Benjamin Graham Model. Valuation Guide for the Dow Jones Industrial Average (Third Quarter 2018)

Transcription

1 Benjamin Graham Model Valuation Guide for the Dow Jones Industrial Average (Third Quarter 8)

2 Disclaimers All information presented herein is intended as a guide and reference to serve as a source for better understanding the economic fundamentals of businesses. Ratings should not be viewed as direct investment advice to you to purchase, hold, or sell the stock of any of the companies discussed. SEENSCO is not your advisor and does not provide legal, accounting or investment advice. Information presented can be treated only as one piece of a larger body of knowledge consulted by investors to reach their own conclusions regarding the attractiveness of a company. All individuals are ultimately responsible for their own finances and their own investment decisions. By not acting as your advisor, it would be impossible for SEENSCO, its directors, managers, or staff to assess the suitability of any investment within the context of your personal situation that is, in relation to your liquidity needs, time horizon, levels of risk tolerance, and return objectives. This material is not intended as an offer or solicitation to purchase or sell any security. BUY, ACCUMULATE,, REDUCE, and SELL ratings mentioned herein represent general statements that may not be suitable for all investors. Strategies and opinions expressed are given in good faith, are subject to change without notice, and are only current as of their issuance date. Prices, values, or income from any security or investments mentioned in this report may fall against the interest of the investor and the investor might get back less than the amount invested. When an investment is described as being likely to outperform, please note that the return the investor might receive from such an investment might fluctuate. SEENSCO, as well as its directors, officers and employees do not guarantee the accuracy, completeness, timeliness or adequacy of this material, neither shall it, its directors, officers or employees have any liability for any errors or omissions therein, regardless of the cause, or for any results obtained from the use of information provided by SEENSCO. At no time shall SEENSCO be liable to any party for any direct, indirect, incidental, compensatory, punitive damages, costs, expenses, or losses (including, without limitation, lost income, profits or opportunity costs) in connection with the use of any information provided by SEENSCO.

3 Methodology Introduction The Graham Model is an investment approach that is commonly used today by individual investors and portfolio managers. The approach was originally formulated over 6 years ago with the publishing of Graham and Dodd s college textbook Security Analysis. Benjamin Graham is properly credited as one of the fathers of value investing. And reviewing the philosophy of the originators can often prove enlightening. Graham s approach focuses on the concept of an intrinsic value that is justified by a firm s assets, earnings, dividends, and/or financial strength. Focusing on this value, Graham argued, would prevent investors from being misled by the misjudgments often made by the market during periods of deep pessimism or euphoria. Graham outlined his philosophy for the lay investor in his book The Intelligent Investor, first written in 97 and updated periodically (by Graham); it is his classic text that is the primary source for this model. The Investment Philosophy Graham believed that it was difficult for most investors to beat the market, that is, to find stocks that would do much better than the overall long-term market average. Stocks that would do better than average over the long term were those with greater growth potential and stronger competitive positions. He stressed that the difficulty was in finding these stocks before such attributes were impounded into the stocks' prices. The problem for investors, he reasoned, was twofold. First, stocks with obvious growth prospects benefiting from some megatrend would frequently not translate into extra gain for investor because the growth would be incorporated into a higher multiple, and second, that investors were frequently incorporate in their growth forecasts. Graham further felt that these risks were compounded by the psychology of the stock market, where the tides of pessimism and euphoria which sweep the market could mislead investors into overvaluing or undervaluing a stock. In short, Graham believed that over the long term most investors could only expect an average return, but that they face an added risk of underperformance due to misjudgment. Instead of seeking a way to produce above-average returns, Graham proposed a method to reduce the risk of misjudgment. He suggested that investors first determine an intrinsic value for a stock that is independent of the market. Graham felt that a firm s tangible assets were a particularly important component; other factors included earnings, dividends, financial strength, and stability. Graham felt investors should limit their purchases to stocks selling not far above this value, while stocks selling below their intrinsic value would offer an even better margin of safety to investors. Graham felt investors should view themselves as the owners of a business, with the goal of buying a sound and expanding business at a rational price, regardless of what the stock market might say. And a successful investment, he said, is a result of the dividends produced and the long-range trend of the average market value of the stock. Investor Suitability Graham suggested that individual investors fall into two camps: defensive investors and aggressive or enterprising investors. These two groups are distinguished not by the amount of risk they are willing to take, but rather by the amount of intelligent effort they are willing and able to bring to bear on the task. Thus, for instance, he included in the defensive investor category professionals (his example a doctor) unable to devote much time to the process and young investors (his example a sharp young executive interested in finance) who are as-yet unfamiliar and inexperienced with investing. Graham felt that the defensive investor should confine his holdings to the shares of important companies with a long record of profitable operations and that are in strong financial condition. By important, he meant one of substantial size and a leading position in the industry, ranking among the first quarter or first third in size within its industry group. Aggressive investors, Graham felt, could expand their universe substantially, but purchases should be attractively priced as established by intelligent analysis. He also suggested that aggressive investors avoid new issues. Quantity and Quality Screens for Defensive Investors The stock selection program employed here is undertaken from the perspective of a value investor. Graham suggested that defensive investors buy issues selling at prices that are reasonably close to their per share tangible asset (book) value (total assets excluding intangible assets such as goodwill and patents, less all liabilities), and no more than one-third above that figure. He cautioned, however, that this criterion alone does not indicate a sound investment. In addition, the company should be in a sufficiently strong financial position, with the prospect that its earnings will at least be maintained over the years, and its stock must be selling at an acceptable P/E multiple. In The Intelligent Investor, Graham laid out a specific set of rules for defensive investors:. Adequate size: Exclude small companies with less than $ million of annual sales. Graham specified these levels in 97, over years ago. Obviously, firms have grown. We modify this criteria and require sales of $ billion. In addition to a sales-based requirement we have added the requirement that a company have a capitalization level of $ billion. These companies typically have leading market position and are less sensitive to economic shocks.. Strong financial condition: Current assets (cash, accounts receivable and inventory) should be at least twice current liabilities (short-term debt), and long-term debt should not exceed the net current assets (working capital, or current assets less current liabilities.. Earnings stability: Positive earnings for at least the last years.. Earnings growth: Minimum increase of at least one-third in earnings per share in the past years (a.9% average annual growth rate over years). 5. Strong dividend record: Growing and uninterrupted dividend payments for at least the past years. 6. Moderate price-to-earnings ratio: The current price should not be more than 5-times average earnings for the past three years. We modify this and make the determination a function of the current interest rate environment. In particular we require that the current price be no more than k-times earnings for the past years, where k is equal to divided by the AAA corporate bond rate. 7. Moderate price-to-book-value ratio: The current price should not be more than ½ times the last reported book value. 8. Acceptable Graham number: Graham noted that a price-earnings ratio below 5 (or "k" based on our modified formulation) could justify a higher price-to-book-value ratio. As a rule of thumb, he proposed that the product of two (otherwise known as the "Graham Number") should not exceed.5 (or.5 x "k"). For instance, an issue selling at.5 times book value could be justified if it were selling at times earnings (.5 =.5). Graham felt these firms fulfilled his criteria well for qualifying investments. Graham certainly intended to take a more pragmatic view toward security selection and recommended that most investors stay away from growth stocks, which he viewed as more likely to be overvalued and risky, and in today s environment, these criteria will continue to exclude these kinds of firms. However, investors should be aware of this tendency when employing this approach. For enterprising investors Graham modified the screening criteria slightly. Among his suggested possibilities Graham suggested that investors could consider smaller firms and firms with smaller current ratios. He also relaxed some of the assumptions around dividends and expected only minor payment.

