The company is kept in the air by selling shares to the Dutch and French governments. Sales have increased from EUR 14b in 2021 to EUR 26b as Covid19 restrictions have been lifted.
SECTOR: [PASS] AF 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. AF's sales of €26 400 million, based on 2022 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. AF's current ratio of €11 000m/€13 660m 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 AF is €21 000 million, while the net current assets are €-2 662 million. AF 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 AF were negative in many of the past years and therefore the company fails this criterion.
E/P RATIO: [FAIL] [PASS] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. (E/P > 7%) Stocks with moderate P/Es are more defensive by nature. AF's Earnings Yield is 0% as an average for the past three years. Earnings per share of EUR 0,31 last year and the current stock price EUR 1,75 result in an Earnings Yield of 18%.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AF's sales of €26 400 million, based on 2022 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. AF's current ratio of €11 000m/€13 660m 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 AF is €21 000 million, while the net current assets are €-2 662 million. AF 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 AF were negative in many of the past years and therefore the company fails this criterion.
E/P RATIO: [FAIL] [PASS] The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. (E/P > 7%) Stocks with moderate P/Es are more defensive by nature. AF's Earnings Yield is 0% as an average for the past three years. Earnings per share of EUR 0,31 last year and the current stock price EUR 1,75 result in an Earnings Yield of 18%.
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 and is at 0,19 whilst the price is 1,75 Euros.
NO DIVIDEND
Conclusion: The stock price is low compared to last year's earnings, but the question for the long term is whether any cash can or will be returned to shareholders...
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