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OZK Stock Study (8-1-23)

Posted by on October 11, 2023 at 06:47 | Last modified: July 31, 2023 20:26

I recently did a stock study on Bank OZK (OZK) with a closing price of $43.73.

Value Line writes:

     > Bank OZK (formerly Bank of the Ozarks) is a bank holding company.
     > The company owns an Arkansas state chartered subsidiary bank, Bank
     > of the Ozarks, that conducts operations through 240 offices. Bank
     > OZK provides a range of retail and commercial banking services.
     > Deposit services includes: checking, savings, money market, time
     > deposit, and individual retirement accounts. Loan services include:
     > various types of real estate, consumer, commercial, industrial and
     > agricultural loans, and various leasing services. The company also
     > provides mortgage lending; treasury management services for
     > businesses, individuals and non-profit and governmental entities
     > including: wholesale lock-box services; remote deposit capture
     > services; trust and wealth management services for businesses,
     > individuals and non-profit and governmental entities; real estate
     > appraisals; ATMs; telephone banking; online and mobile banking
     > services; debit cards, gift cards, and safe deposit boxes.

Over the past decade, this medium-size company has grown sales and EPS at annualized rates of 17.7% and 13.3%, respectively. Lines are mostly up and parallel except for a sales dip in ’19 and EPS dips in ’18 and ’20. PTPM has been above peer and industry averages while going from 49.2% in ’13 to 57.8% in ’22 with a last-5-year mean of 55.6%.

Also over the past decade, ROE leads peer and industry averages going from 14.6% in ’13 to 12.7% in ’22 with a last-5-year mean of 10.8%. Debt-to-Capital is much less than peer and industry averages generally trending down from 35.6% in ’13 to 18.7% in ’22 with a last-5-year mean of 16.8%.

Return on Average Assets (ROAA) has a last-5-year mean of 1.82%. Aside from 1.15% in ’20 (COVID-19), the lowest ROAA in the last 10 years is 1.85% in ’19. That is impressive!

Value Line gives a B+ grade for Financial Strength.

With regard to sales growth:

I am forecasting toward the lower end of the range at 7.0% per year.

With regard to EPS growth:

My 5.0% forecast is below the long-term-estimate range (mean of three: 8.0%). I will use ’22 EPS of $4.54/share as the initial value rather than 2023 Q1 EPS of $4.93 (annualized).

My Forecast High P/E is 10.0. Over the past decade, high P/E has trended down from 24.1 in ’13 to 11.3 in ’22 with a last-5-year mean of 12.6. I am forecasting below the entire range and just above the last-5-year-mean average P/E of 9.7.

My Forecast Low P/E is 6.0. Over the past decade, low P/E has fallen from 13.5 in ’13 to 7.7 in ’22 with a last-5-year mean of 6.8. I am forecasting below the entire range.

My Low Stock Price Forecast (LSPF) of $27.20 is the default value based on $4.54/share. This is 37.8% less than the previous close and 11.4% less than the 52-week low.

Over the past decade, Payout Ratio ranges from 21.2% in ’17 to 47.7% (upside outlier) in ’20 with a last-5-year mean (excluding the outlier) of 26.5%. I am forecasting below the range at 21.0%.

These inputs land OZK in the HOLD zone with a U/D ratio of 0.9. Total Annualized Return (TAR) is 7.9%.

PAR (using Forecast Average—not High—P/E) is 3.8%, which is less than the current yield on T-bills. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 90 studies done in the past 90 days (my study and 17 other outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 7.0%, 7.1%, 14.8, 10.2, and 26.5%, respectively. I am equal on projected sales growth and lower on the others.

MS high / low EPS is $6.46 / $3.41 vs. my $5.79 / $4.54 (per share). My high EPS is lower due to a lower growth rate. I am perplexed by the $3.41. ’22 and ’21 annual EPS are both higher. I have to go back to Q3 2020 to find a lower quarterly [annualized] EPS number. I almost think this to be unreasonably low.

MS LSPF of $28.70 implies a Forecast Low P/E of 8.4 vs. the above-stated 10.2. MS LSPF is 17.5% less than the default $3.41/share * 10.2 = $34.78, which results in more conservative zoning. MS LSPF remains 5.5% greater than mine.

