Boskalis intrinsic value update

Conclusion last year: "Boskalis seems inexpensive at the moment. You can buy a Euro of Graham Value for 66 cents. Profits will be lower this year, but the price to book of 1 is very appealing. Debt is a bit too high for the defensive investor. "

In 2016 Boskalis booked a loss after huge write downs. The company should be profitable this year, but much less than in 2015. Benjamin Graham Value has followed Price:

SECTOR: [PASS]  Boskalis 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. Boskalis' sales of €2 655 million, based on 2016 sales, 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. Boskalis's current ratio €1 834m/€2 025m of 0.9 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 Boskalis is €363 million, while the net current assets are - €191 million. Boskalis 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. Boskalis posted a loss in 2016 and fails this 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. Boskalis's E/P of 0% (using last year's  Earnings) fails 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. Boskalis has a Graham number of √(15 x €1,34 EPS x 1,5 x €24,4 Book Value) = €28 

Dividend: €1/€28 = 4% 

See: www.beterinbeleggen.nl for more in depth, qualitative analysis of "good" companies.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com