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Tapestry Inc Valuation – February 2019 $TPR

Company Profile (excerpt from Reuters): Tapestry, Inc., formerly Coach, Inc., incorporated on June 1, 2000, is a design house of luxury accessories and lifestyle collections. The Company’s product offering uses a range of leathers, fabrics and materials. The Company’s segments include North America, International and Stuart Weitzman. The Company’s product offering uses a range of leathers, fabrics and materials. The Company’s brands include Coach, Kate Spade, and Stuart Weitzman. The North America segment includes sales of Tapestry brand products to North American customers through Tapestry-operated stores (including the Internet) and sales to North American wholesale customers. The International segment includes sales to consumers through Tapestry-branded stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. The Stuart Weitzman segment includes sales across the world generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TPR – 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 $9,818,655,256 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.74 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -31.44% Fail
6. Moderate PEmg Ratio PEmg < 20 17.34 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.99 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.74 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.02 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.95
MG Growth Estimate -3.80%
MG Value $1.77
Opinion Overvalued
MG Grade C+
MG Value based on 3% Growth $28.31
MG Value based on 0% Growth $16.60
Market Implied Growth Rate 4.42%
Current Price $33.86
% of Intrinsic Value 1917.37%

Tapestry 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 PB ratio. The Enterprising Investor is only concerned with the lack of earnings growth over the last five years. 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 seeing its EPSmg (normalized earnings) decline from $2.61 in 2015 to an estimated $1.95 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 4.42% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Tapestry Inc revealed the company was trading above its Graham Number of $25.42. The company pays a dividend of $1.35 per share, for a yield of 4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 17.34, which was below the industry average of 27.33, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-3.17.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$3.17
Graham Number $25.42
PEmg 17.34
Current Ratio 2.74
PB Ratio 2.99
Current Dividend $1.35
Dividend Yield 3.99%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

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Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2018
Total Current Assets $2,467,500,000
Total Current Liabilities $899,400,000
Long-Term Debt $1,594,500,000
Total Assets $6,703,300,000
Intangible Assets $3,213,500,000
Total Liabilities $3,393,700,000
Shares Outstanding (Diluted Average) 292,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.55
Jun2018 $1.38
Jun2017 $2.09
Jun2016 $1.65
Jun2015 $1.45
Jun2014 $2.79
Jun2013 $3.61
Jun2012 $3.53
Jun2011 $2.92
Jun2010 $2.33
Jun2009 $1.91
Jun2008 $2.17
Jun2007 $1.76
Jun2006 $1.27
Jun2005 $0.86
Jun2004 $0.57
Jun2003 $0.33
Jun2002 $0.24
Jun2001 $0.19
Jun2000 $0.14
Jun1999 $0.06

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.95
Jun2018 $1.73
Jun2017 $2.04
Jun2016 $2.21
Jun2015 $2.61
Jun2014 $3.14
Jun2013 $3.17
Jun2012 $2.82
Jun2011 $2.38
Jun2010 $2.04
Jun2009 $1.79
Jun2008 $1.60
Jun2007 $1.20
Jun2006 $0.83
Jun2005 $0.55
Jun2004 $0.36
Jun2003 $0.23

Recommended Reading:

Other ModernGraham posts about the company

Tapestry Inc Valuation – April 2018 $TPR

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Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA
Nordstrom Inc Valuation – December 2018 $JWN
Walmart Inc Valuation – November 2018 $WMT
Canadian Tire Corp Ltd Valuation – August 2018 $TSE:CTC.A
McKesson Corp Valuation – June 2018 $MCK

Disclaimer:

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

Tapestry Inc Valuation – April 2018 $TPR

Company Profile (excerpt from Reuters): Tapestry, Inc., formerly Coach, Inc., incorporated on June 1, 2000, is a design house of luxury accessories and lifestyle collections. The Company’s product offering uses a range of leathers, fabrics and materials. The Company’s segments include North America, International and Stuart Weitzman. The Company’s product offering uses a range of leathers, fabrics and materials. The Company’s brands include Coach, Kate Spade, and Stuart Weitzman. The North America segment includes sales of Tapestry brand products to North American customers through Tapestry-operated stores (including the Internet) and sales to North American wholesale customers. The International segment includes sales to consumers through Tapestry-branded stores and concession shop-in-shops in Japan, mainland China, Hong Kong, Macau, Singapore, Taiwan, Malaysia, South Korea, the United Kingdom, France, Ireland, Spain, Portugal, Germany, Italy, Austria, Belgium, the Netherlands and Switzerland. The Stuart Weitzman segment includes sales across the world generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

