The graph above (that I made) showed actual value calculations made by Syb van Slingerlandt during the past decade. Stock prices including the July 2012, were compared to the Van Slingerlandt's valuation of Aalberts Industries.(AALB NL).
Green line = Value.
Red line = Margin of Safety.
Blue = Stock Price.
Koop = Buy
Now might be a good time to start buying Aalberts because the Price (€11,75) you pay, is lower than the (calculated) Value (€18,70) that you get.
Graham Number value chart March 2013, stock price €17,60 is a 50% increase since July 2012.
SECTOR: [PASS] Aalberts 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. Aalberts' sales of €2,025 million, based on 2012 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. Aalberts' current ratio €663m/€605m of 1.1 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 meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Aalberts is €362 million, while the net current assets are €58 million. Aalberts 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. Aalberts' EPS growth over that period of 175% passes the EPS growth test.
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. Aalberts's E/P of 6% (using the average of last 3 years) 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. Aalberts has a Graham number of √(22,5 x €1,3 EPS x €8,9 Book Value) = €16,8
Comments, questions or E-mails welcome: ajbrenninkmeijer (a) gmail.com