The Rubber Cultuur Maatschappij 'Amsterdam' was founded in 1908 "In 2022 the company decided that it was time for another name change. Amsterdam Commodities N.V. became ACOMO N.V.. The association with ‘commodities’ no longer does justice to the true nature of our core activities as they have developed over the past twenty years, namely the trading and high-quality processing of conventional and organic food ingredients. The name change reflects our current identity as a food ingredient company."
Acomo bought Tradin Organic using debt. Sales and profits per share have increased and profits are being used to pay down debt instead of paying out dividends. In 2022 profit was EUR 54m compared to EUR 53m and would have been higher, but interest rates increases cuased interest expenses to jump by EUR 3,6m from EUR 7,6m to EUR 11,2m.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Acomo's sales of more than EUR 1 400 million, based on 2022 sales, pass this test.
CURRENT RATIO: [FAIL] [PASS] 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 €578m/€298m of 1.9 just 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 €149 million (of which €11m leases), while the net current assets are €280 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 100% over the past 10 years, Acomo passes this test.
Earnings Yield: [PASS] 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 9,7% (using last years Earnings) passes 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. Acomo has a Graham number of √(15 x €1,9 EPS x 1,5 x €13,9 Book Value) = €24
Dividend: €1,25/€21,3 = 6%
Conclusion 2023: The merger seems to be going well. Seems like a goog pick for a Graham Defensive investor
No comments:
Post a Comment