Basic-Fit notes

Energy costs per gym down from EUR 55k in 2023 to 35k in 2024 and 2025. A savings of EUR 24m per year. 

SECTOR: [PASS]  Basic-Fit 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. Basic-Fit's 2022 sales of EUR 800 million, passes 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. Basic-Fit's current ratio €143m/€455m of 0.3 fails this 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 Basic-Fit is €1 990 million, while the net current assets are minus €312 million. Basic-Fit 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. Basic-Fit was losing money until 2022 (due to growth) and fails 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. Basic-Fit's E/P of 1% (using 0,30 Earnings per share and a share price of EUR 28) 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. Basic-Fit has a Graham number of √(15 x €0,5 EPS x 1,5 x €6,5 Book Value) = €8,5 

Dividend: No dividend

Market cap: EUR 28,2 price per share x 66 million shares = EUR 1,8 B  seems reasonable against possible earnings of over EUR 100m per year in the future. 

Conclusion: Not for the Graham Defensive Investor