TPR Chart

TPR data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TPR – 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 $14,987,663,711 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.90 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -31.28% Fail
6. Moderate PEmg Ratio PEmg < 20 31.69 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.11 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.90 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.66
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D+
MG Value based on 3% Growth $24.07
MG Value based on 0% Growth $14.11
Market Implied Growth Rate 11.60%
Current Price $52.61
% of Intrinsic Value N/A

Tapestry Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings 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 $3.14 in 2014 to an estimated $1.66 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 11.6% 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 Tapestry Inc revealed the company was trading above its Graham Number of $16.84. The company pays a dividend of $1.35 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 31.69, which was below the industry average of 34.38, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-4.36.

Tapestry 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) -$4.36
Graham Number $16.84
PEmg 31.69
Current Ratio 1.90
PB Ratio 5.11
Current Dividend $1.35
Dividend Yield 2.57%
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 $3,282,300,000
Total Current Liabilities $1,731,400,000
Long-Term Debt $1,887,500,000
Total Assets $7,481,200,000
Intangible Assets $3,147,700,000
Total Liabilities $4,531,800,000
Shares Outstanding (Diluted Average) 286,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.18
Jun2017 $2.09
Jun2016 $1.65
Jun2015 $1.45
Jun2014 $2.79
Jun2013 $3.61
Jun2012 $3.53
Jun2011 $2.92
Jun2010 $2.33
Jun2009 $1.91
Jun2008 $2.17
Jun2007 $1.76
Jun2006 $1.27
Jun2005 $0.86
Jun2004 $0.57
Jun2003 $0.33
Jun2002 $0.24
Jun2001 $0.19
Jun2000 $0.14
Jun1999 $0.06
Jun1998 $0.07

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.66
Jun2017 $2.04
Jun2016 $2.21
Jun2015 $2.61
Jun2014 $3.14
Jun2013 $3.17
Jun2012 $2.82
Jun2011 $2.38
Jun2010 $2.04
Jun2009 $1.79
Jun2008 $1.60
Jun2007 $1.20
Jun2006 $0.83
Jun2005 $0.55
Jun2004 $0.36
Jun2003 $0.23
Jun2002 $0.17

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Coach Inc Valuation – February 2016 Update $COH
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Macy’s Inc Valuation – April 2018 $M
Walgreens Boots Alliance Inc Valuation – March 2018 $WBA
Bed Bath & Beyond Inc Valuation – March 2018 $BBBY
Ross Stores Inc Valuation – March 2018 $ROST
Nordstrom Inc Valuation – February 2018 $JWN
Walmart Inc Valuation – February 2018 $WMT
Costco Wholesale Corp Valuation – September 2017 $COST
McKesson Corp Valuation – August 2017 $MCK

Disclaimer:

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

Equinix Inc Valuation – March 2019 #EQIX

Company Profile (excerpt from Reuters): Equinix, Inc. (Equinix), incorporated on June 22, 1998, operates as a real estate investment trust (REIT). The Company connects various companies directly to their customers and partners inside interconnected data centers. The Company operates through three segments: Americas, EMEA and Asia-Pacific. The Company’s platform Equinix, combines a global footprint of International Business Exchange (IBX) data centers, a range of interconnection solutions, ecosystems and support. Its customers include carriers, mobile and other bandwidth providers, cloud and information technology (IT) services providers, content providers, financial companies and enterprises. It provides each customer access to a choice of business partners and solutions based on their colocation, interconnection and managed IT service needs. Its colocation offerings include operations space, storage space, cabinets and power for customers’ colocation needs inside Equinix’s IBX data centers. Its interconnection offerings include Equinix Cloud Exchange, which enables simultaneous, direct and secure connections to multiple clouds from a single port; Equinix Performance Hub, which takes enterprise IT inside any one of its global data centers, and Equinix Data Hub, which enables secure, compliant access to business-critical data and analytics wherever users are located around the globe.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of EQIX – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $37,512,444,147 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.00 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 138.03% Pass
6. Moderate PEmg Ratio PEmg < 20 111.84 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 5.05 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.00 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 15,449.18 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.03
MG Growth Estimate 15.00%
MG Value $154.98
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $58.37
MG Value based on 0% Growth $34.22
Market Implied Growth Rate 51.67%
Current Price $450.19
% of Intrinsic Value 290.49%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.62 in 2015 to an estimated $4.03 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 51.67% 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 Equinix Inc revealed the company was trading above its Graham Number of $103.19. The company pays a dividend of $9.12 per share, for a yield of 2% Its PEmg (price over earnings per share – ModernGraham) was 111.84, which was above the industry average of 61.92. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-142.24.

