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Benjamin Graham Defensive analysis:
SECTOR: [PASS] Euronext runs stock exchanges. It went public in 2013-14. It bought the Borsa Italiana Group.
SECTOR: [PASS] Euronext runs stock exchanges. It went public in 2013-14. It bought the Borsa Italiana Group.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Euronext's sales of €1 485 million, based on 2022 sales, passes 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 Euronext is €1 486 million, while the net current assets are €1 000? million. Euronext fails this test.
LONG-TERM EPS GROWTH: [PASS] 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. Euronext's earnings are growing, but the long-term results are difficult to determine because of its corporate history and recent IPO, but earnings have been increasing significantly.
Earnings Yield: [FAIL [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. Euronext's E/P of 6,3% (using last year's adjusted Earnings) doesn't pass or fail 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. Euronext has a Graham number of √(15 x €4,3 EPS x 1,5 x €37 Book Value) = roughly €61
Dividend: €2.20/€78,3 = 2,8%
Conclusion December 2023: The merger with Borsa Italia and IT switch from the UK to Italy seems to have gone well. Stock is now slightly less cheap than a few months ago at EURO 61
Disclosure: I own Euronext shares through www.valuemachinesfund.nl
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Euronext's sales of €1 485 million, based on 2022 sales, passes 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 Euronext is €1 486 million, while the net current assets are €1 000? million. Euronext fails this test.
LONG-TERM EPS GROWTH: [PASS] 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. Euronext's earnings are growing, but the long-term results are difficult to determine because of its corporate history and recent IPO, but earnings have been increasing significantly.
Earnings Yield: [FAIL [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. Euronext's E/P of 6,3% (using last year's adjusted Earnings) doesn't pass or fail 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. Euronext has a Graham number of √(15 x €4,3 EPS x 1,5 x €37 Book Value) = roughly €61
Dividend: €2.20/€78,3 = 2,8%
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