Wednesday, July 08, 2020

Sif holding stock price and Benjamin Graham value

SECTOR: [PASS]  Sif  Holding is in offshore and 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. Sif Holding's sales of €325 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. Sif Holding's current ratio €64m/ €76m of 0,8 fails the 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 SIf Holding is €79 million, while the net current assets are - €12 million. Sif Holding fails this test.

LONG-TERM EPS GROWTH: [FAIL]  [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. I don't have Sif Holding's EPS from 10 years ago when it was a private company, therefore Sif Holding neither passes or failsfails 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. Sif Holding's E/P of 1% (using last year's 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. Sif Holding has a Graham number of (15 x €0,31 EPS x 1,5 x €3,5 Book Value) = €4,9

Dividend ? the company pays dividend when it can. 

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