4 Methodology Continued Graham suggested that enterprising investors could accept P/B ratios of less than % of net tangible assets. Graham did warn against being fooled by high growth companies with high price-earnings ratios. As such he suggested a requirement that the price be low in relation to past average earnings. Graham further suggested that aggressive investors look for reasonable stability of earnings over the past decade, with no years of negative earnings, and enough financial size and strength that would allow the firm to survive any future setbacks. Rules-Based Investing Graham explains that all investors need some understanding of business and economic conditions so as to be able to form some opinion concerning the prospects of a firm or industry. But it is important to note that Graham was generally distrustful of subjective factors and felt that such factors could mislead investors as much as help them. Thus, he preferred basing decisions on quantitative, rather than qualitative, factors. He noted in his book that an investor s operations for profit should be based not on optimism but on arithmetic. Pricing a Company's Stock This valuation model is a method of determining buying and selling points in a company's stock through the determination of a central value as well as an upper and lower valuation range based on historical interest rate and fundamental data. Graham estimated the central value, or fair value, of a stock by capitalizing the average earnings per share over the previous years by an equilibrium multiplier equal to divided by k-times the yield on AAA-rated corporate bonds. Graham then established lower and upper price bounds equal to 8% and % of the central value estimate respectively. A summary of the valuation formula is provided below: Graham explained that when a stock's market price trended near or exceeded the upper price bound (that is, % of its central value), then investors could expect the market to fall or move sideways until it was back within the central value range. At these time, investors should consider shrinking their positions or taking some profits. Similarly, Graham explained that when the market price trended near or fell below the lower price bound (that is, 8% of its central value), then investors could expect the price to rise until it was back within the central value range. At these time, value investors should consider growing their positions. It is important to note that in Graham s original model α= and k=. That is, he capitalized a firm's year average earnings at divided by twice the AAA-rated corporate bond yield. While this approach is intuitively sound, based on our experience it does not always yield the most satisfactory results. To determine the values of "α" of "k" for our model results, we rely on an optimization procedure that varies the parameter value "k" one-by-one for each of the current year, -year, 5-year and -year moving average EPS series until "k" converges on a best fitting series. The best fitting series that minimizes the sum of squared forecasting residuals is then used in combination with next period consensus EPS estimates to determine a central value forecast. Lower and upper price bounds are then set at 8% and % of the central value respectively. In addition, for our model results, we do not simply rely on the average AAA rated corporate bond yield in the broad market, we rely on the effective bond yield of the company's own debt issues. For capitalization purposes this yield must be no lower than the -year government bond yield. Application Central Value = α Year Average EPS [ k AAA Corporate Bond Yield ] As an example, presented below is a valuation of Coca-Cola (KO), the largest non-alcoholic beverage company in the world manufacturing such carbonated and noncarbonated brands as Coca-Cola, Diet Coke, Fanta, Sprite, Minute Maid, Powerade, and Dasani. At the present time KO is trading at $.. EPS for the last years has averaged $.6 and the current AAA-rated corporate bond rate is.5%. Graham's original valuation model produces a central value estimate of $.6/( x.5) = $.86 and a valuation range of $8.9 - $7.. This valuation range is significantly lower than what's been observed over the last years. Alternatively, based on our optimization procedure, we capitalize -year average EPS (reflecting the consensus 8 forward estimate of $.) at k=., reflecting an effective bond yield of % and an equity risk premium over the -year government bond rate of %, or bps. This implies a stock valuation of $./(. x.) = $. and a valuation range of $5.9 - $5.9. The figure below presents KO's historical price series as well as our historical and forecasted fair value range estimates. As can be seen, the model predicted a sideways market through the nineties and early to mid s. The model started to signal near accumulation points starting in 9 but, for the most part, has suggested remaining in a hold pattern through 7. The model continues to signal remaining in a hold pattern. Figure: Coca-Cola Fair Value Range, Price (Close), and Range Diversification Graham was a strong believer in defensive investing and protecting a portfolio against errors in judgment. For that reason, he placed a heavy emphasis on diversification. He recommended that individuals purchase a minimum of different issues and a maximum of. Stock holdings should be reviewed at least annually, he said, paying attention to dividend returns and the operating results of the company, and ignoring share price fluctuations. However, if the holdings were properly valued originally, he felt there

