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UHS Stock Study (8-29-23)

Posted by on November 10, 2023 at 06:36 | Last modified: August 29, 2023 10:17

I recently did a stock study on Universal Health Services Inc. (UHS) with a closing price of $133.01.

M* writes:

     > Universal Health Services Inc owns and operates acute care hospitals,
     > behavior health centers, surgical hospitals, ambulatory surgery
     > centers, and radiation oncology centers. The firm operates in two key
     > segments: Acute Care Hospital Services and Behavioral Health Services.
     > The Acute Care Hospital Services segment includes the firm’s acute
     > care hospitals, surgical hospitals, and surgery and oncology centers.

Over the past decade, this large-size company has grown sales and earnings at annualized rates of 6.5% and 8.8%, respectively. Lines are mostly up, straight, and parallel except for an EPS decline in ’22. PTPM leads peer and industry averages despite trending down from 11.9% in ’13 to 6.5% in ’22 with a last-5-year mean of 9.3%.

Also over the past decade, ROE leads peer and industry averages despite trending down from 16.2% in ’13 to 11.0% in ’22 with a last-5-year mean of 14.0%. Debt-to-Capital is much lower than peer and industry averages, ranging from 39.9% in ’20 to 50.5% in ’13 with a last-5-year mean of 43.3%.

Interest Coverage is 6.1 and Quick Ratio is 1.1. Value Line gives a B+ rating for Financial Strength.

With regard to sales growth:

I am forecasting below the range at 4.0% per year.

With regard to EPS growth:

I am forecasting below the long-term-estimate range (mean of five: 9.9%) at 7.0% per year. I will use ’22 EPS of $9.14/share as the initial value rather than 2023 Q2 EPS of $9.63 (annualized).

My Forecast High P/E is 13.0. Over the past decade, high P/E ranges from 13.5 in ’20 to 22.0 in ’15 with a last-5-year mean of 15.8. The last-5-year-mean average P/E is 12.9. I am forecasting just above the latter and below the entire high P/E range.

My Forecast Low P/E is 9.0. Over the past decade, low P/E ranges from 5.9 in ’20 (possibly a downside outlier) to 15.0 in ’15 with a last-5-year mean of 10.1. I am forecasting near the bottom of the range (only ’20 is lower).

My Low Stock Price Forecast (LSPF) of $82.30 is default based on $9.14/share initial value. This is 38.1% less than the previous close and 20 cents off the 52-week low.

Over the past decade, Payout Ratio ranges from 1.8% in ’20 (downside outlier?) to 8.8% in ’22 with a last-5-year mean of 5.7%. I am forecasting near the bottom of the range at 3.0% (only ’20 is lower).

These inputs land UHS in the HOLD zone with a U/D ratio of 0.7. Total Annualized Return (TAR) is 5.1%.

PAR (using Forecast Average—not High—P/E) is 1.7%, 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 but that, too, is less than the risk-free rate.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on only 37 studies (my study and 16 other outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 6.0%, 8.0%, 16.1, 11.0, and 5.5%. I am lower across the board. Value Line’s projected average annual P/E of 15.0 is higher than MS (13.6) and mine (11.0).

MS high / low EPS are $14.06 / $9.63 vs. my $12.82 / $9.14 (per share). High EPS are both lower than Value Line at $15.40.

MS LSPF of $67.10 implies a Forecast Low P/E of 9.8, which is less than the above-stated 11.0. MS LSPF is 10.8% less than the default $9.63/share * 11.0 = $105.93, which results in more conservative zoning. MS LSPF remains 14.8% above mine.

My TAR (over 15.0% preferred) is much less than the 11.9% from MS.

Despite the small MS sample size, MOS backing the current study seems robust.

I track a few different valuation metrics. PEG is 1.3 (fairly valued) and 1.8 (slightly overvalued) per Zacks and my projected P/E, respectively. Relative Value [(current P/E) / 5-year-mean average P/E] per M* is slightly overvalued at 1.1. Kim Butcher’s “quick and dirty DCF” prices the stock at 9.0 * [$15.40 – ($2.00 + $11.00)] = $21.60, which seems like NMF. The high CapEx may be causing a problem.

I would look to re-evaluate the stock under $103. With a forecast high price of $166.70, I would estimate TAR to meet my criterion at or below $83.35/share.

