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CapitalSource (FRA:CAU) Graham Number : €8.66 (As of Dec. 2013)


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What is CapitalSource Graham Number?

Graham Number is a figure that measures a stock's fundamental value by taking into account the company's earnings per share and book value per share. The Graham number is the upper bound of the price range that a defensive investor should pay for the stock. According to the theory, any stock price below the Graham number is considered undervalued, and thus worth investing in.

As of today (2024-05-18), the stock price of CapitalSource is €11.13. CapitalSource's graham number for the quarter that ended in Dec. 2013 was €8.66. Therefore, CapitalSource's Price to Graham Number ratio for today is 1.29.

The historical rank and industry rank for CapitalSource's Graham Number or its related term are showing as below:

FRA:CAU's Price-to-Graham-Number is not ranked *
in the Credit Services industry.
Industry Median: 0.87
* Ranked among companies with meaningful Price-to-Graham-Number only.

Graham Number is a combination of asset valuation and earnings power valuation. It is a very conservative way of valuing a stock.


CapitalSource Graham Number Historical Data

The historical data trend for CapitalSource's Graham Number can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

CapitalSource Graham Number Chart

CapitalSource Annual Data
Trend Dec04 Dec05 Dec06 Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13
Graham Number
Get a 7-Day Free Trial Premium Member Only Premium Member Only - - - 13.89 8.55

CapitalSource Quarterly Data
Mar09 Jun09 Sep09 Dec09 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 Sep13 Dec13
Graham Number Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 14.11 14.28 7.72 8.32 8.66

Competitive Comparison of CapitalSource's Graham Number

For the Credit Services subindustry, CapitalSource's Price-to-Graham-Number, along with its competitors' market caps and Price-to-Graham-Number data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


CapitalSource's Price-to-Graham-Number Distribution in the Credit Services Industry

For the Credit Services industry and Financial Services sector, CapitalSource's Price-to-Graham-Number distribution charts can be found below:

* The bar in red indicates where CapitalSource's Price-to-Graham-Number falls into.



CapitalSource Graham Number Calculation

Graham Number is a concept based on Ben Graham's conservative valuation of companies.

CapitalSource's Graham Number for the fiscal year that ended in Dec. 2013 is calculated as

Graham Number
=sqrt of (22.5* Tangible Book per Share *EPS without NRI)
=sqrt of (22.5*5.427*0.599)
=8.55

CapitalSource's Graham Number for the quarter that ended in Dec. 2013 is calculated as

Graham Number
=sqrt of (22.5*Tangible Book per Share*EPS without NRI (TTM))
=sqrt of (22.5*5.427*0.614)
=8.66

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


CapitalSource  (FRA:CAU) Graham Number Explanation

Ben Graham actually did not publish a formula like this. But he wrote in The Intelligent Investor (1948 version) regarding to the criteria for purchases:

Current price should not be more than 15 times average earnings of the past three years.

Current price should not be more than 1.5 times the book value last reported. However, a multiplier of earnings below 15 could justify a correspondingly higher multiplier of assets. As a rule of thumb we suggest that the product of the multiplier times the ratio of price to book value should not exceed 22.5. (This figure corresponds to 15 times earnings and 1.5 times book value. It would admit an issue selling at only 9 times earnings and 2.5 times asset value, etc.)

Unlike valuation methods such as DCF or Discounted Earnings, the Graham number does not take growth into the valuation. Unlike the valuation methods based on book value alone, it takes into account the earnings power. Therefore, the Graham Number is a combination of asset valuation and earnings power valuation.

In general, the Graham number is a very conservative way of valuing a stock. It cannot be applied to companies with negative book values.

CapitalSource's Price to Graham number Ratio for today is calculated as

Price to Graham number=Share Price (Today)/Graham number (Q: Dec. 2013 )
=11.13/8.66
=1.29

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


Be Aware

Please keep these in mind:

1. Graham Number does not take growth into account. Therefore it underestimates the values of the companies that have good earnings growth. We feel that if the earnings per share grows more than 10% a year, Graham Number underestimates the value.
2. Graham Number punishes the companies that have temporarily low earnings. Therefore, an average of earnings makes more sense in the calculation of Graham Number.
3. Graham Numbers underestimates companies that are light with book.


CapitalSource Graham Number Related Terms

Thank you for viewing the detailed overview of CapitalSource's Graham Number provided by GuruFocus.com. Please click on the following links to see related term pages.


CapitalSource (FRA:CAU) Business Description

Traded in Other Exchanges
N/A
Address
CapitalSource Inc., incorporated in the state of Delaware. It is a commercial lender that provides financial products to middle market businesses. Through its wholly owned subsidiary, CapitalSource Bank, the Company provides depository products and services in southern and central California. Its main products include: Depository Products and Services; First Mortgage Loans; Senior Secured Asset-Based Loans; Senior Secured Cash Flow Loans; Direct Real Estate Investments; Term B, Second Lien and Mezzanine Loans; Equity Investments; and Residential Mortgage Investments. The Company currently operates as three reportable segments: Commercial Banking, Healthcare Net Lease and Residential Mortgage Investment. Its Commercial Banking segment comprises commercial lending and banking business activities; Healthcare Net Lease segment comprises its direct real estate investment business activities; and Residential Mortgage Investment segment comprises its residential mortgage investment and other investment activities formally engaged in to optimize its REIT qualification. Through Commercial Banking segment activities, the Company provides a range of financial products to middle market businesses and participates in broadly syndicated debt financings for larger businesses. Through Healthcare Net Lease segment activities, it invests in income-producing healthcare facilities, mainly long-term care facilities in the United States. The Company provides lease financing to skilled nursing facilities and, to a lesser extent, assisted living facilities, and long term acute care facilities. In its Commercial Banking and Healthcare Net Lease segments, the Company has three commercial lending businesses: Healthcare and Specialty Finance, which provides first mortgage loans, asset-based revolving lines of credit, and cash flow loans to healthcare businesses and, to a lesser extent, a range of other companies; Corporate Finance, which provides senior and subordinate loans through direct origination and participation in syndicated loan transactions; and Structured Finance, which engages in commercial and residential real estate finance and also provides asset-based lending to finance companies. The Company's markets are competitive and characterized by varying competitive factors. Some of its competitors have considerable market positions. The Company's bank operations are subject to regulation by federal and state regulatory agencies. This regulation is intended mainly for the protection of depositors and the deposit insurance fund, and secondarily for the stability of the U.S. banking system.

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