5 Stock Ratings would be little need for changes. Graham felt that as long as the earnings power of the holdings remained satisfactory, the investor should stick with the stock and ignore any market movements, particularly on the downside. On the other hand, investors should take advantage of market fluctuations on the upside, when a stock becomes overvalued (or fairly valued for stocks that were purchased at below their intrinsic value); at these times, investors should sell and replace their holding with one that is more fairly valued or undervalued. s Model recommendations are guideposts to a broad audience and individuals must consider their own specific investment goals, risk tolerance, tax situation, time horizon, income needs, and complete investment portfolio, among other factors in making investment decisions. BUY: The stock is trading significantly below the lower bound of the company's fair value range: Price < (.6 x ). Analysis suggests that based on the company's fair value range, the current market price will rise to substantially higher valuation levels. ACCUMULATE: The stock is trading modestly below the lower bound of the company's fair value range: Price < (.8 x ) "but" Price > (.6 x ). Analysis suggests that based on the company's fair value range, the current market price will rise to modestly higher valuation levels. : The stock is trading within the lower bound and upper bound of the company's fair value range: (.8 x ) < Price < (. x Target Price). Analysis suggests that based on the company's fair value range, the current market price will gravitate towards the target price and fluctuate between the upper and lower valuation bounds. REDUCE: The stock is trading modestly above the upper bound of the company's fair value range: Price > (. x ) "but" Price < (. x ). Analysis suggests that based on the company's fair value range, the current market price will fall to modestly lower valuation levels. SELL: The stock is trading significantly above the upper bound of the company's fair value range: Price > (. x ). Analysis suggests that based on the company's fair value range, the current market price will fall to substantially lower valuation levels. INCALCULABLE: A target price, and hence, a fair value range for the company's stock cannot be calculated. This is generally due unreported consensus EPS estimates for the target company or negative forward earnings projections.

6 Sample Value Sheet A Indicates whether the firm is significantly undervalued, modestly undervalued, fairly valued, modestly overvalued, or significantly overvalued based on the Graham methodology. B Shows the company's target price and target price range derived based on the Graham methodology. C Fair Value Range, Closing Price Series, Current Price and Range Displays the historical price action and estimated fair value range for the company's stock. Also displays the projected target price range for the next 5 years in relation to the current stock price. I Price Action Shows the company's historical stock price performance over different periods of time. I H A B C C C Quality and Quantity Screens Investment screens specific to the Graham Model, including size-based screens, leveragebased screens, and screens based on the level and stability of the company's earnings and dividends. H Financial Summary A summary of the financial performance of the company over the previous year period. D F E D Earnings Properties Summary of the firm's earnings performance as well as normalized earnings estimates characterized by the year, 5 year and year moving averages. G G Valuation and Return Potential Shows the calculation underlying the firm's price target, fair value range, and return potential corresponding to each price estimate. F Discount Rate Determination Shows the calculation underlying the firm's discount rate, equal to the product of the firm's effective bond yield an a multiplier. E Key Estimates Summary of the market's consensus EPS estimates for the current yearend, projected normalized earnings estimates, and the predictability ranks of each series as a determinant in forecasting the company's stock price.

