Here is a look at how Regal-Beloit Corporation (RBC) fares in ModernGraham's opinion, based on an updated and modernized version of Benjamin Graham's requirements of defensive and enterprising investors from The Intelligent Investor:
Defensive and Enterprising Investor Tests (What is the significance of these tests, and what is PEmg ratio?) :
Defensive Investor - must pass at least 6 of the following 7 tests: Score = 7/7
- Adequate Size of Enterprise - market capitalization of at least $2 billion - PASS
- Sufficiently Strong Financial Condition - current ratio greater than 2 - PASS
- Earnings Stability - positive earnings per share for at least 10 straight years - PASS
- Dividend Record - has paid a dividend for at least 10 straight years - PASS
- Earnings Growth - earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period - PASS
- Moderate PEmg ratio - PEmg is less than 20 - PASS
- Moderate Price to Assets - PB ratio is less than 2.5 or PB x PEmg is less than 50 - PASS
Enterprising Investor - must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5
- Sufficiently Strong Financial Condition, Part 1 - current ratio greater than 1.5 - PASS
- Sufficiently Strong Financial Condition, Part 2 - Debt to Net Current Assets ratio less than 1.1 - PASS
- Earnings Stability - positive earnings per share for at least 5 years - PASS
- Dividend Record - currently pays a dividend - PASS
- Earnings growth - EPSmg greater than 5 years ago - PASS
Valuation Summary (Explanation of the ModernGraham Valuation Model)
Key Data:
| MG Value | $61.21 |
| MG Opinion | Overvalued |
| Value Based on 3% Growth | $59.14 |
| Value Based on 0% Growth | $34.67 |
| Market-Implied Growth Rate | 4.58% |
| NCAV | $1.75 |
| PEmg | 17.67 |
| Current Ratio | 2.39 |
| PB Ratio | 1.57 |
Balance Sheet - 9/30/2013
| Current Assets | $1,717,500,000 |
| Current Liabilities | $720,100,000 |
| Total Debt | $609,100,000 |
| Total Assets | $3,709,300,000 |
| Intangible Assets | $1,403,500,000 |
| Total Liabilities | $1,638,900,000 |
| Outstanding Shares | 45,000,000 |
Earnings Per Share - Diluted
| 2013 (estimate) | $4.18 |
| 2012 | $4.65 |
| 2011 | $3.79 |
| 2010 | $3.84 |
| 2009 | $2.63 |
| 2008 | $3.87 |
| 2007 | $3.49 |
| 2006 | $3.28 |
| 2005 | $2.25 |
| 2004 | $1.22 |
| 2003 | $1.00 |
| 2002 | $1.01 |
Earnings Per Share - Modern Graham (Calculating EPSmg)
| 2013 (estimate) | $4.08 |
| 2012 | $3.94 |
| 2011 | $3.56 |
| 2010 | $3.44 |
| 2009 | $3.19 |
| 2008 | $3.26 |
Conclusion:
Regal-Beloit Corporation is one of my personal favorites. The company passes every single requirement of both the Defensive Investor and the Enterprising Investor. There are stable earnings, dividends, low debt, and everything else an Intelligent Investor would like to see in a company. However, just like many other companies in today's market environment, the current price seems slightly overvalued. EPSmg (normalized earnings) have grown from $3.26 in 2008 to an estimated $4.08 for 2013, and the growth has been pretty consistent over that period, but the market is implying a rate of 4.58% which is a little above what's been seen. As a result, Regal-Beloit should be on all the short list of all Defensive Investors and Enterprising Investors for a time when the price dips a little bit and at that time investors should feel comfortable proceeding with further research to determine whether Regal-Beloit is suitable for their individual portfolios.
Disclosure: None.
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.
from SeekingAlpha.com: Home Page http://seekingalpha.com/article/1882801-moderngraham-valuation-of-regal-beloit-corporation?source=feed
Aucun commentaire:
Enregistrer un commentaire