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AMT Stock Study (8-24-23)

Posted by on November 8, 2023 at 06:25 | Last modified: August 24, 2023 14:36

I recently did a stock study on American Tower Corp. (AMT) with a closing price of $177.84.

M* writes:

     > American Tower [a REIT] owns and operates more than 220,000
     > cell towers throughout the U.S., Asia, Latin America, Europe, and
     > Africa. It also owns and/or operates 25 data centers in eight
     > U.S. markets after acquiring CoreSite. On its towers, the company
     > has a very concentrated customer base, with most revenue in each
     > market being generated by just the top few mobile carriers. The
     > company operates more than 40,000 towers in the U.S., which
     > accounted for roughly half of the company’s total revenue in 2022.
     > Outside the U.S., American Tower operates over 75,000 towers in
     > India, almost 50,000 towers in Latin America (dominated by Brazil),
     > 30,000 towers in Europe, and nearly 25,000 towers in Africa.

AMT is organized as a REIT, which are not recommended as club investments for reasons explained here. I did not realize this recently in selecting CCI to study. Having done CCI, I am interested to study AMT to compare and contrast the two.

Over the past decade, this large-size company has grown sales and earnings at annualized rates of 12.7% and 15.5%, respectively. Lines are mostly up, straight, and parallel except for EPS declines in ’15, ’20, and ’22. PTPM leads peer and industry averages while ranging from 15.5% in ’18 to 30.2% in ’21 with a last-5-year mean of 21.9%.

Also over the past decade, ROE leads peer and industry averages while trending up from 15.4% in ’13 to 28.3% in ’22 with a last-5-year mean of 36.0%. Debt-to-Capital is higher than peer and industry averages while increasing from 80.4% in ’13 to 89.4% in ’22 with a last-5-year mean of 87.3%.

Quick Ratio is 0.5 and Interest Coverage is 1.7. Value Line gives an “A” rating for Financial Strength while M* gives a “Standard” rating for Capital Allocation.

I profess ignorance with regard to REITs. I’m not sure if the requirement to pay out 90% or more of their taxable profits to shareholders in the form of dividends affects ratios like Debt-to-Equity, Quick, or Interest Coverage. All three of these seem undesirable to me, but Value Line’s “A” rating along with M* comments suggest them to be no big deal.

With regard to sales growth:

I am forecasting toward the lower end of the range at 6.0% per year.

With regard to EPS growth:

I am forecasting below the long-term-estimate range (mean of six: 11.9%). Given the 32.5% YOY EPS decline in ’22, I will use that $3.82/share as the initial value rather than ’23 Q2 EPS of $2.07 (annualized).

My Forecast High P/E is 45.0. Over the past decade, high P/E ranges from 53.2 in ’14 to 76.6 in ’22 with a last-5-year mean of 64.0. The last-5-year-mean average P/E is 53.1. I am forecasting below the range [and above my personal comfort zone but REITs may have high P/E’s for reasons unbeknownst to me; I noticed something similar with CCI].

My Forecast Low P/E is 35.0. Over the past decade, low P/E ranges from 34.9 in ’21 to 61.6 in ’15 with a last-5-year mean of 42.2. I am forecasting near the bottom of the range (only ’21 is lower).

My Low Stock Price Forecast (LSPF) of $133.70 is default based on $3.82/share initial value. This is 24.8% less than the previous close and 22.5% less than the 52-week low.

Over the past decade, Payout Ratio ranges from 70.0% in ’14 to 153% in ’22 with a last-5-year mean of 114%. My 70.0% forecast is bottom of the range.

These inputs land AMT in the HOLD zone with a U/D ratio of 1.3. Total Annualized Return (TAR) is 7.2%.

PAR (using Forecast Average—not High—P/E) is 4.9%, 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 only 67 studies (my study and 25 outliers excluded) over the past 90 days, 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%, 10.0%, 56.4, 41.0, and 102%. I am lower across the board. Value Line has NMF for projected average annual P/E [this may or may not have something to do with being a REIT].

MS high / low EPS are $5.59 / $2.84 vs. my $5.11 / $3.82 (per share). My high EPS is lower due to a lower growth rate. Both mine and MS are conservative compared to M* and Value Lines’ projected [high] EPS of $8.38 and $6.00/share, respectively.

