Monday, August 10, 2015

Recent Buy IV



If you follow my blog, TROW appeared on my August Screen.




The screen essentially looks for companies that have their PEs below their median PE and yield above their median yields. Moreover, in this month my focus is on companies with wide moat.


T. Rowe Price (TROW) is an asset management company with more than $770 billion assets under management (AUM) from both individuals and institutions. It also provides investment-management and retirement account products and services.

You can check out my previous analysis below:
I’ve updated the criteria table with the new information - mostly from M* and S&P Capital IQ - where they’ve lowered the fair price estimate to $84 & $82 respectively. M* also upgraded their star system from 3 stars to 4 stars.


Below, you’ll see that they get almost a perfect score on my criteria list. (Yield is less than 3%).


TROW 8/2015
Area
Criteria
CheckList
Comment
Quality Company
Dividend Growth
>5 years
Yes
29 Years
ROE/Op Margin
Stable
Yes
Stable
Long term Avg Growth
Stable
Yes
Stable
FCF over Dividends
Yes
Yes
Stable
M* Moat
Wide Moat
Yes
Wide
M* & S&P
Credit Rating
> BBB+
Yes
No Debt
Cash to Debt & Interest Coverage, Debt to Equity
Cash Debt >1 or Interest > 5
Yes
No Debt
M* & S&P Stars
> 3 Stars for both
Yes
M* 4 Stars S&P CapIQ 4 Stars A- quality rating
Payout Ratio
<60%
Yes
41.00%
Dividend Growth
& Yield
Dividend Yield
>3%
No
2.70%
Dividend Growth
>5%
Yes
11.90%
Chowder
>12%
Yes
14.60%
Valuation
Yield/Avg Yield
>1.1
Yes
1.35
Dividend Yield Theory Mid Point
Below Mid Point
Yes
Mid Point 79.63
Low Point 46
P/E
Below Mid Point
Yes
Median 18.56 Current 16.17
DRRM
~10%
Yes
Assuming 6% growth; projected return=10.63%
M* Estimate
<M* est
Yes
M* 89.00
S&P Estimate
< S&P cap IQ est
Yes
S&P Cap IQ 84.00


My estimation of the fair price of TROW is around $80 (+/- $5). Therefore, I think TROW is trading at the low end of the fair price range.


Transaction Details


Security
Price
Quantity
Amount
TROW
75.89
20
1524.75


This will add an estimated $41.06 forward dividends per year.


Did you make any recent buys? What do you think of TROW?

D4s

4 comments:

  1. Looks like you've been extremely busy lately on the buy front. Congrats on adding a solid business in your portfolio.

    ReplyDelete
    Replies
    1. Thanks Tawcan.
      The market is very heated so this may be a crazy move. I started to change my criteria to buy companies at favorable PEs and yields. In the long term, I think I am fine, but short term, this can be a roller coaster ride.
      D4s

      Delete
  2. The metrics look great on this company. I have a small position and plan to keep dollar-cost-averaging into more.

    Thanks for sharing!

    ReplyDelete
  3. AAI, I like companies with no debt so TROW is a good choice. Concerning averaging down, I still have a couple more chances if the market goes south.
    Thanks for visiting
    D4s

    ReplyDelete