For shareholders, the company and share including dividends have done better than I expected: http://sinaas.blogspot.com/2018/09/tomtom-stock-intrinsic-value-versus.html The coronavirus and low automotive sales in H1 2020 have led to a loss this year.
Here is the Graham Defensive analysis:
SECTOR: [FAIL] TomTom is in the Technology sector, which is one sector that this methodology avoids. 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. TomTom's sales of €700 million, based on 2019 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. TomTom's current ratio €436m/€330m of 1.3 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 TomTom is €0 million (the balance sheet includes deferred revenue and other items), while the net current assets are €106 million. TomTom 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. TomTom made losses in 2008, 2011, 2017 and is currently losing money and therefore 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. TomTom's E/P of 3% using "earnings" of 0,25 EUR 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. TomTom has a Graham number of √(15x €0,25 EPS x €4 Book Value) = €4,7
SECTOR: [FAIL] TomTom is in the Technology sector, which is one sector that this methodology avoids. 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. TomTom's sales of €700 million, based on 2019 sales, pass 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). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for TomTom is €0 million (the balance sheet includes deferred revenue and other items), while the net current assets are €106 million. TomTom 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. TomTom made losses in 2008, 2011, 2017 and is currently losing money and therefore 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. TomTom's E/P of 3% using "earnings" of 0,25 EUR 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. TomTom has a Graham number of √(15x €0,25 EPS x €4 Book Value) = €4,7
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