Monday, May 14, 2018
Acomo Amsterdam Commodities intrinsic value
Acomo has been growing (through acquisitions) and pays a good dividend. In 2017 the lower dollar had a negative effect on results. If the price goes towards €20 again it could be a good buy although it is more expensive than the Graham Number.
SECTOR: [PASS] Acomo 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. Acomo's sales of €709 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. Acomo's current ratio €240m/€140m of 1.7 fails the 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). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Acomo is €21 million, while the net current assets are €100 million. Acomo 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. Acomo's EPS growth was more than 160% over the past 10 years, Acomo passes 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. Acomo's E/P of 6% (using the last 3 years 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. Acomo has a Graham number of √(15 x €1,4 EPS x 1,5 x €7,6 Book Value) = €15,4
Dividend: €1,1/€23 = 5%
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