7 Valuation Sheets Index of Stocks by Company Name Company Name Ticker ID# Rating Company Name Ticker ID# Rating M Co MMM JPMorgan Chase & Co JPM 6 American Express Co AXP McDonald's Corp MCD 7 Apple Inc AAPL Merck & Co Inc MRK 8 Boeing Co BA Microsoft Corp MSFT 9 Caterpillar Inc CAT 5 Nike Inc NKE Chevron Corp CVX 6 Pfizer Inc PFE Cisco Systems Inc CSCO 7 Procter & Gamble Co PG Coca-Cola Co KO 8 The Travelers Companies Inc TRV DowDuPont Inc DWDP 9 United Technologies Corp UTX Exxon Mobil Corp XOM UnitedHealth Group Inc UNH 5 Goldman Sachs Group Inc GS Verizon Communications Inc VZ 6 The Home Depot Inc HD Visa Inc V 7 Intel Corp INTC Walgreens Boots Alliance Inc WBA 8 International Business Machines Corp IBM Walmart Inc WMT 9 Johnson & Johnson JNJ 5 Walt Disney Co DIS

8 Valuation Sheet Third Quarter 8 Ticker Symbol: MMM M Co $96.7 Based on normalized earnings projection, MMM's shares are worth between $67.85 and $5.77 and should appreciate by approximately 6.7% over the next -5 years. Price / Target Range Potential (% ) $9.8.9 $67.85 $ % 8.% Price (Close) Fair Value Range & Range Price (Close) Range Fair Value Range -Yr % -Yr % 5-Yr % -Yr % 5-Yr 9% -Yr 9% ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Consensus Estimate Projected Average Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Predictability Rank Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = (c) Estimation *Implied Risk Premium =.55%.95% α-year Moving Average EPS Year Moving Average EPS $.9 K x Effective Bond Yield (%) (.) x (.).95% $9.8 (d) Range and Return Potential Range = ± % $67.85 $5.77 Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. Return Potential per Range Lower Bound Target -.7% 6.7% Upper Bound 8.%

9 Valuation Sheet Third Quarter 8 Ticker Symbol: AXP American Express Co $98. Based on normalized earnings projection, AXP's shares are worth between $77.8 and $6.7 and should depreciate by approximately.8% over the next -5 years. Price / Target Range Potential (% ) $97.6. $77.8 $ % 9.% Price (Close) Fair Value Range & Range -Yr % -Yr % 5-Yr % -Yr 7% 5-Yr 8% -Yr 7% 8 6 Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.7% (c) Estimation *Implied Risk Premium =.97% α-year Moving Average EPS 5 Year Moving Average EPS $5. K x Effective Bond Yield (%) (.) x (.) 5.7% $97.6 (d) Range and Return Potential Range = Return Potential per Range ± % $77.8 $ % -.8% 9.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

10 Valuation Sheet Third Quarter 8 Ticker Symbol: AAPL Apple Inc $85. REDUCE Based on normalized earnings projection, AAPL's shares are worth between $9.88 and $79.8 and should depreciate by approximately 9.% over the next -5 years. Price / Target Range Potential (% ) $9.85. $9.88 $ % -.9% Price (Close) Fair Value Range & Range -Yr 6% -Yr 5% 5-Yr % -Yr % 5-Yr % -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).6 = 6.% (c) Estimation *Implied Risk Premium =.9% α-year Moving Average EPS Year Moving Average EPS $9. K x Effective Bond Yield (%) (.6) x (.) 6.% $9.85 (d) Range and Return Potential Range = Return Potential per Range ± % $9.88 $ % -9.% -.9% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE

11 Valuation Sheet Third Quarter 8 Ticker Symbol: BA Boeing Co $5.5 Based on normalized earnings projection, BA's shares are worth between $6.57 and $9.85 and should depreciate by approximately 5.6% over the next -5 years. Price / Target Range Potential (% ) $8..8 $6.57 $ %.% Price (Close) Fair Value Range & Range -Yr 89% -Yr % 5-Yr % -Yr % 5-Yr 6% -Yr 9% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.% (c) Estimation *Implied Risk Premium =.7% α-year Moving Average EPS Year Moving Average EPS $.56 K x Effective Bond Yield (%) (.) x (.) 5.% $8. (d) Range and Return Potential Range = Return Potential per Range ± % $6.57 $ % -5.6%.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

12 Valuation Sheet Third Quarter 8 Ticker Symbol: CAT Caterpillar Inc $5.67 REDUCE Based on normalized earnings projection, CAT's shares are worth between $8.8 and $. and should depreciate by approximately 5.5% over the next -5 years. Price / Target Range Potential (% ) $.. $8.8 $. -.% -.6% Price (Close) Fair Value Range & Range -Yr 7% -Yr % 5-Yr % -Yr 8% 5-Yr % -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years FAIL % EPS > / over last years FAIL Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). =.9% (c) Estimation *Implied Risk Premium =.5% α-year Moving Average EPS Year Moving Average EPS $.96 K x Effective Bond Yield (%) (.) x (.).9% $. (d) Range and Return Potential Range = Return Potential per Range ± % $8.8 $. -.% -5.5% -.6% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE 5