MOS backing the current study seems robust. My 7.9% is much lower than MS TAR of 20.9%.

I track a couple different valuation metrics. PEG is 1.7 based on my forward P/E (slightly overvalued) while Relative Value [(current P/E) / 5-year-mean average P/E] is slightly undervalued at 0.92 (M*).

I would look to re-evaluate OZK under $34/share.

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CHDN Stock Study (7-27-23)

Posted by on October 9, 2023 at 06:38 | Last modified: July 27, 2023 13:45

I recently did a stock study on Churchill Downs Inc. (CHDN) with a closing price of $131.58.

M* writes:

     > Churchill Downs Inc is a gaming entertainment, online wagering,
     > and racing company. It operates through three business segments:
     > Live and Historical Racing, TwinSpires, and Gaming. The Live and
     > Historical Racing segment includes live and historical pari-mutuel
     > racing. The TwinSpires segment includes the revenue and expenses
     > for online horse racing and the online and retail sports betting
     > and iGaming wagering business. The company generates more than
     > half of its revenue from the Gaming segment includes revenue from
     > casino properties and associated racetrack or jai alai facilities
     > which support the casino license as applicable.

Over the past decade, this medium-size company has grown sales and earnings at annualized rates of 7.4% and 20.6%. Lines are mostly up, straight, and narrowing except for sales dips in ’17 and ’20 along with EPS declines in ’14, ’19, and ’20. PTPM leads peer and industry averages while trending up from 11.0% in ’13 to 33.6% in ’22 with a last-5-year mean of 18.8%.

Also over the past decade, ROE is slightly better than peer and industry averages while trending up from 7.6% in ’13 to 69.7% in ’22 with a last-5-year mean of 40.8%. Debt-to-Capital is lower than peer and industry averages despite increasing from 34.4% in ’13 to 89.3% in ’22 with a last-5-year mean of 79.4%.

Interest Coverage is 5.0 and Quick Ratio is 0.7. Value Line assigns a B++ rating for Financial Strength.

With regard to sales growth:

I am forecasting below the range at 14.0% per year.

With regard to EPS growth:

I am forecasting below the long-term-estimate range (mean of five: 17.9%) at 10.0% per year. I am using ’22 EPS of $5.71/share as the initial value rather than ’23 Q1 EPS of $7.20 (annualized).

My Forecast High P/E is 21.0. Over the past decade, high P/E ranges from 21.8 in ’22 to 41.3 in ’15 and ’21 (upside outlier of 644 in ’20 excluded). The last-5-year mean (excluding ’20) is 31.8 and the last-5-year-mean average P/E is 26.2. I am forecasting below the entire range.

My Forecast Low P/E is 15.0. Over the past decade, low P/E ranges from 15.1 in ’22 to 31.7 in ’14 (upside outlier of 160 in ’20 excluded) with a last-5-year mean of 20.5. I am projecting below the entire range.

My Low Stock Price Forecast (LSPF) of $85.70 is the default value based on $5.71/share initial value. This is 34.8% less than the previous close and 3.9% less than the 52-week low.

Over the past decade, Payoff Ratio ranges from 6.3% in ’22 to 38.0% in ’14 (excluding upside outlier of 189% in ’20) with a last-5-year mean of 46.9%. I am forecasting conservatively below the range at 6.0%.

These inputs land CHDN in the HOLD zone with a U/D ratio of 1.3. Total Annualized Return (TAR) is 8.3%.

PAR (using Forecast Average—not High—P/E) of 5.0% is less than the current yield on T-bills. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 7 studies done in the past 90 days (five outliers including my own excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 13.1%, 2.1%, 31.6, 20.3, and 44.1%. My growth rates are higher while my other three inputs are lower. Value Line projects a future average annual P/E of 27.0, which is higher than MS (26.0) and much higher than me (18.0).

MS high / low EPS is $7.99 / $6.82 vs. my $9.20 / $5.71 (per share). My high EPS is higher due to a higher growth rate. My TAR is significantly lower than MS 15.3% [average], however.

MS LSPF of $106.00 implies a Forecast Low P/E of 15.5 vs. the above-stated 20.3. MS LSPF is 23.4% less than the default $6.82/share * 20.3 = $138.45, which results in more conservative zoning. MS LSPF remains 23.7% greater than mine.

