bankers Inc Valuation – Initial Coverage $CFR

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 – August 2016.  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 Cullen/Frost Bankers Inc (CFR) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cullen/Frost Bankers, Inc. is a financial holding and bank holding company. The Company, through its subsidiaries, offers commercial and consumer banking services, as well as trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. It serves various industries, such as energy, manufacturing, services, construction and retail. It operates through two segments, which include Banking and Frost Wealth Advisors. Its Banking segment includes both commercial and consumer banking services, Frost Insurance Agency and Frost Securities. Its Banking segment offers commercial banking services, such as lending and cash management products to corporations and other business clients. Its Frost Wealth Advisors segment includes fee-based services within private trust, retirement services and financial management services, including personal wealth management and securities brokerage services.

CFR Chart

CFR 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.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of CFR – December 2016

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 $5,560,311,623 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 30.15% Fail
5. Moderate PEmg Ratio PEmg < 20 20.26 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.73 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 $4.27
MG Growth Estimate 3.02%
MG Value $62.02
Opinion Overvalued
MG Grade B-
MG Value based on 3% Growth $61.87
MG Value based on 0% Growth $36.27
Market Implied Growth Rate 5.88%
Current Price $86.46
% of Intrinsic Value 139.41%

Cullen/Frost Bankers, Inc. is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.55 in 2012 to an estimated $4.27 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 5.88% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cullen/Frost Bankers, Inc. revealed the company was trading above its Graham Number of $69.78. The company pays a dividend of $2.14 per share, for a yield of 2.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 20.26, which was above the industry average of 13.43.

Cullen/Frost Bankers, Inc. performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Graham Number $69.78
PEmg 20.26
PB Ratio 1.73
Dividend Yield 2.48%
TTM Dividend $2.14
Number of Consecutive Years of Dividend Growth 20

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ModernGraham tagged articles Morningstar
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Yahoo Finance Seeking Alpha
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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $236,072,000
Total Assets $29,602,912,000
Intangible Assets $661,599,000
Total Liabilities $26,441,116,000
Shares Outstanding (Diluted Average) 63,141,000

Earnings Per Share History

Next Fiscal Year Estimate $4.51
Dec2015 $4.28
Dec2014 $4.29
Dec2013 $3.80
Dec2012 $3.86
Dec2011 $3.54
Dec2010 $3.44
Dec2009 $3.00
Dec2008 $3.50
Dec2007 $3.55
Dec2006 $3.42
Dec2005 $3.07
Dec2004 $2.66
Dec2003 $2.48
Dec2002 $2.29
Dec2001 $1.57
Dec2000 $2.03
Dec1999 $1.78
Dec1998 $1.38
Dec1997 $1.34
Dec1996 $1.16

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $4.27
Dec2015 $4.08
Dec2014 $3.92
Dec2013 $3.66
Dec2012 $3.55
Dec2011 $3.40
Dec2010 $3.35
Dec2009 $3.30
Dec2008 $3.38
Dec2007 $3.23
Dec2006 $2.97
Dec2005 $2.64
Dec2004 $2.35
Dec2003 $2.14
Dec2002 $1.92
Dec2001 $1.69
Dec2000 $1.68

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

Cardinal Financial Corp Valuation – Initial Coverage $CFNL
Citizens Financial Group Inc Valuation – Initial Coverage $CFG
BB&T Corporation Valuation – November 2016 $BBT
SunTrust Banks Inc Valuation – August 2016 $STI
Comerica Inc Valuation – August 2016 $CMA
US Bancorp Valuation – August 2016 $USB
Bank of New York Mellon Corp Valuation – August 2016 $BK
Best Stocks to Invest In: the Bank Industry – August 2016
JPMorgan Chase & Co Valuation – July 2016 $JPM
Dominion Resources Inc Valuation – July 2016 $D

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.

Canfor Corporation Valuation – Initial Coverage $TSE:CFP

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 – August 2016.  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 Canfor Corporation (TSE:CFP) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Canfor Corporation is a Canada-based integrated forest products company. The Company is engaged in the production of softwood lumber, pulp and paper products, remanufactured lumber products, engineered wood products, wood pellets and energy. The Company operates through two segments: Lumber, and Pulp and Paper. Its Lumber segment includes logging operations, and manufacture and sale of various grades, widths and lengths of lumber, engineered wood products, wood chips and wood pellets. The Company’s Pulp and Paper segment includes purchase of residual fiber, and production and sale of pulp and paper products, including Northern Bleached Softwood Kraft (NBSK) and Bleached Chemi-Thermo Mechanical Pulp (BCTMP), as well as energy production. The Pulp and Paper segment includes its interest of Canfor Pulp Products Inc. (CPPI). The Company’s subsidiaries include Canadian Forest Products Ltd, New South Companies, Inc and Anthony Forest Products Co.

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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.

[/level-free]
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Downloadable PDF version of this valuation:

ModernGraham Valuation of TSE-CFP – December 2016

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 $278,791,507 Fail
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.71 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 -142.39% Fail
6. Moderate PEmg Ratio PEmg < 20 20.68 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.57 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 1.71 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.04 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

EPSmg $0.81
MG Growth Estimate 15.00%
MG Value $31.34
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $11.80
MG Value based on 0% Growth $6.92
Market Implied Growth Rate 6.09%
Current Price $16.83
% of Intrinsic Value 53.70%

Canfor Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $-0.16 in 2012 to an estimated $0.81 for 2016. This level of demonstrated earnings growth outpaces the market’s implied estimate of 6.09% 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 Canfor Corporation revealed the company was trading above its Graham Number of $14.31. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 20.68, which was below the industry average of 24.45, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-6.5.

