Benjamin Graham analysis:
SECTOR: [PASS] Brunel 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. Brunel's sales of €914 million, based on 2018 sales, passes this test.
CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Brunel's current ratio €347m/€122m of 3.2 is very good.
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 Brunel is €33 million, while the net current assets are €230 million. Brunel passes 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. Brunel's earnings have not increased over the past ten years.
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. Brunel's E/P of 6% (using this year's adjusted Earnings) just passes 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. Brunel has a Graham number of √(15 x €0,4 EPS x 1,5 x €5,3 Book Value) = €7
Dividend: €0,25/€8,82 = 3%
Conclusion: Brunel has a strong balance sheet. The business is not capital intensive so it will not have a high book value compared to share price. Business was bad due to the low oil price. Results have improved except in Texas where the BIS business was cloased and a one time loss of 15 cents per share was incurred. 8,82 Euros on December 15th 2019 might be a good price to buy.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Brunel's sales of €914 million, based on 2018 sales, passes this test.
CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Brunel's current ratio €347m/€122m of 3.2 is very good.
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 Brunel is €33 million, while the net current assets are €230 million. Brunel passes 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. Brunel's earnings have not increased over the past ten years.
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. Brunel's E/P of 6% (using this year's adjusted Earnings) just passes 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. Brunel has a Graham number of √(15 x €0,4 EPS x 1,5 x €5,3 Book Value) = €7
Dividend: €0,25/€8,82 = 3%
Conclusion: Brunel has a strong balance sheet. The business is not capital intensive so it will not have a high book value compared to share price. Business was bad due to the low oil price. Results have improved except in Texas where the BIS business was cloased and a one time loss of 15 cents per share was incurred. 8,82 Euros on December 15th 2019 might be a good price to buy.
No comments:
Post a Comment