13 Valuation Sheet Third Quarter 8 Ticker Symbol: CVX Chevron Corp $6. REDUCE Based on normalized earnings projection, CVX's shares are worth between $8. and $.7 and should depreciate by approximately 8.6% over the next -5 years. Price / Target Range Potential (% ) $.89. $8. $ % -.% Price (Close) Fair Value Range & Range -Yr 6% -Yr % 5-Yr % -Yr % 5-Yr 9% -Yr 6% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years FAIL % EPS > / over last years FAIL Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 7.79% (c) Estimation *Implied Risk Premium = 5.9% α-year Moving Average EPS Year Moving Average EPS $8. K x Effective Bond Yield (%) (.) x (.) 7.79% $.89 (d) Range and Return Potential Range = Return Potential per Range ± % $8. $.7 -.9% -8.6% -.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE 6

14 Valuation Sheet Third Quarter 8 Ticker Symbol: CSCO Pass Cisco Systems Inc $. Based on normalized earnings projection, CSCO's shares are worth between $. and $5.6 and should depreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $.. $. $5.6 -.%.% Price (Close) Fair Value Range & Range -Yr % -Yr 8% 5-Yr 5% -Yr % 5-Yr 6% -Yr 7% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x PASS Net Current Asset Value Net Current Assets Value > $ PASS Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).5 = 6.% (c) Estimation *Implied Risk Premium =.6% α-year Moving Average EPS Year Moving Average EPS $.6 K x Effective Bond Yield (%) (.5) x (.) 6.% $. (d) Range and Return Potential Range = Return Potential per Range ± % $. $5.6 -.%.%.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 7

15 Valuation Sheet Third Quarter 8 Ticker Symbol: KO Coca-Cola Co $.86 Based on normalized earnings projection, KO's shares are worth between $. and $9.86 and should depreciate by approximately 5.% over the next -5 years. Price / Target Range Potential (% ) $.55.6 $. $ %.7% Price (Close) Fair Value Range & Range -Yr % -Yr % 5-Yr 5% -Yr % 5-Yr 5% -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).5 =.6% (c) Estimation *Implied Risk Premium =.% α-year Moving Average EPS Year Moving Average EPS $.5 K x Effective Bond Yield (%) (.5) x (.).6% $.55 (d) Range and Return Potential Range = Return Potential per Range ± % $. $ % -5.%.7% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 8

16 Valuation Sheet Third Quarter 8 Ticker Symbol: DWDP Pass DowDuPont Inc $65.9 Based on normalized earnings projection, DWDP's shares are worth between $5.9 and $76.79 and should depreciate by approximately.9% over the next -5 years. Price / Target Range Potential (% ) $6.99. $5.9 $ % 6.5% Price (Close) Fair Value Range & Range -Yr % -Yr 6% 5-Yr 7% -Yr 6% 5-Yr 6% -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x PASS Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.% (c) Estimation *Implied Risk Premium =.7% α-year Moving Average EPS 5 Year Moving Average EPS $.6 K x Effective Bond Yield (%) (.) x (.) 5.% $6.99 (d) Range and Return Potential Range = Return Potential per Range ± % $5.9 $ % -.9% 6.5% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 9

17 Valuation Sheet Third Quarter 8 Ticker Symbol: XOM Exxon Mobil Corp $8.7 Based on normalized earnings projection, XOM's shares are worth between $6.8 and $95. and should depreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $79.5. $6.8 $ % 5.% Price (Close) Fair Value Range & Range -Yr -7% -Yr -% 5-Yr -% -Yr -% 5-Yr 6% -Yr 5% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 7.85% (c) Estimation *Implied Risk Premium = 5.5% α-year Moving Average EPS 5 Year Moving Average EPS $6. K x Effective Bond Yield (%) (.) x (.) 7.85% $79.5 (d) Range and Return Potential Range = Return Potential per Range ± % $6.8 $95. -.% -.% 5.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

18 Valuation Sheet Third Quarter 8 Ticker Symbol: GS Pass Goldman Sachs Group Inc $.57 ACCUMULATE Based on normalized earnings projection, GS's shares are worth between $6.65 and $69.97 and should appreciate by approximately 9.8% over the next -5 years. Price / Target Range Potential (% ) $8..7 $6.65 $ % 67.7% Price (Close) Fair Value Range & Range -Yr 6% -Yr % 5-Yr 5% -Yr % 5-Yr 8% -Yr Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x PASS Graham Number Graham Number < 7.5x PASS Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 7.6% (c) Estimation *Implied Risk Premium =.96% α-year Moving Average EPS Year Moving Average EPS $.7 K x Effective Bond Yield (%) (.) x (.) 7.6% $8. (d) Range and Return Potential Range = Return Potential per Range ± % $6.65 $ % 9.8% 67.7% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. ACCUMULATE

19 Valuation Sheet Third Quarter 8 Ticker Symbol: HD The Home Depot Inc $95. Based on normalized earnings projection, HD's shares are worth between $7.6 and $6.9 and should appreciate by approximately.6% over the next -5 years. Price / Target Range Potential (% ) $7.8.9 $7.6 $ %.% Price (Close) Fair Value Range & Range Price (Close) Range Fair Value Range -Yr 6% -Yr % 5-Yr 5% -Yr % 5-Yr 6% -Yr % ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).8 =.% (c) Estimation *Implied Risk Premium =.9% α-year Moving Average EPS Year Moving Average EPS $9. K x Effective Bond Yield (%) (.8) x (.).% $7.8 (d) Range and Return Potential Range = Return Potential per Range ± % $7.6 $ %.6%.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

