Wednesday, December 06, 2023

NSI NV "Graham" Value 1x book and 15x recurring EPS and stock Price


Dividend €2,16/ €32 = 7%

Conclusion August 2022: Seems like a buy here. 

Since then the stock price has declined 43% to EUR 18,4 and the dividend has been cut 30% to roughly EUR 1,5 from EUR 2,16 

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Benjamin Graham Analysis 

SECTOR: [PASS]  NSI  is neither a technology nor financial Company, and therefore this methodology is applicable.

SALES: [FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. NSI's sales of €71 million, based on 2022 sales, fails 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. NSI's current ratio €2.8m/€103m of 0.03 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 NSI is €289 million, while the net current assets are €-100 million. NSI 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. NSI made a loss in 2016 and therefore 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. NSI's E/P of 11% (using the current adjusted Earnings of EUR 2,1) just 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. NSI has a Graham number of ( 15 x €2,1 EPS x €38 Book Value) = +/- €34

Note: With real estate I use 1 x Book Value instead of 1,5 x Book Value. 

Dividend €1,5/ €18,4 = 8%


Conclusion December 2023: I was too optimistic last year. Today at a much lower price of EUR 18,4, it seems to be more attractive than last year. 

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