Equinix 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) -$142.24
Graham Number $103.19
PEmg 111.84
Current Ratio 1.00
PB Ratio 5.05
Current Dividend $9.12
Dividend Yield 2.03%
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 12/1/2018
Total Current Assets $1,515,682,000
Total Current Liabilities $1,515,071,000
Long-Term Debt $9,439,448,000
Total Assets $20,244,638,000
Intangible Assets $7,169,684,000
Total Liabilities $13,025,359,000
Shares Outstanding (Diluted Average) 80,920,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.27
Dec2018 $4.56
Dec2017 $3.00
Dec2016 $1.79
Dec2015 $3.21
Dec2014 -$4.96
Dec2013 $1.89
Dec2012 $2.83
Dec2011 $1.74
Dec2010 $0.82
Dec2009 $1.75
Dec2008 $2.79
Dec2007 -$0.16
Dec2006 -$0.22
Dec2005 -$1.78
Dec2004 -$3.87
Dec2003 -$8.76
Dec2002 -$7.23
Dec2001 -$76.62
Dec2000 -$111.18
Dec1999 -$159.11

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.03
Dec2018 $2.78
Dec2017 $1.58
Dec2016 $0.90
Dec2015 $0.62
Dec2014 -$0.30
Dec2013 $1.96
Dec2012 $1.99
Dec2011 $1.51
Dec2010 $1.26
Dec2009 $1.15
Dec2008 $0.35
Dec2007 -$1.57
Dec2006 -$2.97
Dec2005 -$9.45
Dec2004 -$22.70
Dec2003 -$45.60

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Equinix Inc Valuation – June 2018 $EQIX
Equinix Inc Valuation – July 2017 $EQIX
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Equinix Inc Valuation – August 2016 $EQIX
Equinix Inc. Analysis – Initial Coverage $EQIX

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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.

Costco Wholesale Corp Valuation – March 2019 #COST

Company Profile (excerpt from Reuters): Costco Wholesale Corporation, incorporated on May 12, 1987, is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company’s average warehouse space is approximately 144,000 square feet. The Company’s warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of COST – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $103,811,680,000 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.96 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 106.73% Pass
6. Moderate PEmg Ratio PEmg < 20 34.96 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 7.36 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.96 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -5.98 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $6.75
MG Growth Estimate 6.57%
MG Value $146.16
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $97.90
MG Value based on 0% Growth $57.39
Market Implied Growth Rate 13.23%
Current Price $236.07
% of Intrinsic Value 161.52%

Costco Wholesale Corporation does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $4.69 in 2015 to an estimated $6.75 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 13.23% 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 Costco Wholesale Corporation revealed the company was trading above its Graham Number of $71.28. The company pays a dividend of $2.14 per share, for a yield of 0.9% Its PEmg (price over earnings per share – ModernGraham) was 34.96, which was above the industry average of 27.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-15.75.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$15.75
Graham Number $71.28
PEmg 34.96
Current Ratio 0.96
PB Ratio 7.36
Current Dividend $2.14
Dividend Yield 0.91%
Number of Consecutive Years of Dividend Growth 15

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 2/1/2019
Total Current Assets $21,648,000,000
Total Current Liabilities $22,450,000,000
Long-Term Debt $4,794,000,000
Total Assets $42,799,000,000
Intangible Assets $0
Total Liabilities $28,616,000,000
Shares Outstanding (Diluted Average) 442,337,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $7.73
Aug2018 $7.09
Aug2017 $6.08
Aug2016 $5.33
Aug2015 $5.37
Aug2014 $4.65
Aug2013 $4.63
Aug2012 $3.89
Aug2011 $3.30
Aug2010 $2.92
Aug2009 $2.47
Aug2008 $2.89
Aug2007 $2.37
Aug2006 $2.30
Aug2005 $2.18
Aug2004 $1.85
Aug2003 $1.53
Aug2002 $1.48
Aug2001 $1.29
Aug2000 $1.35
Aug1999 $0.87

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $6.75
Aug2018 $6.08
Aug2017 $5.45
Aug2016 $5.02
Aug2015 $4.69
Aug2014 $4.20
Aug2013 $3.79
Aug2012 $3.28
Aug2011 $2.92
Aug2010 $2.68
Aug2009 $2.52
Aug2008 $2.47
Aug2007 $2.19
Aug2006 $2.02
Aug2005 $1.81
Aug2004 $1.58
Aug2003 $1.40

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Costco Wholesale Corp Valuation – June 2018 $COST
Costco Wholesale Corp Valuation – September 2017 $COST
Costco Wholesale Corp Valuation – July 2016 $COST
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Costco Wholesale Corporation Annual Valuation – 2015 $COST

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Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

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.

