Healthcare is not easy... https://www.results.philips.com/publications/q223/downloads/pdf/en/philips-second-quarter-results-2023-report.pdf?v=20230725135335
Respironics litigation provision 575 miilion Respironics field-action provision 165 million
Philips reported today, October 6th, that the FDA wants more testing before the Respironics can be used again.
Philips reported 19% "circular revenues" a new term for me. It does not mean recurring, it is related to the products being part of the circular economy (recycled, re-used etc).
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| Based on adjusted EPS of 1 for 2023 |
Benjamin Graham Defensive analysis
SECTOR: [PASS] Philips 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. Philips' sales of €17 954 million, based on 2023 sales, pass this test. Sales have been declining.
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. Philips' current ratio €10 259m/€7 934m 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 Philips is €9 471 million, while the net current assets are €2 325 million. Philips 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 Philips haven't grown significantly over the past 10 to 15 years and booked a loss in 2022..
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. Philips's E/P of 5,8% (even using adjusted Earnings of EUR 1 per share) fails 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. Philips has a Graham number of √(15 x €1,5 EPS x 1,5 x €13 Book Value) = €18 and passes this test.
Dividend €0,85/€17,3 = 5%
Conclusion 2023: Still not an investment for the Graham Defensive investor.
Exor bought 15% of the shares this year: https://www.exor.com/press-releases/2023-08-14/exor-becomes-long-term-investor-philips-supporting-companys-strategy
I don't no whether they bought around 12 Euros or 18 Euros. Goldman Sachs seems to have played a role...
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