We evaluated 18 different companies this week to determine whether they are suitable for Defensive Investors, those unwilling to do substantial research, or Enterprising Investors, those who are willing to do such research. We also put each company through the ModernGraham valuation model based on Benjamin Graham’s value investing formulas in order to determine an intrinsic value for each. Here’s a summary of the ModernGraham Valuations.
Southwest Airlines does not qualify for either the Defensive Investor or the Enterprising Investor. The Defensive Investor is concerned with the low current ratio, along with the high PEmg and PB ratios. The Enterprising Investor has concerns with the level of debt relative to the current assets.
The overvalued company of the week is Southwest Airlines Co. (LUV), the discounted airline company that proved to out-run the larger airlines and beat them both price wise and in some consumers opinionâ€™s service as well. We will analyze using Warren Buffettâ€™s approach for the Business and Management Review as well use Benjamin Grahamâ€™s model […]