Something isn’t right with the MS studies because the default MS LSPF is invalid (higher than previous close) on today’s date. These studies were all done in the past two weeks as the stock has fallen less than 3.0%. The LSPF cushion should be 15-20% (and sometimes much more). I would also take issue with multiple MS studies (done on 2 separate days) that have identical inputs including EPS growth of 2.1%: unreasonably low, in my opinion.

I deem MOS in the current study to be robust based on the long-term EPS estimates and Value Line’s future average P/E. I can’t take MS into account for this comparison because the sample size (four not including the duplicates) is too low.

Valuation metrics are mixed for the stock. PEG is 2.1 (Zacks) or 1.7 (using my projected P/E). While this implies overvalued, Relative Value [(current P/E) / 5-year-mean average P/E] at 0.70 (M*) disagrees. Kim Butcher’s “quick and dirty DCF” prices the stock at 20 * [$12.30 – ($0.75 + $2.45)] = $182.00 thereby suggesting the stock to be undervalued by 28.0%.

I would look to re-evaluate CHDN under $112/share.

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DAR Stock Study (8-17-23)

Posted by on October 6, 2023 at 07:00 | Last modified: August 17, 2023 11:44

I recently did a stock study on Darling Ingredients Inc. (DAR) with a closing price of $62.61.

M* writes:

     > Darling Ingredients Inc develops and manufactures sustainable ingredients
     > for customers in the pharmaceutical, food, pet food, fuel, and fertilizer
     > industries. It collects and transforms all aspects of animal by-product
     > streams into ingredients, including gelatin, fats, proteins, pet food
     > ingredients, fertilizers, and other specialty products. Also, the company
     > recovers and converts used cooking oil and bakery remnants into feed
     > and fuel ingredients. Darling has three primary business segments: feed
     > ingredients (the majority of revenue), food ingredients, and fuel
     > ingredients. It provides grease trap services for food businesses and sells
     > various equipment for collecting and delivering cooking oil. The company
     > derives the majority of its revenue from customers in North America.

Over the past decade, this medium-size company has grown sales and earnings at annualized rates of 8.5% and 27.5%. Lines are generally up and parallel with YOY declines for sales in ’15, ’18, and ’19 along with ’14, ’18, and ’20 for EPS. PTPM trails peer and industry averages despite increasing from 9.5% in ’13 to 13.7% in ’22 with a last-5-year mean of 11.1%.

Also over the past decade, ROE trails peer and industry averages despite increasing from 12.9% in ’13 to 20.1% in ’22 with a last-5-year mean of 13.6%. Debt-to-Capital is lower than peer and industry averages while ranging from 30.5% in ’13 to 52.4% in ’14 with a last-5-year mean of 40.2%.

Quick Ratio is 0.9 and Interest Coverage is 5.5. Value Line rates the company B++ for Financial Strength.

With regard to sales growth:

I am forecasting near the bottom of the range at 5.0% per year.

With regard to EPS growth:

My 2.0% per year forecast is at the bottom of the long-term estimate range. I consider this quite conservative as the mean and median of four estimates are 16.6% and 10.6%, respectively. Of the extremes, I am more puzzled by YF than CNN Business although I scratch my head at both. A larger estimate range also encourages me to lean more conservative due to perceived uncertainty.

My initial value is ’22 EPS of $4.49/share rather than 2023 Q2 EPS of $4.82 (annualized).

My Forecast High P/E is 19.0. Over the past decade, high P/E trends down from 17.7 in ’13 to 12.4 in ’22 with a last-5-year mean of 13.9. My forecast is near the bottom of the range [only ’19 (15.2) is lower].

My Forecast Low P/E is 11.0. Over the past decade, low P/E trends down from 17.7 in ’13 to 12.4 in ’22 with a last-5-year mean of 13.9. My forecast is near the bottom of the range [only ’20 (5.8) and ’19 (9.8) are lower].

My Low Stock Price Forecast (LSPF) of $49.40 is default based on $4.49/share initial value. This is 21.1% less than the previous closing price, 4.6% less than the 52-week low, and 11.3% less than the lowest price from 2020-1.

These inputs land DAR in the HOLD zone with a U/D ratio of 2.4. Total Annualized Return (TAR) is 8.5%.

