Monday, April 13, 2099

Valuation of all stocks listed in Holland AEX All Share AAX: Benjamin Graham Defensive Investor method

Warren Buffett: "Well, start with the A’s." Click on the companies below for Graham Evaluation:

Aalberts Industries 2018
ABN AMRO 2018 
Accell Group 2018 
Ahold Delhaize Koninklijke 2018
Accsys Technologies 2018
Adyen 2018
Aegon 2018
AFC AJAX 2018
Air France-KLM 2018 
Akzo Nobel 2018 
Alfen 2018
Altice AEX:ATC, NL0011333752
Alumexx 2018 (voorheen Phelix, Inverko, Newconomy)
AMG Advanced Metallurgical Group NV 2018
Amsterdam Commodities ACOMO 2018
AND International Publishers 2018
Apollo Alternative Assets EMPTY? 
Aperam 2018
Arcadis 2018
ArcelorMittal 2018 
ASM International AEX:ASM NL0000334118 2018
ASML 2018
ASR Nederland 2018
Avantium 2018
Batenburg Techniek 2018
BAM Koninklijke Groep 2018 
Basic Fit 2018
BE Semiconductor AEX:BESI, NL0000339760 2018
Beter Bed Holding 2018
B&S Group 2018

Berkshire Hathway run by Warren Buffett

Bever Holding 2018
BinckBank 2018
Boskalis Westminster Koninklijke 2018
Boussard & Gavaudan Holding Ltd. An expensive hedge fund.
Brill, Koninklijke 2018
Brunel 2018
Coca-Cola European Partners 2018
Corbion 2018
Core Laboratories 2018
Ctac 2018
Curetis 2018
DGB Group cijfers 27 september 2018
DPA Groep N.V. buy at €1,4
DSM Koninklijke 2018
Dutch Star One 2018
Ease2pay 2018 a  holding for the https://www.ease2.com/ parking payments via Rabo app
Envipco 2018
Esperite: Stem Cell Bank losing money, selling shares. Price recently fell from 3 to 0,25
Eurocastle 2018
Eurocommercial Properties 2018
Euronext 2018
Fagron 2018
Flow Traders 2018, seems like a buy under €30
FNG 2018
ForFarmers 2018
Fugro's 2018
Gemalto Thales offer 2018
Galapagos 2018
GrandVision 2018: Buy under EUR 15
Groothandelsgebouwen N.V. bought for EUR 56,92
HAL Trust 2018
Headfirst verkocht, lege beurshuls 2018
Heijmans 2018
Heineken 2018, buy under 60?
Holland Colours 2018 buy under €70
Hunter Douglas 2018
Hydratec 2018
ICT Group NV 2018 buy under 9 Euros
IEX Group 2018 Sales 3m, losses 600k, not for the defensive investor
IMCD 2018
ING Bank 2018
Intertrust 2018
Kardan 2018
KAS BANK 2018
Kendrion 2018
Kiadis Pharma 2018
Klepierre cheap at €29? 2018
KPN 2018
Porceleyne Fles Koninklijke 2018
K. VolkerWessels check after August 31st, 2017
K. VOPAK 2018
K. Wessanen 2018 
K. VolkerWessels 2018
Lavide sold childcare company oct 2018 1 Euro 
Lucas Bols 2018 buy now
Nedap 2018
MKB Nedsense 2018
New Sources Energy 2018 fraud
Neways 2018
NIBC 2018
NN Group 2018
Novisource 2018
NSI Nieuwe Steen Investments HNK = Het Nieuwe Kantoor 2018
OCI 2018
Oranjewoud 2018 
Ordina 2018
Pershing Square 2018
Pharming back of the envelope math 2018
Philips 2018
PostNL 2018
Probiodrug 2018
Randstad 2018
Real Estates 2018
RELX 2018
RoodMicrotec 2018
Royal Dutch Shell
SBM Offshore 2018
Sif Holding 2018
Signify Philips Lighting 2018
Sligro 2018
SnowWorld 2018
Stern Groep 2018 a buy?
Takeaway.com 2018
Tetragon 2018
Thunderbird Resorts 2018
TIE Kinetix 2018
TKH Group 2018
TomTom 2018
Unibail Rodamco 2018 a buy?
Unilever 2018
Value8 2018
Van Lanschot 2018
Vastned Retail 2018

Volta Finance fund including CLO (Collateralized Loan Obligations)
WDP 2018
Wereldhave, buy! 2018
Wolters Kluwer 2018
Yatra Capital Indian Real Estate, 2017: losing money, stopping? Book 7,5 E, Price 5,75 E.
2018 "As the Company has exited or is in the process of exiting all of its investments the shareholders passed a special resolution at its Annual General Meeting on September 17, 2018 to put the Company into liquidation and is in the process of realising its assets, settling liabilities and distributing the assets. Price EUR 3,5 cash payout Eur 4 to 4,40 in 2019? but not for people who buy the shares today (December 18th 2018)?

