Benjamin Graham Defensive Evaluation Aalberts Industries AEX:AALB, NL0000852564

Graham Defensive analysis based on The Intelligent Investor book Chapter 14: Using Full Year 2015 Earnings published February 2016.

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 €2,475 million, based on 2015 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 €942m/€693m of 1.4 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 €756 million, while the net current assets are €249 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 47% 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 4% (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 €1,4 EPS x €11,47 Book Value) = €19

Dividend: Aalberts currently pays a dividend of 52 cents. 0,52/30,42 = 1,7%

Conclusion: A bit too much debt, price (koers) a bit too high at the moment. Start buying only if under 25 Euros.

Old chart September 2012

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