Thursday, June 17, 2021

Ajax Amsterdam Benjamin Graham analysis

Here a simple Graham analysis:

SECTOR: [PASS]  AJAX is neither a technology nor a financial Company, and therefore this methodology is applicable. 

SALES:[FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AJAX's sales of €162 million, based on 2020 sales, fails 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. AJAX's current ratio €114m/€86m of 1.3 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 AJAX is €193 million (an increase), while the net current assets are €28 million. AJAX 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. AJAX made a small loss in 2015  and thus fails the 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. AJAX's E/P of 7,5% (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. AJAX has a Graham number of (15 x €1,6 EPS x 1,5 x €12,5 Book Value) = €21 

Dividend 2020 0 cents = 0,0% 

Update 17 februari 2021 : Ajax heeft in de 1-e helft van het boekjaar (seizoen) 2020 - 2021 de inkomsten en winst zien dalen. De omzet daalde  - als gevolg van de coronacrisis - met 29 % tot  79 miljoen euro. Mede door  57 miljoen euro aan transfergelden bedroeg het nettoresultaat 38 miljoen euro positief (vorig seizoen 53 miljoen euro). De operationele winst * (exclusief transfergelden) bedroeg 1,3 miljoen euro negatief.
* : Ajax keert jaarlijks 25 tot 35% van de operationele winst (exclusief transfergelden) als een cash dividend uit. (zie onderstaand dividendbeleid)

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