Other countries:
Starbucks

Tuesday, February 05, 2019

Investing in gold to preserve wealth

A money manager might say, she will invest your money in gold to preserve your wealth. She asks for a 0,5% fee per year and you pay the Dutch government 1,3% taxes per year.

If you have tens of millions and buy 500kg of gold, you will lose 1,8% per year. Your expected return is 0,98 per year. So after 50 years, how much gold do you have left?

500kg x (0,982)^50 = 200 kilograms, more than half your wealth is gone...

If you invest the money in assets that create cash flow, a (volatile) after tax, after inflation return of 5% is reasonable. How much gold will you be able to buy after 50 years?

500kg x (1+0,05)^50 = 5 750kg

You will have roughly 30 times more gold than in the option where you wanted to preserve wealth.

See also Matthew 25:14-30


Ajb@valuemachinesfund.nl

Friday, January 18, 2019

List of things that are not changing

What is not going to change?
Love
Time
Etc fill in.


Let us invest for you (min. EUR 100 000,-) www.valuemachinesfund.nl

Friday, January 11, 2019

A C&A 25 store, ramblings of the future

I 'm work for C&A, but am one of the Mettinger Katholieken.

Some rough notes on ideas I have for a store.

25% gross margin (BCP)
Average age of colleagues 25
A number of colleagues with 25 or more years experience at C&A
Board of advisors made up of customers and frontline colleagues.
Test/selling area mix like IKEA Delft Concept Center.
Managed out of a cardboard box totally separated from the outside world except 1 visitor at a time, kind of like a confessional but with books and paper.
Everything hanging on rails to avoid the amount of folding work at Primark.
Access only for paying customers, like Costco (Amazon Prime). Subscription fee €25 per month to be allowed to shop at the store. Customers have a running balance, no cash in the store.
Markdown math according to booklet "Breakthrough: C&A Secret Formula Re-discovered." Markdown fast and invisibly as part of Everyday Best Value. Never ever markdown bestsellers except against the competition.
Omni-channel 100% RFID, reward customers who don't send back a ridiculous number of articles.
"Tinder" for personal shopping, matching people who do like to shop and don't have money, with those that don't and do.






Let us invest for you (min. EUR 100 000,-) www.valuemachinesfund.nl

Sunday, January 06, 2019

De waarde van elke investering volgens Warren Buffett

Buffett: "Any investment is worth all the cash you're going to get out between now and judgement day discounted back."

"De waarde van elke investering is al het geld dat je eruit krijgt tussen nu en de dag des oordeels verdisconteerd terug naar vandaag."

Buffett: "Aesop, in between tortoises and hares, and all these other things he found time to write about birds. And he said, "A bird in the hand is worth two in the bush." Now that isn't quite complete because the question is, how sure are you that there are two in the bush, and how long do you have to wait to get them out? Now, he probably knew that but he just didn't have time because he had all these other parables to write and had to get on with it. But he was halfway there in 600 BC. That's all there is to investing is, how many birds are in the bush, when are you going to get them out, and how sure are you?
Now if interest rates are 15 percent, roughly, you've got to get two birds out of the bush in five years to equal the bird in the hand. But if interest rates are 3 percent, and you can get two birds out in 20 years, it still makes sense to give up the bird in the hand, because it all gets back to discounting against an interest rate. The problem is often you don't know not only how many birds are in the bush, but in the case of the internet companies there weren't any birds in the bush. But they still take the bird that you give them if they're in the hand.
But I actually have written about this sort of thing, and stealing heavily from Aesop who wrote it some 2600 years ago, but I've been behind on my reading. Yeah?"

Let us invest for you (min. EUR 100 000,-) www.valuemachinesfund.nl

Tuesday, December 18, 2018

Alfen rough intrinsic value using Graham Number notes

New IPO at EUR 10 per share. Currently, 11,3m shares, share price EUR 12,25 per share. Market Cap: EUR 138m
The company is buying Finnish Elkamo for EUR 4,5m

Book value: Equity EUR 7,1m/11,3m shares = 0,6 EUR Book value per share

Adjusted Earnings Guess for 2018: 0,2 EUR per share. Graham Number (Geometric average of 15x Earnings and 1,5 x Book value = Graham Value EUR 1,68 per share.