20 Valuation Sheet Third Quarter 8 Ticker Symbol: INTC Intel Corp $9.7 REDUCE Based on normalized earnings projection, INTC's shares are worth between $. and $5.8 and should depreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $7.65. $. $5.8-9.% -9.% Price (Close) Fair Value Range & Range 6 Price (Close) Range Fair Value Range -Yr 7% -Yr 8% 5-Yr 7% -Yr 6% 5-Yr 8% -Yr 5% ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).9 =.8% (c) Estimation *Implied Risk Premium =.8% α-year Moving Average EPS Year Moving Average EPS $.69 K x Effective Bond Yield (%) (.9) x (.).8% $7.65 (d) Range and Return Potential Range = Return Potential per Range ± % $. $5.8-9.% -.% -9.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE

21 Valuation Sheet Third Quarter 8 Ticker Symbol: IBM International Business Machines Corp $9.7 Based on normalized earnings projection, IBM's shares are worth between $.6 and $99.59 and should appreciate by approximately 9.% over the next -5 years. Price / Target Range Potential (% ) $66..8 $.6 $ %.9% Price (Close) Fair Value Range & Range -Yr -8% -Yr -% 5-Yr -% -Yr % 5-Yr 5% -Yr 6% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 7.% (c) Estimation *Implied Risk Premium = 5.% α-year Moving Average EPS Year Moving Average EPS $.5 K x Effective Bond Yield (%) (.) x (.) 7.% $66. (d) Range and Return Potential Range = Return Potential per Range ± % $.6 $ % 9.%.9% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

22 Valuation Sheet Third Quarter 8 Ticker Symbol: JNJ Johnson & Johnson $. Based on normalized earnings projection, JNJ's shares are worth between $98. and $7. and should appreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $ $98. $7. -9.%.% Price (Close) Fair Value Range & Range -Yr % -Yr % 5-Yr 5% -Yr 8% 5-Yr 7% -Yr 7% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). =.8% (c) Estimation *Implied Risk Premium =.% α-year Moving Average EPS Year Moving Average EPS $5.9 K x Effective Bond Yield (%) (.) x (.).8% $.66 (d) Range and Return Potential Range = Return Potential per Range ± % $98. $7. -9.%.%.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 5

23 Valuation Sheet Third Quarter 8 Ticker Symbol: JPM Pass JPMorgan Chase & Co $. Based on normalized earnings projection, JPM's shares are worth between $7.6 and $. and should depreciate by approximately.7% over the next -5 years. Price / Target Range Potential (% ) $9.. $7.6 $. -9.6% 6.% Price (Close) Fair Value Range & Range Price (Close) Range Fair Value Range -Yr % -Yr % 5-Yr 9% -Yr 9% 5-Yr % -Yr 6% ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x PASS Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).7 = 6.6% (c) Estimation *Implied Risk Premium =.6% α-year Moving Average EPS 5 Year Moving Average EPS $5.95 K x Effective Bond Yield (%) (.7) x (.) 6.6% $9. (d) Range and Return Potential Range = Return Potential per Range ± % $7.6 $. -9.% -.7% 6.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 6

24 Valuation Sheet Third Quarter 8 Ticker Symbol: MCD McDonald's Corp $56.69 REDUCE Based on normalized earnings projection, MCD's shares are worth between $9.6 and $5.9 and should depreciate by approximately 7.7% over the next -5 years. Price / Target Range Potential (% ) $.8.8 $9.6 $ % -.% Price (Close) Fair Value Range & Range -Yr % -Yr % 5-Yr % -Yr % 5-Yr 7% -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).5 =.5% (c) Estimation *Implied Risk Premium =.% α-year Moving Average EPS Year Moving Average EPS $. K x Effective Bond Yield (%) (.5) x (.).5% $.8 (d) Range and Return Potential Range = Return Potential per Range ± % $9.6 $5.9 -.% -7.7% -.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE 7

25 Valuation Sheet Third Quarter 8 Ticker Symbol: MRK Merck & Co Inc $6.7 Based on normalized earnings projection, MRK's shares are worth between $5.9 and $76.8 and should appreciate by approximately.9% over the next -5 years. Price / Target Range Potential (% ) $ $5.9 $ % 5.8% Price (Close) Fair Value Range & Range -Yr -% -Yr % 5-Yr 7% -Yr % 5-Yr % -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).7 =.% (c) Estimation *Implied Risk Premium =.7% α-year Moving Average EPS Year Moving Average EPS $.6 K x Effective Bond Yield (%) (.7) x (.).% $6.65 (d) Range and Return Potential Range = Return Potential per Range ± % $5.9 $ %.9% 5.8% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 8