MS LSPF of $126.00 implies a Forecast Low P/E of 44.4 as opposed to the above-stated 41.0. MS LSPF is 8.2% greater than the default $2.84/share * 41.0 = $116.44, which results in more aggressive zoning. MS LSPF is 5.8% less than mine, however.

My TAR (over 15.0% preferred) is much less than the 12.1% from MS.

MOS backing the current study seems robust.

I track a few different valuation metrics. PEG is 1.3 per Zacks (fairly valued). Relative Value per M* is significantly overvalued at 1.6 [(current P/E) / 5-year-mean average P/E]. Kim Butcher’s “quick and dirty DCF”—25.0 * [$12.10 – ($8.36 + $3.90)]—prices the stock at -$4.00, which is NMF and clearly a result of the dividend payout [characteristic of REITs] being so high.

AMT is a BUY under $157. To satisfy my minimum required TAR, I probably need to see the stock at $115 or less given a forecast high price of $230. With the stock already near the 52-week low, this strikes me as unusual.

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CCI Stock Study (8-23-23)

Posted by on November 6, 2023 at 06:40 | Last modified: August 23, 2023 14:48

I recently did a stock study on Crown Castle International (CCI) with a closing price of $98.71.

M* writes:

     > Crown Castle International owns and leases roughly 40,000 cell
     > towers in the United States. It also owns more than 85,000 route
     > miles of fiber. It leases space on its towers to wireless service
     > providers, which install equipment on the towers to support their
     > wireless networks. The company’s fiber is primarily leased by
     > wireless service providers to set up small-cell network
     > infrastructure and by enterprises for their internal connection
     > needs. Crown Castle’s towers and fiber are predominantly located
     > in the largest U.S. cities. The company has a very concentrated
     > customer base, with more than 70% of its revenue coming from
     > the big three U.S. mobile carriers. Crown Castle operates as a
     > real estate investment trust.

Yes, CCI is organized as a REIT. I did not realize this initially because it’s not the sort of REIT with which I am familiar [towers and fiber, although Real Estate (land) is necessary for the towers and/or fiber to be placed]. REITs are not recommended as club investments for reasons explained here.

This medium-size company has grown sales and earnings at annualized rates of 9.2% and 17.1% over the last 9 years (’13 excluded due to fractional EPS that would artificially inflate the rate to 24.0%). Lines are mostly up, straight, and parallel except for a sales dip in ’15 and EPS decline in ’16. PTPM slightly trails the industry and leads peer averages while trending up from 10.5% in ’14 to 25.2% in ’22 with a last-5-year mean of 17.8%.

Also since ’14, ROE lags peer and industry averages while increasing from 5.1% to 21.8% in ’22 with a last-5-year mean of 11.4%. Debt-to-Capital is less than peer and industry averages despite increasing from 64.0% in ’14 to 79.0% in ’22 with a last-5-year mean of 68.9%.

Quick Ratio is 0.3 and Interest Coverage is 3.3. Value Line gives an A rating for Financial Strength while M* gives a “Poor” rating for Capital Allocation for reasons other than the following:

     > The significant spending has left Crown’s balance sheet stretched,
     > although the steady tower business alleviates concerns that the
     > firm is overleveraged. Net debt/EBITDA has consistently been
     > between 5.0 and 6.0 for several years, which although high
     > relative to the market is not unusual for a tower REIT. We expect
     > the leverage ratio to stay above 5 but don’t foresee any
     > difficulty with covenants, interest payments, or debt maturities.

I will profess personal ignorance with regard to REITs. This is the first time I have studied one and I’m not sure if the requirement to pay out 90% or more of their taxable profits to shareholders in the form of dividends affects ratios like Debt-to-Equity, Current/Quick, or Interest Coverage. All three ratios seem borderline undesirable to me, but Value Line’s A rating along with M* comments suggest them to be no big deal.

With regard to sales growth:

I am forecasting toward the lower end of the range at 1.0% contraction per year.

With regard to EPS growth:

I am forecasting below the long-term-estimate range (mean and median of five: 1.1%) at 1.0% contraction per year.