The company is growing revenues quickly (plus 32% in the first half of 2018), but seems expensive at the current stock price. The company would have to keep growing at this pace for 3-4 years to justify the current share price.  The EV market could grow that quickly, but I don't know how much competition there is.

Current ratio: 30,4m/24,8m = 1,2
Long term debt: 8,6m (including Elkamo?)

Conclusion: Not a stock for the Defensive investor.

Monday, December 17, 2018

FNG -> Fred N Ginger very rough math, intrinsic value guesstimate

FNG has been buying Dutch and Belgian retail and production companies partly by selling shares. Not easy to base much on track record.

The company was set up by 3 engineers who seem to want to make the companies in the holding work together as parts of an efficient machine. Seems logical.

http://www.fng.eu/fng-sets-strong-first-half-year-rebitda-increases-by-30-2-to-eur-25-1-million/

Increasing Recurring EBITDA (REBITDA).

Book value per share was: EUR 277m equity/9m shares = EUR 31 per share.
They sold 2,2m shares at around EUR 27 raising EUR 60m.

So new book EUR 337m/11,2m shares = EUR 30m book value per share.

Earnings 0,69 Euro per share in 2018 H1, Earnings EUR 1,6 / share full year?? x 15 multiple = EUR 24,- per share.

Debt is too high for the Defensive Investor.

Current price: EUR 18,90

Conclusion December 2018: FNG stock seems inexpensive.

www.valuemachinesfund.nl

Thursday, December 13, 2018

Wolters Kluwer intrinsic value based on Benjamin Graham Defensive analysis

Conclusion 2017: Wolters Kluwer has done much better than I would have thought a few years ago, but the stock price does not seem cheap at the moment. http://sinaas.blogspot.com/2017/05/wolters-kluwers-increasing-intrinsic.html

Since then earnings per share have increased and the share price has gone up more than 20%.  

Over the past decade Wolters Kluwer has done very well for investors like Francisco Parames ( the "Buffett of Spain") https://okdiario.com/economia/inversion/2017/03/19/840531-840531

Graham Defensive analysis based on Chapter 14 of The Intelligent Investor:

SECTOR: [PASS]  Wolters Kluwer is an information services company. 


SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Wolter Kluwer's sales of €4 422 million, based on 2017 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Wolter Kluwer's current ratio €1 832m/€2 852m of 0,6 is too low.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Wolters Kluwer is €2 639 million, while the net current assets are - €1 020 million. Wolters Kluwer fails this test.

LONG-TERM EPS GROWTH: [PASS]  Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Wolter Kluwer's earnings per share grew 250% over the past 10 years. 

Earnings Yield: [[FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Wolters Kluwer's E/P of 5% (using this years estimated Earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Wolters Kluwer has a Graham number of (15 x €2,4 EPS x 1,5 x €7 Book Value) = €23 

Dividend: €0,85/€53 = 1,6% 

Conclusion 2018 same as 2017: The stock seems expensive today, not an investment for the Defensive Investor. 

Question: What I don't understand (and haven't really looked into) is why the share buybacks are increasing with the share price. Warren Buffett argues that buybacks should increase when the share price falls compared to intrinsic value. Wolters Kluwer announced the budget allocated to share buybacks in the 2017 Annual Report and didn't link that intention to share price or intrinsic value. The word "intrinsic" is not used anywhere in the Annual Report. 

www.valuemachinesfund.nl

Wednesday, December 12, 2018

WDP Warehousing & Distribution De Pauw: Warehouses with Brains, intrinsic value

Belgian real estate/warehousing company with a fairly recent dual listing in Amsterdam. https://www.wdp.eu/investors/key-figures

The track record is impressive, also considering that this chart does not include dividends.

Current dividend: EUR 4,80/Price EUR 117 = 4%

This is the first time I have looked at the company. The Graham Value is the geometric average of 1,5 x NAV and 15 x Earnings per Share. If you take 1x book, the Graham Value would be lower.





Tuesday, December 11, 2018

Vopak intrinsic value based on Chapter 14 of The Intelligent Investor


SECTOR: [PASS]  Vopak is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Vopak's sales of €1 329 million, based on 2017 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Vopak's current ratio €429m/€536m of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Vopak is €2 039 million, while the net current assets are -€107 millionVopak fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Vopak's Earnings with the exception of the very good year 2016 have been flat over the past 10 years.