26 Valuation Sheet Third Quarter 8 Ticker Symbol: MSFT Microsoft Corp $98.6 SELL Based on normalized earnings projection, MSFT's shares are worth between $6.57 and $5.85 and should depreciate by approximately 5.6% over the next -5 years. Price / Target Range Potential (% ) $5.7.6 $6.57 $ % -.% Price (Close) Fair Value Range & Range Price (Close) Range Fair Value Range -Yr 5% -Yr 8% 5-Yr 8% -Yr 9% 5-Yr 6% -Yr 8% ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x PASS Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).7 =.% (c) Estimation *Implied Risk Premium =.7% α-year Moving Average EPS Year Moving Average EPS $.89 K x Effective Bond Yield (%) (.7) x (.).% $5.7 (d) Range and Return Potential Range = Return Potential per Range ± % $6.57 $ % -5.6% -.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. SELL 9

27 Valuation Sheet Third Quarter 8 Ticker Symbol: NKE Pass Nike Inc $79.68 REDUCE Based on normalized earnings projection, NKE's shares are worth between $5.6 and $68. and should depreciate by approximately 8.% over the next -5 years. Price / Target Range Potential (% ) $57.. $5.6 $ % -.% Price (Close) Fair Value Range & Range -Yr - -Yr - 5-Yr - -Yr - 5-Yr - -Yr Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion FAIL Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x PASS Net Current Asset Value Net Current Assets Value > $ PASS Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x PASS Graham Number Graham Number < 7.5x PASS Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).9 =.59% (c) Estimation *Implied Risk Premium =.9% α-year Moving Average EPS Year Moving Average EPS $.6 K x Effective Bond Yield (%) (.9) x (.).59% $57. (d) Range and Return Potential Range = Return Potential per Range ± % $5.6 $ % -8.% -.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE

28 Valuation Sheet Third Quarter 8 Ticker Symbol: PFE Pfizer Inc $6.8 Based on normalized earnings projection, PFE's shares are worth between $.5 and $7. and should appreciate by approximately 8.% over the next -5 years. Price / Target Range Potential (% ) $9.8.9 $.5 $7. -.6% 9.6% Price (Close) Fair Value Range & Range 6 Price (Close) Range Fair Value Range -Yr % -Yr 5% 5-Yr 8% -Yr 5% 5-Yr % -Yr % ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.% (c) Estimation *Implied Risk Premium =.8% α-year Moving Average EPS Year Moving Average EPS $. K x Effective Bond Yield (%) (.) x (.) 5.% $9.8 (d) Range and Return Potential Range = Return Potential per Range ± % $.5 $7. -.6% 8.% 9.6% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

29 Valuation Sheet Third Quarter 8 Ticker Symbol: PG Procter & Gamble Co $78.6 Based on normalized earnings projection, PG's shares are worth between $6.6 and $95.9 and should appreciate by approximately.8% over the next -5 years. Price / Target Range Potential (% ) $ $6.6 $ %.% Price (Close) Fair Value Range & Range -Yr % -Yr % 5-Yr 7% -Yr % 5-Yr 5% -Yr 5% 8 6 Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.7% (c) Estimation *Implied Risk Premium =.87% α-year Moving Average EPS Year Moving Average EPS $.9 K x Effective Bond Yield (%) (.) x (.) 5.7% $79.5 (d) Range and Return Potential Range = Return Potential per Range ± % $6.6 $ %.8%.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

30 Valuation Sheet Third Quarter 8 Ticker Symbol: TRV Pass The Travelers Companies Inc $. REDUCE Based on normalized earnings projection, TRV's shares are worth between $79. and $9. and should depreciate by approximately 8.9% over the next -5 years. Price / Target Range Potential (% ) $99.7. $79. $ % -.6% Price (Close) Fair Value Range & Range -Yr % -Yr 9% 5-Yr % -Yr % 5-Yr % -Yr 6% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x PASS Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).6 = 6.% (c) Estimation *Implied Risk Premium =.7% α-year Moving Average EPS Year Moving Average EPS $6.8 K x Effective Bond Yield (%) (.6) x (.) 6.% $99.7 (d) Range and Return Potential Range = Return Potential per Range ± % $79. $9. -5.% -8.9% -.6% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE

31 Valuation Sheet Third Quarter 8 Ticker Symbol: UTX Pass United Technologies Corp $5. Based on normalized earnings projection, UTX's shares are worth between $9. and $8.7 and should depreciate by approximately 7.8% over the next -5 years. Price / Target Range Potential (% ) $5..8 $9. $8.7-6.%.7% Price (Close) Fair Value Range & Range -Yr 6% -Yr % 5-Yr 9% -Yr 5% 5-Yr % -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).5 = 6.7% (c) Estimation *Implied Risk Premium =.67% α-year Moving Average EPS Year Moving Average EPS $7. K x Effective Bond Yield (%) (.5) x (.) 6.7% $5. (d) Range and Return Potential Range = Return Potential per Range ± % $9. $8.7-6.% -7.8%.7% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc.

