Monday , 20 August 2018


These 10 “Graham Number” Stocks Should Be Great Investments

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The following 10 companies have demonstrated strong financial positions through passing the rigorous requirements of the ModernGraham Investor and show potential for capital growth based on their current price in relation to intrinsic value.  As such, these Graham Number stocks may be a great investment if they prove to be suitable for your portfolio after your own additional research.

The original article has been edited here for length (…) and clarity ([ ])

…The companies selected…have been valued as undervalued based on the ModernGraham valuation model.  The full list can be found in the latest issue of my monthly Stocks & Screens report; however, to cut down on the length of the post, I’ve selected the ten which trade furthest below their Graham Number.

1. Lincoln National Corporation (LNC)

Lincoln National Corporation…

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.25 in 2014 to an estimated $7.21 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.03% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price…
  • was trading below its Graham Number of $121.79 at the time of valuation…
  • pays a dividend of $0.87 per share, for a yield of 1.1%
  • PEmg (price over earnings per share – ModernGraham) was 10.56, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)

(Click on image to enlarge)

2. Signet Jewelers Ltd. (SIG)

Signet Jewelers Ltd….

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $3.86 in 2014 to an estimated $6.07 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.22% annual earnings loss 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.
  • was trading below its Graham Number of $61.99 at the time of valuation…
  • pays a dividend of $1.04 per share, for a yield of 2.1%, putting it among the best dividend paying stocks today…
  • PEmg (price over earnings per share – ModernGraham) was 8.06, which was below the industry average of 30.22, which by some methods of valuation makes it one of the most undervalued stocks in its industry…
  • was trading above its Net Current Asset Value (NCAV) of $-3.32.(See the full valuation)

(Click on image to enlarge)

3. Bed Bath & Beyond Inc. (BBBY)

Bed Bath & Beyond Inc….

  • appears to be Undervalued after “growing” its EPSmg (normalized earnings) from $4.19 in 2014 to an estimated $4.19 for 2018. This level of earnings growth (even though the earnings didn’t actually grow) outpaces the market’s implied estimate of 1.57% annual earnings loss 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.
  • was trading below its Graham Number of $34.59 at the time of valuation…
  • pays a dividend of $0.38 per share, for a yield of 1.7%
  • PEmg (price over earnings per share – ModernGraham) was 5.36, which was below the industry average of 35.42, which by some methods of valuation makes it one of the most undervalued stocks in its industry.
  • was trading above its Net Current Asset Value (NCAV) of $-3.6.(See the full valuation)

(Click on image to enlarge)

4. Newell Rubbermaid Inc. (NWL)

Newell Brands Inc….

  •  appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.28 in 2014 to an estimated $2.89 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 0.48% 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.
  • was trading below its Graham Number of $41.25 at the time of valuation…
  • pays a dividend of $0.88 per share, for a yield of 3.2%, putting it among the best dividend paying stocks today.
  • PEmg (price over earnings per share – ModernGraham) was 9.46, which was below the industry average of 20.37, which by some methods of valuation makes it one of the most undervalued stocks in its industry…
  • was trading above its Net Current Asset Value (NCAV) of $-26.44.(See the full valuation)(Click on image to enlarge)5. Invesco Ltd. (IVZ)

Invesco Ltd.

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $2.63 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.87% 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…
  • was trading below its Graham Number of $38.6 at the time of valuation…
  • pays a dividend of $1.15 per share, for a yield of 3.6%, putting it among the best dividend paying stocks today.
  • PEmg (price over earnings per share – ModernGraham) was 12.24, which was below the industry average of 21.55, which by some methods of valuation makes it one of the most undervalued stocks in its industry…
  • was trading above its Net Current Asset Value (NCAV) of $-14.2.(See the full valuation)(Click on image to enlarge)6. Principal Financial Group Inc. (PFG)

Principal Financial Group Inc….

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.62 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% 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.
  • was trading below its Graham Number of $74.18 at the time of valuation…
  • pays a dividend of $1.87 per share, for a yield of 3%, putting it among the best dividend paying stocks today.
  • PEmg (price over earnings per share – ModernGraham) was 10.92, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)

(Click on image to enlarge)

7. Simmons First National Corporation (SFNC)

Simmons First National Corporation…

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $2.9 in 2014 to an estimated $5.62 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% 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.
  • was trading below its Graham Number of $74.18 at the time of valuation.
  • pays a dividend of $1.87 per share, for a yield of 3%, putting it among the best dividend paying stocks today…
  • PEmg (price over earnings per share – ModernGraham) was 10.92, which was below the industry average of 20.16, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)

(Click on image to enlarge)

8. Bank of America Corp. (BAC)

Bank of America Corp….

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $0.41 in 2014 to an estimated $1.72 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 4.31% 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.
  • was trading below its Graham Number of $35.85 at the time of valuation…
  • pays a dividend of $0.39 per share, for a yield of 1.3%
  • PEmg (price over earnings per share – ModernGraham) was 17.12, which was below the industry average of 24.17, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)(Click on image to enlarge)9. AFLAC Incorporated (AFL)

AFLAC Incorporated…

  • appears to be Undervalued after growing its EPSmg (normalized earnings) from $6.07 in 2014 to an estimated $8.08 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.21% 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.
  • was trading below its Graham Number of $103.31 at the time of valuation…
  • pays a dividend of $1.74 per share, for a yield of 2%…
  • PEmg (price over earnings per share – ModernGraham) was 10.92, which was below the industry average of 22.76, which by some methods of valuation makes it one of the most undervalued stocks in its industry.(See the full valuation)(Click on image to enlarge)10. AT&T Inc. (T)

AT&T Inc….

  1.  appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.89 in 2014 to an estimated $3.17 for 2018. This level of demonstrated earnings growth outpaces the market’s implied estimate of 1.36% 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….
  2. was trading below its Graham Number of $41.02 at the time of valuation…
  3. pays a dividend of $1.97 per share, for a yield of 5.5%, putting it among the best dividend paying stocks today….
  4. PEmg (price over earnings per share – ModernGraham) was 11.23, which was below the industry average of 41.47, which by some methods of valuation makes it one of the most undervalued stocks in its industry
  5. was trading above its Net Current Asset Value (NCAV) of $-36.26.(See the full valuation)(Click on image to enlarge)

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