EARNINGS YIELD: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Vopak's E/P of 6% (using the average of last 3 years earnings) just fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Vopak has a Graham number of (15 x €2,4 EPS x €20 Book Value) = €33 and fails this test.

DIVIDEND €1,05/€40 = 2,6%

Let us invest for you (min. EUR 100 000,-) www.valuemachinesfund.nl

Templeton 16 rules

Here are John Templeton’s 16 Rules for Investment Success:
12. Begin with a prayer
1. Invest for maximum total real (after-inflation) return
2. Invest – don’t trade or speculate
3. Remain flexible and open-minded about types of investments
4. Buy low
5. When buying stocks, search for bargains among quality stocks
6. Buy value, not market trends or the economic outlook
7. Diversify. In stocks and bonds, as in much else, there is safety in numbers
8. Do your homework or hire wise experts to help you
9. Aggressively monitor your investments
10. Don’t panic
11. Learn from your mistakes
..
13. Outperforming the market is a difficult task
14. An investor who has all the answers doesn’t even understand all the questions
15. There’s no free lunch
16. Do not be too fearful or negative too often
Interesting that Walter Schloss also had 16 rules. Why 16?

Let us invest for you (min. EUR 100 000,-) www.valuemachinesfund.nl

Monday, December 10, 2018

Templeton's Way with Money Re-Balancing Program: Increase stocks from 55% to 60%

Sir John Templeton used to give his clients a yearly program at the beginning of the year. If at the end of the year the Dow Jones had increased significantly, they should lower the percentage of their wealth held in stocks. On the other hand, if prices have become more attractive it makes sense to increase the percentage held in stocks AFTER stock prices have deacreased. 

Since last year (below) the MSCI World index https://www.msci.com/world (USD) has decreased slightly from 2070 to 1965. According to the adapted John Templeton re-balancing program, I made last year, your percentage of wealth allocated to stocks should increase from 55% to 60%.



Wednesday, December 06, 2017


Templeton's Way with Money Re-Balancing Program: Update

 Since last year the MSCI World index https://www.msci.com/world has increased from 1770 to 2070. According to the adapted John Templeton re-balancing program I made last year, your percentage in stocks should decrease slightly from around 60% in stocks to roughly 55% in stocks.


One year ago:


Sunday, December 04, 2016


Templeton's Way with Money Re-Balancing Program 1955

What will you do if stock prices go up or down? Sir John Templeton gave his customers a program, a plan before the year started: Today in 2016 he might have a higher percentage of stocks because interest rates (on (government) bonds) are currently near 0%.

Let us invest for you (min. EUR 100 000) www.valuemachinesfund.nl

VolkerWessels stock price is lower than intrinsic value


VolkerWessels and BAM have been building the OpenIJ locks project for a fixed price. They have made a loss on this project, but it seems Mr. Market is too negative at the moment. In general, the company is doing well and has an all-time high order book of future revenue.



SECTOR: [PASS] VolkerWessels is a group of Dutch companies involved mostly in construction. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. VolkerWessels' sales of €5 714 million in 2017 passes this test.

CURRENT RATIO: 
[FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. VolkerWessels' current ratio €2 395m/€2 245m of 1,1 fails this test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for VolkerWessels is €305 million, while the net current assets are  €150 million. VolkerWessels fails this test.

LONG-TERM EPS GROWTH: [PASS] [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. I don't have enough earnings history for VolkerWessels to measure this factor. 

Earnings Yield
[PASS] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. VolkerWessels' E/P of 12% (using an average of 3 year's estimated Earnings) passes this test.

Graham Number value: 
[PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. VolkerWessels has a Graham number of (15 x €1,6 EPS x 1,5 x €13,6 Book Value) = €22 

Dividend: €1,05/€13,3 = 8% 


Conclusion 2018: Like a number of other Dutch stocks, VolkerWessels seems inexpensive at this moment. You can buy a Euro of Value for 60 Cents.

www.valuemachinesfund.nl

Wednesday, December 05, 2018

Van Lanschot Kempen intrinsic value and stock price

The https://en.wikipedia.org/wiki/Graham_number is also not usually used for financial companies like banks.


For banks and real estate I have decided to use 1 x book value instead of 1,5 x book value which makes more sense for other industries. The Graham Value is the geometric average of 15 x Earnings per Share and Book Value x  1,5 (in this case x 1).


The company is paying out a special dividend of EUR 1,5 / EUR 22,6 = 7% on December 19th 2018. 