Amazon.com Inc Valuation – March 2019 #AMZN

Company Profile (excerpt from Reuters): Amazon.com, Inc., incorporated on May 28, 1996, offers a range of products and services through its Websites. The Company operates through three segments: North America, International and Amazon Web Services (AWS). The Company’s products include merchandise and content that it purchases for resale from vendors and those offered by third-party sellers. It also manufactures and sells electronic devices. The Company, through its subsidiary, Whole Foods Market, Inc., offers healthy and organic food and staples across its stores. The Company also offers a range of products like whole trade bananas, organic avocados, organic large brown eggs, organic responsibly-farmed salmon and tilapia, organic baby kale and baby lettuce, animal-welfare-rated 85% lean ground beef, creamy and crunchy almond butter, organic gala and fuji apples, organic rotisserie chicken.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AMZN – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $870,058,004,269 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.10 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 1163.52% Pass
6. Moderate PEmg Ratio PEmg < 20 121.09 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 20.33 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.10 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.50 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $14.62
MG Growth Estimate 15.00%
MG Value $562.90
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $212.00
MG Value based on 0% Growth $124.28
Market Implied Growth Rate 56.29%
Current Price $1,770.35
% of Intrinsic Value 314.51%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $0.48 in 2015 to an estimated $14.62 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 56.29% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Amazon.com, Inc. revealed the company was trading above its Graham Number of $208.82. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 121.09, which was above the industry average of 27.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-88.

Amazon.com, Inc. scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$88.00
Graham Number $208.82
PEmg 121.09
Current Ratio 1.10
PB Ratio 20.33
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 12/1/2018
Total Current Assets $75,101,000,000
Total Current Liabilities $68,391,000,000
Long-Term Debt $23,495,000,000
Total Assets $162,648,000,000
Intangible Assets $18,658,000,000
Total Liabilities $119,099,000,000
Shares Outstanding (Diluted Average) 500,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $21.85
Dec2018 $20.14
Dec2017 $6.15
Dec2016 $4.90
Dec2015 $1.25
Dec2014 -$0.52
Dec2013 $0.59
Dec2012 -$0.09
Dec2011 $1.37
Dec2010 $2.53
Dec2009 $2.04
Dec2008 $1.49
Dec2007 $1.12
Dec2006 $0.45
Dec2005 $0.84
Dec2004 $1.39
Dec2003 $0.08
Dec2002 -$0.39
Dec2001 -$1.56
Dec2000 -$4.02
Dec1999 -$2.20

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $14.62
Dec2018 $9.47
Dec2017 $3.58
Dec2016 $1.94
Dec2015 $0.48
Dec2014 $0.32
Dec2013 $0.92
Dec2012 $1.21
Dec2011 $1.81
Dec2010 $1.86
Dec2009 $1.42
Dec2008 $1.09
Dec2007 $0.85
Dec2006 $0.64
Dec2005 $0.51
Dec2004 -$0.07
Dec2003 -$1.07

Recommended Reading:

Other ModernGraham posts about the company

Amazon.com Inc Valuation – June 2018 $AMZN
Amazon.com Inc Valuation – August 2017 $AMZN
Amazon Inc Valuation – July 2016 $AMZN
58 Companies in the Spotlight This Week – 1/31/15
Amazon.com Inc. Annual Valuation – 2015 $AMZN

Other ModernGraham posts about related companies

Dollar Tree Inc Valuation – March 2019 #DLTR
TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

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.