PAR (using Forecast Average—not High—P/E) is 3.5%, which is less than the current yield on T-bills. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 184 studies done in the past 90 days (my study and 42 outliers excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 7.0%, 9.2%, 19.4, and 12.2. I am lower across the board. Value Line’s future average annual P/E of 18.0 is higher than both MS (15.8) and mine (15.0).

MS high / low EPS are $7.15 / $4.50 vs. my $4.96 / $4.49 (per share). My high EPS is much lower due to the very conservative EPS growth rate discussed above.

MS LSPF of $50.00 implies a Forecast Low P/E of 11.1 vs. the above-stated 12.2. MS LSPF is 8.9% less than the default $4.50/share * 12.2 = $54.90, which results in more conservative zoning. MS LSPF remains 1.2% greater than mine.

My TAR (over 15.0% preferred) is much less than the 16.3% from MS.

MOS backing the current study seems robust.

I track a few different valuation metrics. PEG per my projected P/E (using that very conservative EPS growth rate) is 6.4: substantially overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] per M* is significantly undervalued at 0.54. Kim Butcher’s “quick and dirty DCF” prices the stock at 11.5 * [$10.50 – ($1.00 + $5.00)] = $51.75 thereby suggesting the stock to be overvalued by 21.0% [I’m a bit puzzled by the $5.00 ’26-’28 CapEx, which is twice as much as anything seen historically or projected through ’24].

Based on this analysis, DAR is a BUY under $60/share. For me, TAR would still not qualify. With a Forecast High Price of $94.20 [in five years], I should look to invest up to $94.20 / 2 = $47.10. If you believe DAR capable of realizing greater than a 2.0% EPS growth rate, then this threshold can be relaxed.

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DIS Stock Study (7-26-23)

Posted by on October 5, 2023 at 06:40 | Last modified: July 26, 2023 18:55

I recently did a stock study on The Walt Disney Co. (DIS) with a closing price of $85.63.

M* writes:

     > Walt Disney owns the rights to some of the most globally recognized
     > characters, from Mickey Mouse to Luke Skywalker. These characters
     > and others are featured in several Disney theme parks around the
     > world. Disney makes live-action and animated films under studios
     > such as Pixar, Marvel, and Lucasfilm and also operates media
     > networks including ESPN and several TV production studios. Disney
     > shifted into a more streaming-focused firm by acquiring the
     > remainder of Hulu and launching Disney+ and ESPN+. Across its
     > streaming platforms, Disney had over 235 million subscribers as of
     > September 2022, up sharply from under 64 million in December 2019.

Over the past decade, this mega-size ( > $50B annual revenue) company has grown sales 6.0% per year. EPS has grown 12.7% per year from ’13-’19 before falling off the COVID-19 cliff in ’20. A full recovery is still years away, and for this reason the company does not pass visual inspection.

Pressing on to entertain [pun intended] the possibility of a smaller, more speculative holding, PTPM trails peer and industry [declining] averages with a last-5-year mean of 10.5%. ROE also trails peers and the industry with a last-5-year mean of 8.4%. Debt-to-Capital is lower than peer and industry averages with a last-5-year mean of 36.1%.

Interest Coverage is 4.6 and Quick Ratio 0.83. M* rates the company “Exemplary” for Capital Allocation while Value Line awards an A rating for Financial Strength.

With regard to sales growth:

I am forecasting below both long-term estimates at 4.0% per year.

With regard to EPS growth:

Given the large long-term-estimate range (11.9% to 37.7%), my initial thought was to forecast below the range at 11.0%.

The Zacks long-term estimate of 11.8% seems a bit quirky, though. They project 36.5% YOY for ’24 leaving only 20.0% further growth to be spread over the following four years.

Excluding the extremes results in a 4-long-term-estimate mean of 21.1%. I am truncating to get my forecast. I will use ’22 EPS of $1.75/share as the initial value rather than ’23 Q2 EPS of $2.25 (annualized).

My Forecast High P/E is 30.0. From ’13-’19, high P/E ranges from 14.1 (downside outlier in ’18) to 24.9 (’15). ’20 is NMF with negative earnings and for the last two years, high P/E is in triple digits. I expect this to normalize, which also suggests EPS should normalize [to be conservative, my forecast EPS growth over five years still ends up less than ’15 EPS]. My arbitrary forecast is near the top of my comfort zone.