Cornerstone Progressive Return Fund performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$6.50
Graham Number $14.31
PEmg 20.68
Current Ratio 1.71
PB Ratio 1.57
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
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/16/2016
Total Current Assets $1,019,200,000
Total Current Liabilities $594,900,000
Long-Term Debt $441,600,000
Total Assets $3,304,400,000
Intangible Assets $767,900,000
Total Liabilities $1,882,800,000
Shares Outstanding (Diluted Average) 132,805,000

Earnings Per Share History

Next Fiscal Year Estimate $0.85
Dec2015 $0.18
Dec2014 $1.28
Dec2013 $1.61
Dec2012 $0.18
Dec2011 -$0.40
Dec2010 $0.57
Dec2009 -$0.50
Dec2008 -$2.42
Dec2007 -$2.53
Dec2006 $3.31
Dec2005 $0.67
Dec2004 $3.22
Dec2003 $1.65
Dec2002 $0.07
Dec2001 $0.19
Dec2000 $1.28
Dec1999 $1.66
Dec1998 -$3.49
Dec1997 -$0.56
Dec1996 -$0.97

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $0.81
Dec2015 $0.72
Dec2014 $0.88
Dec2013 $0.55
Dec2012 -$0.16
Dec2011 -$0.57
Dec2010 -$0.54
Dec2009 -$0.83
Dec2008 -$0.52
Dec2007 $0.71
Dec2006 $2.15
Dec2005 $1.43
Dec2004 $1.64
Dec2003 $0.89
Dec2002 $0.32
Dec2001 $0.23
Dec2000 $0.03

Recommended Reading:

Other ModernGraham posts about the company

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

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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.

Cardinal Financial Corp Valuation – Initial Coverage $CFNL

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 – August 2016.  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 Cardinal Financial Corp (CFNL) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Cardinal Financial Corporation is a financial holding company. The Company owns Cardinal Bank (the Bank), a Virginia state-chartered community bank. The Bank operates in three business segments: commercial banking, mortgage banking and wealth management services. The commercial banking segment includes both commercial and consumer lending and provides customers such products as commercial loans, real estate loans, and other business financing and consumer loans. In addition, commercial banking segment provides customers with several choices of deposit products, including demand deposit accounts, savings accounts and certificates of deposit. The mortgage banking segment is engaged in the origination and acquisition of residential mortgages for sale into the secondary market. The wealth management services segment provides investment and financial advisory services to businesses and individuals, including financial planning, retirement/estate planning and investment management.

CFNL Chart

CFNL data by YCharts

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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-cfnl-december-2016

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 $1,046,959,564 Fail
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 608.93% Pass
5. Moderate PEmg Ratio PEmg < 20 24.97 Fail
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.43 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

cfnl-value-chart-december-2016

EPSmg $1.30
MG Growth Estimate 6.09%
MG Value $26.98
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $18.92
MG Value based on 0% Growth $11.09
Market Implied Growth Rate 8.24%
Current Price $32.58
% of Intrinsic Value 120.77%

Cardinal Financial Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the small size, high PEmg ratio. The Enterprising Investor has no initial concerns. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.93 in 2012 to an estimated $1.3 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 8.24% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Cardinal Financial Corporation revealed the company was trading above its Graham Number of $21.85. The company pays a dividend of $0.47 per share, for a yield of 1.4% Its PEmg (price over earnings per share – ModernGraham) was 24.97, which was above the industry average of 13.43.

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

Stage 3: Information for Further Research

cfnl-charts-december-2016

Graham Number $21.85
PEmg 24.97
PB Ratio 2.43
Dividend Yield 1.44%
TTM Dividend $0.47
Number of Consecutive Years of Dividend Growth 7

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Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Long-Term Debt & Capital Lease Obligation $464,876,000
Total Assets $4,219,648,000
Intangible Assets $36,115,000
Total Liabilities $3,767,811,000
Shares Outstanding (Diluted Average) 33,767,000

Earnings Per Share History

Next Fiscal Year Estimate $1.54
Dec2015 $1.43
Dec2014 $1.00
Dec2013 $0.82
Dec2012 $1.51
Dec2011 $0.94
Dec2010 $0.62
Dec2009 $0.37
Dec2008 $0.01
Dec2007 $0.18
Dec2006 $0.30
Dec2005 $0.44
Dec2004 $0.19
Dec2003 $0.54
Dec2002 -$0.13
Dec2001 -$3.11
Dec2000 -$0.98
Dec1999 -$0.94
Dec1998 -$0.64
Dec1997 -$0.12

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $1.30
Dec2015 $1.17
Dec2014 $1.02
Dec2013 $0.97
Dec2012 $0.93
Dec2011 $0.57
Dec2010 $0.35
Dec2009 $0.23
Dec2008 $0.18
Dec2007 $0.29
Dec2006 $0.32
Dec2005 $0.08
Dec2004 -$0.30
Dec2003 -$0.67
Dec2002 -$1.23
Dec2001 -$1.58
Dec2000 -$0.72

Recommended Reading:

Other ModernGraham posts about the company

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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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