Target Corporation Valuation – March 2019 #TGT

Company Profile (excerpt from Reuters): Target Corporation (Target), incorporated on February 11, 1902, is a general merchandise retailer selling products through its stores and digital channels. The Company’s general merchandise stores offer an edited food assortment, including perishables, dry grocery, dairy and frozen items. The Company’s digital channels include a range of general merchandise, including a range of items found in its stores, along with an assortment, such as additional sizes and colors sold only online. The Company’s owned brands include Archer Farms, Market Pantry, Sutton & Dodge, Art Class, Merona, Threshold, Ava & Viv, Pillowfort, up & up, Boots & Barkley, Room Essentials, Wine Cube, Cat & Jack, Simply Balanced, Wondershop, Embark, Smith & Hawken, Xhilaration, Gilligan & O’Malley, Sonia Kashuk, Knox Rose and Spritz.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of TGT – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $40,036,461,292 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 0.83 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 27.42% Fail
6. Moderate PEmg Ratio PEmg < 20 14.51 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.60 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 0.83 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 -4.10 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $5.34
MG Growth Estimate 15.00%
MG Value $205.72
Opinion Undervalued
MG Grade B-
MG Value based on 3% Growth $77.48
MG Value based on 0% Growth $45.42
Market Implied Growth Rate 3.01%
Current Price $77.54
% of Intrinsic Value 37.69%

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

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.58 in 2016 to an estimated $5.34 for 2020. This level of demonstrated earnings growth outpaces the market’s implied estimate of 3.01% 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 Target Corporation revealed the company was trading above its Graham Number of $51.81. The company pays a dividend of $2.52 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 14.51, which was below the industry average of 27.69, 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 $-33.33.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$33.33
Graham Number $51.81
PEmg 14.51
Current Ratio 0.83
PB Ratio 3.60
Current Dividend $2.52
Dividend Yield 3.25%
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 1/1/2019
Total Current Assets $12,519,000,000
Total Current Liabilities $15,014,000,000
Long-Term Debt $10,223,000,000
Total Assets $41,290,000,000
Intangible Assets $699,000,000
Total Liabilities $29,993,000,000
Shares Outstanding (Diluted Average) 524,200,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.51
Jan2019 $5.51
Jan2018 $5.29
Jan2017 $4.69
Jan2016 $5.31
Jan2015 -$2.58
Jan2014 $3.07
Jan2013 $4.52
Jan2012 $4.28
Jan2011 $4.00
Jan2010 $3.30
Jan2009 $2.86
Jan2008 $3.33
Jan2007 $3.21
Jan2006 $2.71
Jan2005 $3.51
Jan2004 $1.76
Jan2003 $1.78
Jan2002 $1.21
Jan2001 $1.38
Jan2000 $1.23

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $5.34
Jan2019 $4.72
Jan2018 $3.94
Jan2017 $3.17
Jan2016 $2.58
Jan2015 $1.70
Jan2014 $3.84
Jan2013 $4.08
Jan2012 $3.76
Jan2011 $3.44
Jan2010 $3.14
Jan2009 $3.08
Jan2008 $3.09
Jan2007 $2.85
Jan2006 $2.51
Jan2005 $2.25
Jan2004 $1.57

Recommended Reading:

Other ModernGraham posts about the company

Target Corp Valuation – June 2018 $TGT
Target Corp Valuation – March 2017 $TGT
Target Corp Valuation – August 2016 $TGT
Target Corporation Stock Analysis – 2015 Update $TGT
17 Companies in the Spotlight This Week – June 21, 2014

Other ModernGraham posts about related companies

Dollar Tree Inc Valuation – March 2019 #DLTR
TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

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.

CVS Health Corp Valuation – March 2019 #CVS

Company Profile (excerpt from Reuters): CVS Health Corporation, incorporated on August 22, 1996, together with its subsidiaries, is an integrated pharmacy healthcare company. The Company provides pharmacy care for the senior community through Omnicare, Inc. (Omnicare) and Omnicare’s long-term care (LTC) operations, which include distribution of pharmaceuticals, related pharmacy consulting and other ancillary services to chronic care facilities and other care settings. It operates through three segments: Pharmacy Services, Retail/LTC and Corporate. The Company delivers products and services by advising patients on their medications at its CVS Pharmacy locations; introducing programs for clients at CVS Caremark; delivering care to patients with complex conditions through CVS Specialty, and providing access to care at CVS MinuteClinic. As of December 31, 2016, the Company had more than 9,700 retail locations and more than 1,100 walk-in healthcare clinics.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of CVS – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $74,484,932,860 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.03 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 55.69% Pass
6. Moderate PEmg Ratio PEmg < 20 13.21 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.10 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.03 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 57.90 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.33
MG Growth Estimate 1.58%
MG Value $50.55
Opinion Overvalued
MG Grade C
MG Value based on 3% Growth $62.85
MG Value based on 0% Growth $36.84
Market Implied Growth Rate 2.35%
Current Price $57.26
% of Intrinsic Value 113.27%

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

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.92 in 2015 to an estimated $4.33 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.35% 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 CVS Health Corp revealed the company was trading below its Graham Number of $82.45. The company pays a dividend of $2 per share, for a yield of 3.5%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.21, which was below the industry average of 27.69, 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 $-82.59.