Given negative growth, I need to ensure high EPS exceeds low EPS. For the former, I will use ’22 EPS of $3.86/share as initial value rather than 2023 Q2 EPS of $3.94 (annualized). For low EPS, I will use $2.67/share from 2021 (arbitrary).

My Forecast High P/E is 45.0. Since 2014, high P/E ranges from 54.1 in ’22 to 114 in ’17 with a last-5-year mean of 76.1. The last-5-year-mean average P/E is 64.7. I am forecasting below the range [and above my personal comfort zone but—see my comment above about REIT ignorance].

My Forecast Low P/E is 25.0. Since 2014, low P/E ranges from 31.5 in ’22 to 83.1 in ’17 with a last-5-year mean of 53.4. I am forecasting below the range.

My Low Stock Price Forecast (LSPF) of $66.80 is default based on $2.67/share initial value. This is 32.3% less than the previous close and 31.8% less than the 52-week low.

Since 2014, Payout Ratio ranges from 155% in ’22 to 386% in ’17 with a last-5-year mean of 229%. I am forecasting below the range at 150%.

These inputs land CCI in the HOLD zone with a U/D ratio of 2.0. Total Annualized Return (TAR) is 14.1%.

PAR (using Forecast Average—not High—P/E) is 9.6%, which is less than I seek 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 69 studies (my study and 29 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 4.8%, 7.8%, 47.8, 28.0, and 229%. I am lower across the board. Value Line has NMF for projected average annual P/E (see my fifth paragraph above professing ignorance of how ratios may differentially affect REIT treatment).

MS high / low EPS are $5.65 / $3.42 vs. my $3.67 / $2.67 (per share). My EPS range is much lower. Value Line’s projected [high] EPS is also higher than mine at $4.50/share.

MS LSPF of $94.90 implies a Forecast Low P/E of 27.7: consistent with the above-stated 28.0. MS LSPF is also 42.1% greater than mine, which results in much more aggressive zoning.

My TAR (over 15.0% preferred) is less than the 25.8% from MS.

MOS backing the current study seems robust.

I track a few different valuation metrics. Per my data, PEG is not meaningful because of the -1.0% growth rate. Per Zacks, PEG is NMF. Relative Value per M* [(current P/E) / 5-year-mean average P/E] is significantly undervalued at 0.4. Kim Butcher’s “quick and dirty DCF” prices the stock at 25.0 * [$9.30 – ($7.55 + $3.35)] = -$40.00. A negative stock price is NMF and here, it’s clearly because the dividend payout [characteristic of REITs] is so high.

CCI is a BUY under $91. With a forecast high price of $165.20, I would estimate TAR to qualify at or below $82.60/share.

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UI Stock Study (8-22-23)

Posted by on November 4, 2023 at 06:56 | Last modified: August 22, 2023 12:41

I recently did a stock study on Ubiquiti Inc. (UI) with a closing price of $156.97.

M* writes:

     > Ubiquiti Inc is a wireless and wireline network equipment provider
     > for small Internet service providers and small- and midsize-
     > business integrators. Its product is based on two primary categories
     > namely Service Provider Technology and Enterprise Technology. The
     > company generates maximum revenue from Enterprise Technology.
     > Geographically, it derives a majority of revenue from North America
     > and also has a presence in Europe, the Middle East and Africa; Asia
     > Pacific and South America.

Over the past decade, this medium-size company has grown sales and earnings at annualized rates of 19.2% and 25.2%, respectively. Lines are mostly up and parallel with a sales decline in ’22 and EPS declines in ’15, ’18, and ’22. PTPM leads industry and peer averages while ranging from 24.5% in ’15 to 38.3% in ’21 with a last-5-year mean of 32.7%.

Also over the past decade, ROE is above peer and industry averages until ’20 when share repurchases cause a stockholders’ deficit. The last-5-year mean is -200%. Debt-to-Capital is mostly less than peer and industry averages until ’18 and ’19, respectively, after which it soars into triple digit percentages for a last-5-year mean of 120.4%.

Interest Coverage is 11.1, Current Ratio is 3.2, and Quick Ratio is 0.8. Value Line gives a B+ rating for Financial Strength.

With regard to sales growth:

I am forecasting below the range at 9.0% per year.