Conclusion December 2018: Like other Dutch stocks and banks, Van Lanschot seems like a buy at the moment.

Let us invest for you (min. EUR 100 000,-)  www.valuemachinesfund.nl

Tuesday, December 04, 2018

Unilever intrinsic value based on Benjamin Graham number and Peter Lynch chart

Conclusion a little over a year ago: "The Price for Unilever has gone up more than I expected a few years ago. A bid from Kraft Heinz (Buffett / 3G) has helped increase the "quoted value". Not a stock for the Defensive Investor at this price." Since then Unilever's stock price has increased by about 10%.

The Graham Value which is the geometric average of 1,5x book value and 15x Earnings per Share has decreased. The reason seems to be that Unilever is buying back shares at a large premium over book value which decreases book value per share and thus the Graham number. On the other hand debt per share is increasing, but so are Earnings per Share which could be considered more important than book value. Consider the trend of the Peter Lynch chart with Price and Earnings per Share lines. (Something seems to have gone wrong in this chart with the 4 to 1 stock split just before 2000.)

Seen from this perspective the increase in share price is more logical. As Peter Lynch liked to point out, if a company's Earnings per Share doubling, the share price will probably follow. The Earnings per Share increase is partly driven by share buybacks financed by increasing debt. 

Graham Defensive analysis:
SECTOR: [PASS] Unilever is neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS]  The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Unilever's sales of €53 715 million, based on 2017 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Unilever's current ratio €19 833m/€26 000 of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL]  For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Unilever is €24 000 million, while the net current assets are - €6 200 million. Unilever fails this test.

LONG-TERM EPS GROWTH: PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. EPS for Unilever increased roughly 50% over the past 10 years, therefore the company fails this criterion. 

Earnings Yield: [FAIL] The Earnings/Price (E/P) ratio, based on the lesser of the current Earnings Yield or the  yield using average earnings over the last 3 fiscal years, must be "sufficient", which this methodology states is greater than 6,6%. Stocks with higher Earning Yields are more defensive by nature. Unilever's E/P of 4% (using the current PE) fails this test. 

Graham Number: [FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Unilever has a book value of €5 per share, a Graham Number of €15,3 per share and fails this test.

Dividend: 1,52/49 = 3%

Conclusion 2018: I have been misreading Unilever in the past years.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl

Friday, November 30, 2018

Unibail Rodamco Westfield intrinsic value


Unibail Rodamco merged with Westfield and financed the deal by selling 38? million shares, so the share count has increased from 100m to roughly 140m. I haven't seen the balance sheet or P&L since the merger / stapling? of stocks.
The business is retail real estate so investors might be afraid of the long-term results...

Usually, the Benjamin Graham number is the geometric average of 15x Earnings and 1,5x book value. For real estate 1,5x book might lead to a too high valuation so I have used 1x book.
Earnings are a mix of revaluation and income, so you could also say the EPS will be 12,90 Eur this year...

Graham Number = 260 Euro = Square Root ( 15 x 25 EPS x 1 x Book 200 )

Dividend = 10,8 / 150 = 7% and increasing.

Conclusion: As of November 2018 Unibail Rodamco Westfield looks like a buy. Not my circle of competence.

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl

Thursday, November 29, 2018

TKH Group intrinsic value based on Benjamin Graham number


SECTOR: [PASS] TKH formerly Twentse Kabelfabriek Holding is in industry. Technology and financial stocks were considered too risky to invest in when this methodology was published. 

SALES: 
[PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. TKH's sales of  € 1 484 million based on 2017 sales, pass this test.

CURRENT RATIO:   [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. TKH's current ratio 723m/442m of 1,6 fails this test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). The long-term debt for TKH is 343 million, while the net current assets are  423 million. TKH passes this test.

LONG-TERM EPS GROWTH: [PASS] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. TKH's earnings have increased 100% since 2006.

Earnings Yield: [FAIL] The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature.TKH's  E/P of 5%  (using the average of the last 3 years Earnings) is a bit too low for this test.

Graham Number value: 
[FAIL]  The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. TKH has a Graham number of √ (15 x  2,2 EPS x 1,5 x  14 Book Value) =   € 26,50

Dividend: TKH 1.2/ 45 =3%

Conclusiom Sales and profits have been increasing, but so have debts... not a stock for the Graham Defensive Investor at a price above EUR 35

Do you speak Dutch? If so please opt-in at www.valuemachinesfund.nl Thanks in advance! Comments, questions or E-mails welcome: ajb@valuemachinesfund.nl