CVS Health Corp receives an average overall rating in the ModernGraham grading system, scoring a C.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$82.59
Graham Number $82.45
PEmg 13.21
Current Ratio 1.03
PB Ratio 1.10
Current Dividend $2.00
Dividend Yield 3.49%
Number of Consecutive Years of Dividend Growth 15

Useful Links:

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

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $45,243,000,000
Total Current Liabilities $44,009,000,000
Long-Term Debt $71,444,000,000
Total Assets $196,456,000,000
Intangible Assets $115,202,000,000
Total Liabilities $137,913,000,000
Shares Outstanding (Diluted Average) 1,122,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.71
Dec2018 -$0.57
Dec2017 $6.44
Dec2016 $4.90
Dec2015 $4.63
Dec2014 $3.96
Dec2013 $3.74
Dec2012 $3.02
Dec2011 $2.57
Dec2010 $2.49
Dec2009 $2.55
Dec2008 $2.18
Dec2007 $1.92
Dec2006 $1.60
Dec2005 $1.45
Dec2004 $1.10
Dec2003 $1.03
Dec2002 $0.88
Dec2001 $0.50
Dec2000 $0.92
Dec1999 $0.78

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.33
Dec2018 $3.39
Dec2017 $5.16
Dec2016 $4.36
Dec2015 $3.92
Dec2014 $3.43
Dec2013 $3.07
Dec2012 $2.68
Dec2011 $2.45
Dec2010 $2.31
Dec2009 $2.13
Dec2008 $1.83
Dec2007 $1.57
Dec2006 $1.34
Dec2005 $1.13
Dec2004 $0.94
Dec2003 $0.85

Recommended Reading:

Other ModernGraham posts about the company

10 Low PE Stock Picks for the Defensive Investor – August 2018
10 Undervalued Companies for the Defensive Dividend Stock Investor – June 2018
CVS Health Corp Valuation – June 2018 $CVS
6 Best Stocks for Value Investors This Week – 3/26/17
CVS Health Corp Valuation – March 2017 $CVS

Other ModernGraham posts about related companies

Dollar Tree Inc Valuation – March 2019 #DLTR
TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

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.

Ulta Beauty Inc Valuation – March 2019 #ULTA

Company Profile (excerpt from Reuters): Ulta Beauty, Inc. is a holding company for the Ulta Beauty group of companies. The Company is a beauty retailer. The Company offers cosmetics, fragrance, skin, hair care products and salon services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of ULTA – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $20,297,752,712 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.32 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 357.49% Pass
6. Moderate PEmg Ratio PEmg < 20 42.61 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 11.17 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 2.32 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.00 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $8.03
MG Growth Estimate 15.00%
MG Value $309.18
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $116.44
MG Value based on 0% Growth $68.26
Market Implied Growth Rate 17.05%
Current Price $342.18
% of Intrinsic Value 110.67%

Ulta Beauty Inc is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor is only concerned with the lack of dividends. As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $3.84 in 2016 to an estimated $8.03 for 2020. This level of demonstrated earnings growth does not support the market’s implied estimate of 17.05% 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 Ulta Beauty Inc revealed the company was trading above its Graham Number of $65.79. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 42.61, which was above the industry average of 27.69. Finally, the company was trading above its Net Current Asset Value (NCAV) of $9.15.

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

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) $9.15
Graham Number $65.79
PEmg 42.61
Current Ratio 2.32
PB Ratio 11.17
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 1/1/2019
Total Current Assets $1,914,861,000
Total Current Liabilities $823,736,000
Long-Term Debt $0
Total Assets $3,191,172,000
Intangible Assets $15,187,000
Total Liabilities $1,370,954,000
Shares Outstanding (Diluted Average) 59,428,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $6.36
Jan2019 $10.94
Jan2018 $8.96
Jan2017 $6.52
Jan2016 $4.98
Jan2015 $3.98
Jan2014 $3.15
Jan2013 $2.68
Jan2012 $1.90
Jan2011 $1.16
Jan2010 $0.66
Jan2009 $0.43
Jan2008 $0.48
Jan2007 $0.45
Jan2006 $0.33
Jan2005 -$0.70
Jan2004 -$2.36
Jan2003 $0.02

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $8.03
Jan2019 $8.27
Jan2018 $6.46
Jan2017 $4.90
Jan2016 $3.84
Jan2015 $3.03
Jan2014 $2.34
Jan2013 $1.75
Jan2012 $1.16
Jan2011 $0.74
Jan2010 $0.51
Jan2009 $0.36
Jan2008 $0.10
Jan2007 -$0.22
Jan2006 -$0.55
Jan2005 -$0.86
Jan2004 -$0.78

Recommended Reading:

Other ModernGraham posts about the company

Ulta Beauty Inc Valuation – June 2018 $ULTA
Ulta Beauty Inc Valuation – Initial Coverage $ULTA

Other ModernGraham posts about related companies

Dollar Tree Inc Valuation – March 2019 #DLTR
TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

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.