With regard to EPS growth:

I am forecasting toward the bottom of the long-term-estimate range (mean of three: 21.2%) at 12.0% per year. I question the CNN Business long-term estimate, but even without I am a few percentage points below the remaining arithmetic mean. I will use ’22 EPS of $6.13/share as the initial value rather than 2023 Q3 (FY ends Jun 30) EPS of $6.56 (annualized).

Over the past decade, high P/E trends up from 23.5 in ’13 to 56.2 in ’22 with a last-5-year mean of 41.3 and a last-10-year median P/E of 34.5. The last-5-year-mean average P/E is 31.3. I am forecasting toward the bottom of the range [only ’16 (16.6) and ’17 (20.9) are lower].

My Forecast Low P/E is 17.0. Over the past decade, low P/E trends up from 8.8 in ’13 to 35.6 in ’22 with a last-5-year mean of 21.2. The last-10-year median is 13.7. For me, this is a relatively aggressive forecast.

My Low Stock Price Forecast (LSPF) of $104.20 is default based on $6.13/share initial value. This is 33.6% less than the previous close, 32.9% less than the 52-week low, and 30.9% less than the 2021 low.

Over the past decade, the lowest nonzero Payout Ratio is 11.7% in ’15 and the last-5-year mean is 24.6%. I am forecasting below the range at 11.0%.

These inputs land UI in the HOLD zone with a U/D ratio of 1.7. Total Annualized Return (TAR) is 10.1%.

PAR (using Forecast Average—not High—P/E) is 7.1%, which is less than I seek 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 24 studies (my study and 12 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 13.9%, 14.6%, 30.0, 16.1, and 20.1%. I am lower on everything but Forecast Low P/E. Value Line’s projected average annual P/E of 27.0 is higher than MS (23.1) and mine (20.0).

MS high / low EPS are $12.42 / $6.43 vs. my $10.80 / $6.13 (per share). My high EPS is lower due to a lower EPS growth rate. As another data point, Value Line—the lowest of three long-term estimates—projects a high P/E of $10.00/share (with a future P/E range that is 35.0% higher than mine).

MS LSPF of $134.70 implies a Forecast Low P/E of 20.9, which is higher than the above-stated 16.1. MS LSPF is 30.1% greater than the default $6.43/share * 16.1 = $103.52, which results in substantially more aggressive zoning [this is when the manual overrides get me concerned]. MS LSPF is also 29.3% greater than mine.

My TAR (over 15.0% preferred) is less than the 19.8% from MS.

Despite the small MS sample size, MOS backing the current study seems robust.

I track a few different valuation metrics. PEG per my projected P/E is overvalued at 1.8. Relative Value per M* is undervalued at 0.8 [(current P/E) / 5-year-mean average P/E]. Kim Butcher’s “quick and dirty DCF” has the stock overvalued by 15.9% with a fair value of 22.0 * [$10.45 – ($4.00 + $0.45)] = $132.00.

UI is a BUY under $140/share. With a forecast high price of $248.50, I would estimate TAR to qualify at or below $124.

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SBUX Stock Study (8-21-23)

Posted by on November 2, 2023 at 06:51 | Last modified: August 21, 2023 11:38

I recently did a stock study on Starbucks Corp. (SBUX) with a closing price of $97.23. My original study is here.

Value Line writes:

     > Starbucks Corp. is the leading retailer, roaster, and brand of
     > specialty coffee in the world. Sells whole bean coffees through
     > its specialty sales group, mail-order business, supermarkets, and
     > online. Had 10,216 company-owned stores in the Americas and
     > 8,037 elsewhere. Also had 17,458 licensed stores worldwide (as
     > of 10/2/22). Food & beverage: 96% of ’22 total; CPG and other,
     > 4%. Has joint ventures with Pepsi-Cola and Dreyer’s to develop
     > bottled coffee drinks and ice creams, respectively.

This large-size company has grown sales and earnings at annualized rates of 8.0% and 10.9% over the last 10 and 9 years, respectively. The latter excludes ’13 (fractional $0.01/share artificially inflates historical growth rate) and ’20 (including this downside outlier results in 6.1% historical growth rate). Lines are mostly up, straight, and parallel except for a sales decline in ’20 and EPS declines in ’19 and ’22. PTPM leads the industry but trails peer averages while trending down from 19.2% in ’14 to 13.1% in ’22 with a last-5-year mean of 17.9%.