My Forecast Low P/E is 15.0. From ’13-’19, low P/E ranges from 11.6 in ’18 to 16.0 (’15 and ’19). ’20 is NMF with negative earnings and for the last two years, low P/E has been ~106 and 51.6. Once again, I seem to have two distinct distributions from which to forecast. I am sticking with the former even though the latter will probably rule until EPS significantly rebounds toward pre-COVID levels. Only 13.8 in ’13, 14.8 in ’14, and 11.6 in ’18 are lower than my forecast.

I also need to determine what number to use as low EPS because [default] TTM seems unreasonably low. With the worst of COVID-19 seeming well behind us, zero-growth should not be based off a depressed value. Given my high EPS at $4.54/share, I will use $4.00 for low EPS, which represents zero-growth since 2014.

My Low Stock Price Forecast (LSPF) of $60.00 is the default value based on my Forecast Low P/E and low EPS. This is 29.9% less than the previous close and 28.7% less than the 52-week low.

These inputs land DIS in the HOLD zone with a U/D ratio of 2.0. Total Annualized Return (TAR) is 9.7%.

Dividend payout was suspended in ’21 (if not a bit earlier). While analysts expect it to be reinstated at some point, I am forecasting 0% Payout Ratio for now.

PAR (using Forecast Average—not High—P/E) is 3.6%, which is lower than the current yield on T-bills. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on the 9.7% instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 305 studies done in the past 90 days [121 outliers including my study excluded], averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 7.0%, 21.4%, 40.0, 20.0, and [interestingly] 24.1%. I am lower across the board. Value Line projects an average annual P/E of 19.0, which is less than both MS (30.0) and mine (22.5).

MS high / low EPS is $4.92 [median] / $2.20 vs. my $4.54 / $4.00 (per share). Mean MS high EPS is $6.08/share, which implies significant uncertainty. Looking back over my analysis, I empathize wholeheartedly.

MS LSPF of $71.80 implies a Forecast Low P/E of 32.6 vs. the above-stated 20.0. MS LSPF is 63.2% greater than the default value of $2.20/share * 20.0 = $44.00. I rarely see such an enormous discrepancy, which may be further evidence of confusion [i.e. MS low EPS needs to be greater].

I think MOS in the current study is at least moderate if not robust. Value Line and M* project high EPS of $8.65 and $4.61/share, respectively [based on this difference, one could even say the professionals seem confused]. Also, MS projects a mean total return of 19.2% compared to my 9.7%.

Valuation metrics are conflicted on the company. PEG ratio is 1.9 (Zacks) while Relative Value [(current P/E) / 5-year-mean average P/E] is 1.2 (M*). Both suggest the stock to be overvalued. According to Kim Butcher’s “quick and dirty DCF,” the stock should be priced at 15 * [$11.35 – ($0.00 + $2.50)] = $132.75 (i.e. stock undervalued by 35.0%).

I would look to re-evaluate DIS under $79/share.

There is certainly debate to be had over how to approach this analysis. Using ’22 or ’21 for low EPS essentially pushes the company back many years for what was clearly a COVID-driven decline. Suspending the dividend significantly impacts valuation as [Kim Butcher’s] Quick-and-Easy DCF decreases from $132.75 to $102.75/share when Value Line’s $2.00/share [projected future] dividend is included. Maybe a depressed low EPS is valid given the suspended dividend, but I still can’t reconcile pushing the company back more than a decade with a sub-$2.00/share EPS. Confusion rules the day, and nobody’s efforts—neither MS, professionals, nor myself—seem to be spared!

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YETI Stock Study (7-26-23)

Posted by on October 3, 2023 at 06:44 | Last modified: July 26, 2023 14:31

I recently did a stock study on YETI Holdings (YETI) with a closing price of $41.50.