32 Valuation Sheet Third Quarter 8 Ticker Symbol: UNH UnitedHealth Group Inc $5. Based on normalized earnings projection, UNH's shares are worth between $7.76 and $57.6 and should depreciate by approximately.5% over the next -5 years. Price / Target Range Potential (% ) $.7. $7.76 $ % 5.% Price (Close) Fair Value Range & Range Price (Close) Range Fair Value Range -Yr 8% -Yr % 5-Yr % -Yr % 5-Yr 7% -Yr % ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.86% (c) Estimation *Implied Risk Premium =.6% α-year Moving Average EPS Year Moving Average EPS $.57 K x Effective Bond Yield (%) (.) x (.) 5.86% $.7 (d) Range and Return Potential Range = Return Potential per Range ± % $7.76 $ % -.5% 5.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 5

33 Valuation Sheet Third Quarter 8 Ticker Symbol: VZ Verizon Communications Inc $5. Based on normalized earnings projection, VZ's shares are worth between $. and $66.5 and should appreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $55..9 $. $ %.% Price (Close) Fair Value Range & Range -Yr -% -Yr % 5-Yr % -Yr % 5-Yr % -Yr % Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years FAIL % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier).5 =.7% (c) Estimation *Implied Risk Premium =.% α-year Moving Average EPS Year Moving Average EPS $.6 K x Effective Bond Yield (%) (.5) x (.).7% $55. (d) Range and Return Potential Range = Return Potential per Range ± % $. $ %.%.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 6

34 Valuation Sheet Third Quarter 8 Ticker Symbol: V Visa Inc $.5 REDUCE Based on normalized earnings projection, V's shares are worth between $77. and $6. and should depreciate by approximately 6.9% over the next -5 years. Price / Target Range Potential (% ) $ $77. $ % -.% Price (Close) Fair Value Range & Range -Yr 7% -Yr 5% 5-Yr 6% -Yr - 5-Yr - -Yr Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). =.9% (c) Estimation *Implied Risk Premium =.9% α-year Moving Average EPS 5 Year Moving Average EPS $. K x Effective Bond Yield (%) (.) x (.).9% $96.77 (d) Range and Return Potential Range = Return Potential per Range ± % $77. $6. -.6% -6.9% -.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE 7

35 Valuation Sheet Third Quarter 8 Ticker Symbol: WBA Walgreens Boots Alliance Inc $6. BUY Based on normalized earnings projection, WBA's shares are worth between $9. and $. and should appreciate by approximately 96.% over the next -5 years. Price / Target Range Potential (% ) $ $9. $ % 5.5% Price (Close) Fair Value Range & Range -Yr % -Yr % 5-Yr 8% -Yr 6% 5-Yr 6% -Yr 9% Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.% (c) Estimation *Implied Risk Premium =.6% α-year Moving Average EPS Year Moving Average EPS $5.89 K x Effective Bond Yield (%) (.) x (.) 5.% $7.77 (d) Range and Return Potential Range = Return Potential per Range ± % $9. $. 57.% 96.% 5.5% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. BUY 8

36 Valuation Sheet Third Quarter 8 Ticker Symbol: WMT Walmart Inc $85.65 Based on normalized earnings projection, WMT's shares are worth between $65.68 and $98.5 and should depreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $8.. $65.68 $ % 5.% Price (Close) Fair Value Range & Range -Yr 6% -Yr 8% 5-Yr 9% -Yr 8% 5-Yr 5% -Yr 9% 8 6 Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years FAIL Dividends per Share years of + and dividends PASS Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x FAIL P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). = 5.7% (c) Estimation *Implied Risk Premium =.% α-year Moving Average EPS 5 Year Moving Average EPS $.7 K x Effective Bond Yield (%) (.) x (.) 5.7% $8. (d) Range and Return Potential Range = Return Potential per Range ± % $65.68 $ % -.% 5.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. 9

37 Valuation Sheet Third Quarter 8 Ticker Symbol: DIS Walt Disney Co $.8 REDUCE Based on normalized earnings projection, DIS's shares are worth between $65. and $98. and should depreciate by approximately.% over the next -5 years. Price / Target Range Potential (% ) $ $65. $ % -6.% Price (Close) Fair Value Range & Range -Yr 6% -Yr % 5-Yr % -Yr % 5-Yr % -Yr 7% 8 6 Price (Close) Range Fair Value Range ($) Financials Financial Results Market Cap ($ Billions) Market Cap > $ Billion PASS Sales ($ Billions) Annual Sales > $ Billion PASS Net Cash per Share Current Ratio Current Ratio >.x FAIL Net Current Asset Value Net Current Assets Value > $ FAIL Net-Net Working Capital < (/) x NNWC FAIL Net Income ($ Billions) Earnings per Share (EPS) EPS > $ in each of last years PASS % EPS > / over last years PASS Dividends per Share years of + and dividends FAIL Free Cash Flow ($ Billions) P/(Yr Avg EPS) Ratio P/(Yr Avg EPS) < 5.x PASS P/B Ratio P/B <.5x FAIL Graham Number Graham Number < 7.5x FAIL Earnings per Share Year Moving Average Year Moving Average Year Moving Average Year Moving Average Discount Rate (%) = Effective Bond Yield. x K (Yield Multiplier). =.6% (c) Estimation *Implied Risk Premium =.96% α-year Moving Average EPS Year Moving Average EPS $.75 K x Effective Bond Yield (%) (.) x (.).6% $8.75 (d) Range and Return Potential Range = Return Potential per Range ± % $65. $ % -.% -6.% Redistribution or reproduction is prohibited without written permission. Copyright 8 SEENSCO Inc. REDUCE