In June 2020 I underestimated the effect further lockdowns in The Netherlands would have on boosting PostNL's business. (The second lockdown was a surprise for me.) https://sinaas.blogspot.com/2020/06/postnl-stock-price-and-graham-value-in.html The stockprice reached EUR 4,77 in 2021. Today it is EUR 2,19
SECTOR: [PASS] PostNL 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. PostNL's sales of €3 491 million, based on 2021 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. PostNL's current ratio €1 343m/€927 of 1.4 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 PostNL is €1 129 million, while the net current assets are €416 million. PostNL 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. EPS for PostNL were negative within the last 5 years and Earnings per Share have decreased over the last 10 years, therefore the company fails this criterion.
GRAHAM NUMBER VALUE: [FAIL][PASS] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. PostNL has a Graham number of √(15 x €0,36 EPS x 1,5 x €0,42 Book Value) = €1,8 and netither fails or passes this test.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. PostNL's sales of €3 491 million, based on 2021 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. PostNL's current ratio €1 343m/€927 of 1.4 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 PostNL is €1 129 million, while the net current assets are €416 million. PostNL 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. EPS for PostNL were negative within the last 5 years and Earnings per Share have decreased over the last 10 years, therefore the company fails this criterion.
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. PostNL's E/P of 11% (using 2022 estimated earnings of EUR 0,25 per share) passes this test.
Dividend: 0,15?/1,8 = 8% ? The aim was "for a progressive dividend." this doesn't seem to have worked. The dividend last year of EUR 0,42 was pretty good. EUR 0,15 is a guesstimate.
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