The last-5-year mean ROE is -16.7%. ROE in 2021 is -61.4%. This is not atypical as the industry mean has been negative four out of the last 10 years.

Debt-to-Capital increases from 22.5% in ’13 to 41.9% in ’17: below peer and industry averages. This jumps to 89.0% in ’18 and is in triple-digit percentages and above peer and industry averages since ’19.

Interest Coverage is 10.2 and Quick Ratio is 0.52. M* gives an “Exemplary” rating for Capital Allocation and Value Line gives an A++ rating for Financial Strength.

In looking at the 2021 balance sheet, long-term debt, operating lease liability, and deferred revenue are the largest contributions. As discussed here, the latter is a deal made in late 2018 that allows Nestle to market, sell and distribute SBUX consumer packaged goods. SBUX was paid an upfront royalty of $6.7B to be recorded in equal amounts as “other revenue” x40 years. This means the deferred revenue liability will decrease by ~$175M per year until ~2061. The liability is really of no concern as long as SBUX stays in business; without this liability, shareholders’ equity would be positive.

With regard to sales growth:

I am forecasting toward the lower end of the range at 9.0% per year.

With regard to EPS growth:

I am forecasting below the long-term-estimate range (mean of six: 16.9%) at 14.0% per year. I will use ’22 EPS of $2.83/share as the initial value rather than 2023 Q3 EPS of $3.28 (annualized).

My Forecast High P/E is 28.0. Over the past decade, high P/E ranges from 30.4 in ’14 to 41.6 in ’22 (upside outliers of 7785 in ’13 and 119 in ’20 excluded) with a last-5-year mean of 32.6 (downside outlier of 19.1 in ’18 excluded). The last-5-year-mean average P/E is 26.5. I am forecasting above the latter but below the range.

My Forecast Low P/E is 20.0. Over the past decade, low P/E ranges from 14.6 in ’18 (possibly a downside outlier) to 27.7 in ’16 (excluding upside outliers 4427 in ’13 and 63.3 in ’20) with a last-5-year mean of 20.4. The last-10-year median is 24.6. I am forecasting toward the lower end of the range [’18, ’19 (18.7), and ’15 (19.4) are lower].

My Low Stock Price Forecast (LSPF) of $56.60 is default based on $2.83/share initial value. This is 41.8% less than the previous close and 30.7% less than the 52-week low.

Over the past decade, the lowest Payout Ratio is 35.2% in ’15 and the last-5-year mean is 52.1% (excluding the upside outlier of 208% in ’20). I am estimating below the range at 35.0%.

These inputs land SBUX in the HOLD zone with a U/D ratio of 1.4. Total Annualized Return (TAR) is 10.7%.

PAR (using Forecast Average—not High—P/E) is 7.6%, which is less than I seek for a large-size company. If a healthy margin of safety (MOS) anchors this study, then I can proceed based on the total annualized return (TAR) of 10.7% instead.

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 330 studies (my study and 103 outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, Forecast Low P/E, and Payout Ratio are 9.9%, 12.9%, 32.0, 21.0, and 62.4%. I am lower on everything but EPS growth rate. Value Line’s projected average annual P/E of 30.0 is higher than MS (26.5) and mine (24.0).

MS high / low EPS are $5.69 / $3.01 vs. my $5.45 / $2.83 (per share). My high EPS is lower despite a higher EPS growth rate.

MS LSPF of $67.10 implies a Forecast Low P/E of 22.3, which is higher than the above-stated 21.0. MS LSPF is 6.2% greater than the default $3.01/share * 21.0 = $63.21, which results in more aggressive zoning. MS LSPF is 18.6% greater than mine.

My TAR (over 15.0% preferred) is less than the 14.6% from MS.

MOS backing the current study seems robust.

I track a few different valuation metrics. PEG is 1.7 and 1.9 per Zacks and my projected P/E, respectively: both slightly overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] per M* is overvalued at 1.1. Kim Butcher’s “quick and dirty DCF” prices the stock at 22.0 * [$7.65 – ($3.00 + $0.00)] = $102.30, which suggests the stock to be 5.0% undervalued.

I would look to re-evaluate the stock under $80. With a forecast high price of $152.60, I would estimate TAR to qualify at or below $76.30/share.

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