M* writes:

     > YETI Holdings Inc is a designer, marketer, and distributor of premium
     > products for the outdoor and recreation market sold under the YETI
     > brand. The company offers products including coolers and equipment,
     > drinkware, and other accessories. Its trademark products include YETI,
     > Tundra, Hopper, YETI TANK, Rambler, Colster, Rambler Colster, Roadie,
     > and Wildly Stronger! Keep Ice Longer!, SideKick, FatWall, PermaFrost,
     > T-Rex, ColdLock, NeverFail, AnchorPoint, InterLock, BearFoot, Vortex,
     > DoubleHaul, LipGrip, Vortex, DryHide, ColdCell, HydroLock, Over-the-
     > Nose, and LOAD-AND-LOCK. The company distributes products through
     > wholesale channels and through direct-to-consumer, or DTC, channels.

This medium-size company has grown sales and earnings at annualized rates of 32.5% and 19.3% over the last 9 and 7 years, respectively [’13-’14 EPS excluded due to small fractional values that artificially inflate the growth rate]. The visual inspection is mediocre. Sales are up and straight except for spike in ’15 and decline in ’17. EPS are down in ’16, ’17, ’19, and ’22 [I am excluding the latter 57.1% YOY decline due to operational snafus including recall of defective items and inflation-induced demand destruction per Value Line]. PTPM has led peer and industry averages with a last-5-year mean of 12.3%.

ROE averages 47.6% over the last four years (too brief a history to compare peer and industry averages). Debt-to-Capital is declining since ’16 and falls below peer and industry averages in ’20 with a last-5-year mean of 50.9% [23.8% in ’22].

Value Line rates the company B+ for Financial Strength. Interest Coverage is 23.7 and Quick Ratio is 0.80.

With regard to sales growth:

I am forecasting conservatively toward the bottom of the range at 6.0% per year.

With regard to EPS growth:

I am forecasting below the long-term-estimate range (mean of five: 10.1%) at 8.0% per year. As the initial value, I will not use ’22 EPS of $1.03/share or Q1 ’23 EPS of $0.85/share (annualized) since those numbers are affected by product recall and production issues [strange that CFRA is the only data source projecting huge percentage increases relative to the depressed ’22 EPS]. Instead, I will use ’20 EPS of $1.77/share and extrapolate to $1.77/share * (1.08 ^ 5) = $2.60/share. I can almost ($2.56/share) get to this as a [website] workaround with a 20.0% growth rate and ’22 EPS.

My Forecast High P/E is 31.0. With the stock trading publicly since 2018, high P/E has increased since 31.1 in ’18 for a last-5-year mean of 53.0. The last-5-year-mean average P/E is 36.9. I am forecasting below the range.

My Forecast Low P/E is 16.0. Over the past five years, low P/E ranges from 8.6 (perhaps a downside outlier) in ’20 to 27.0 in ’22 with a last-5-year mean of 20.8. I am forecasting conservatively (18.0 in ’18 being the second-lowest value).

My Low Stock Price Forecast (LSPF) of $26.60 is the default value based on of $1.77/share. This is 35.9% less than the previous close and 4.7% less than the 52-week low.

These inputs land YETI in the HOLD zone with a U/D ratio of 2.6. Total Annualized Return (TAR) is 13.9%.

PAR (using Forecast Average—not High—P/E) of 7.3% is less than I prefer for a medium-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on TAR instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 58 studies done in the past 90 days (23 outliers and my study excluded), averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 10.3%, 13.0%, 31.1, and 17.4. I am lower across the board. Value Line projects a future average annual P/E of 20.0, which is lower than MS (24.3) and me (23.5).

MS high / low EPS is $1.82 / $0.85 vs. my $2.56 / $1.77 (per share). I think many studies are using ’22 for low EPS. Not only would I argue this to be unreasonable, it also obscures MOS.

MS LSPF of $17.70 implies a Forecast Low P/E of 20.8 vs. the above-stated 17.4. MS LSPF is 19.7% greater than the default value of $0.85/share * 17.4 = $14.79/share, which results in more aggressive zoning and suggests MS studies may not be comfortable with the $0.85. MS LSPF, which I believe to be unreasonably low, is 33.5% less than mine.

With regard to valuation metrics, PEG ratio is 2.0 per Zacks while Relative Value [(current P/E) / 5-year-mean average P/E] is 1.32 per M*. Both suggest the stock to be overvalued. According to Kim Butcher’s “quick and dirty DCF,” the stock should be priced at 17 * [$4.85 – ($0.00 + $0.70)] = $70.55 (i.e. stock undervalued by 41.0%).

I would look to re-evaluate PAR with the stock under $39/share.

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