Kohl’s Corporation Valuation – March 2019 #KSS

Company Profile (excerpt from Reuters): Kohl’s Corporation (Kohl’s), incorporated on March 23, 1993, is an operator of department stores. As of January 28, 2017, the Company operated 1,154 Kohl’s department stores, a Website (www.Kohls.com), 12 FILA outlets, and three Off-Aisle clearance centers. The Company’s stores and Website sell moderately-priced private label and national brand apparel, footwear, accessories, beauty and home products. The Company’s Website includes merchandise that is available in its stores, as well as merchandise that is available only online. The Company’s merchandise mix includes both national brands and private brands that are available only at Kohl’s.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of KSS – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,227,120,357 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.77 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 29.93% Fail
6. Moderate PEmg Ratio PEmg < 20 13.89 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.01 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.77 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 0.88 Pass
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.89
MG Growth Estimate 3.65%
MG Value $77.27
Opinion Fairly Valued
MG Grade B-
MG Value based on 3% Growth $70.95
MG Value based on 0% Growth $41.59
Market Implied Growth Rate 2.70%
Current Price $67.99
% of Intrinsic Value 87.99%

Kohl’s Corporation is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth 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 Fairly Valued after growing its EPSmg (normalized earnings) from $3.94 in 2016 to an estimated $4.89 for 2020. This level of demonstrated earnings growth supports the market’s implied estimate of 2.7% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value within a margin of safety relative to the price.

At the time of valuation, further research into Kohl’s Corporation revealed the company was trading above its Graham Number of $66.09. The company pays a dividend of $2.44 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.89, which was below the industry average of 27.69, 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 $-12.93.

Kohl’s Corporation performs fairly well in the ModernGraham grading system, scoring a B-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$12.93
Graham Number $66.09
PEmg 13.89
Current Ratio 1.77
PB Ratio 2.01
Current Dividend $2.44
Dividend Yield 3.59%
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 1/1/2019
Total Current Assets $4,835,000,000
Total Current Liabilities $2,730,000,000
Long-Term Debt $1,861,000,000
Total Assets $12,469,000,000
Intangible Assets $0
Total Liabilities $6,942,000,000
Shares Outstanding (Diluted Average) 163,000,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $5.80
Jan2019 $4.84
Jan2018 $5.12
Jan2017 $3.11
Jan2016 $3.46
Jan2015 $4.24
Jan2014 $4.05
Jan2013 $4.17
Jan2012 $4.30
Jan2011 $3.66
Jan2010 $3.17
Jan2009 $2.89
Jan2008 $3.39
Jan2007 $3.31
Jan2006 $2.43
Jan2005 $2.04
Jan2004 $1.59
Jan2003 $1.85
Jan2002 $1.45
Jan2001 $1.10
Jan2000 $0.77

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.89
Jan2019 $4.34
Jan2018 $4.06
Jan2017 $3.63
Jan2016 $3.94
Jan2015 $4.14
Jan2014 $4.02
Jan2013 $3.88
Jan2012 $3.65
Jan2011 $3.32
Jan2010 $3.11
Jan2009 $2.99
Jan2008 $2.88
Jan2007 $2.49
Jan2006 $2.02
Jan2005 $1.74
Jan2004 $1.51

Recommended Reading:

Other ModernGraham posts about the company

Kohl’s Corporation Valuation – June 2018 $KSS
Kohl’s Corporation Valuation – March 2017 $KSS
Kohl’s Corporation Valuation – November 2015 Update $KSS
The Best Companies of the Retail Industry – August 2015
15 Best Stocks For Value Investors This Week – 8/22/15

Other ModernGraham posts about related companies

Dollar Tree Inc Valuation – March 2019 #DLTR
TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA

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.

Dollar Tree Inc Valuation – March 2019 #DLTR

Company Profile (excerpt from Reuters): Dollar Tree, Inc., incorporated on February 22, 2008, is an operator of discount variety stores. As of January 28, 2017, the Company operated 14,334 stores in 48 states and the District of Columbia, and five Canadian provinces. The Company’s segments include Dollar Tree and Family Dollar. The Dollar Tree segment is the operator of discount variety stores offering merchandise at a fixed price. The Family Dollar segment operates a chain of general merchandise retail discount stores providing consumers with a selection of merchandise in neighborhood stores. The Company’s stores operate under the names of Dollar Tree, Family Dollar and Dollar Tree Canada. As of January 28, 2017, the Dollar Tree segment included 6,360 stores operating under the Dollar Tree and Dollar Tree Canada brands, 11 distribution centers in the United States and two in Canada and a Store Support Center in Chesapeake, Virginia. The Family Dollar segment consists of its operations under the Family Dollar brand, 11 distribution centers and a Store Support Center in Matthews, North Carolina. As of January 28, 2017, the Company offered 7,100 items in its stores. The Company offers a range of everyday basic products, and supplements these basic, everyday items with seasonal, closeout and promotional merchandise.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of DLTR – March 2019

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

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $24,548,986,071 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.22 Pass
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 220.13% Pass
6. Moderate PEmg Ratio PEmg < 20 23.23 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 3.10 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 2.22 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.93 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $4.44
MG Growth Estimate 10.62%
MG Value $132.06
Opinion Fairly Valued
MG Grade D+
MG Value based on 3% Growth $64.38
MG Value based on 0% Growth $37.74
Market Implied Growth Rate 7.37%
Current Price $103.16
% of Intrinsic Value 78.11%

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

As for a valuation, the company appears to be Fairly Valued after growing its EPSmg (normalized earnings) from $2.6 in 2015 to an estimated $4.44 for 2019. This level of demonstrated earnings growth supports the market’s implied estimate of 7.37% 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 within a margin of safety relative to the price.

At the time of valuation, further research into Dollar Tree, Inc. revealed the company was trading above its Graham Number of $53.48. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 23.23, which was below the industry average of 27.69, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.58.

Dollar Tree, 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) -$16.58
Graham Number $53.48
PEmg 23.23
Current Ratio 2.22
PB Ratio 3.10
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 10/1/2018
Total Current Assets $4,749,500,000
Total Current Liabilities $2,135,700,000
Long-Term Debt $5,043,800,000
Total Assets $16,649,300,000
Intangible Assets $8,442,800,000
Total Liabilities $8,706,200,000
Shares Outstanding (Diluted Average) 238,700,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.20
Jan2018 $7.21
Jan2017 $3.78
Jan2016 $1.26
Jan2015 $2.90
Jan2014 $2.72
Jan2013 $2.68
Jan2012 $2.01
Jan2011 $1.55
Jan2010 $1.19
Jan2009 $0.84
Jan2008 $0.70
Jan2007 $0.62
Jan2006 $0.53
Jan2005 $0.53
Jan2004 $0.51
Dec2002 $0.45
Dec2001 $0.36
Dec2000 $0.36
Dec1999 $0.31
Dec1998 $0.24

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $4.44
Jan2018 $4.23
Jan2017 $2.72
Jan2016 $2.23
Jan2015 $2.60
Jan2014 $2.31
Jan2013 $1.95
Jan2012 $1.48
Jan2011 $1.14
Jan2010 $0.88
Jan2009 $0.70
Jan2008 $0.61
Jan2007 $0.55
Jan2006 $0.51
Jan2005 $0.47
Jan2004 $0.43
Dec2002 $0.38

Recommended Reading:

Other ModernGraham posts about the company

Dollar Tree Inc Valuation – May 2018 $DLTR
Dollar Tree Inc Valuation – February 2017 $DLTR
Dollar Tree Stores Inc. Valuation – October 2015 Update $DLTR
5 Undervalued Companies with a Low Beta – October 2015
The Best Companies of the Retail Industry – August 2015

Other ModernGraham posts about related companies

TJX Companies Inc Valuation – February 2019 $TJX
Tractor Supply Co Valuation – February 2019 $TSCO
Tapestry Inc Valuation – February 2019 $TPR
Dollar General Corp Valuation – February 2019 $DG
Tiffany & Co Valuation – February 2019 $TIF
Best Buy Co Inc Valuation – February 2019 $BBY
Macy’s Inc Valuation – January 2019 $M
Ross Stores Inc Valuation – January 2019 $ROST
Walgreens Boots Alliance Inc Valuation – December 2018 $WBA
Nordstrom Inc Valuation – December 2018 $JWN

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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