Alfen energy transition company stock Price and Graham defensive Value : energietransitie

Today in the Dutch Financial Daily it was revealed that pension funds want to invest billions in the Dutch energy transition: https://fd.nl/economie/1511961/grootste-pensioenfondsen-willen-miljarden-in-energietransitie-steken as a "result" Alfen's share price has decreased by 1% whilst the AEX increased slightly:) 

Alfen's has a market cap of EUR 1b. The pension fund ABP is talking about investing EUR 10b.

Logarithmic scale is better for decision-making than linear below

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Alfen was focused on charging electric vehicles and is now also working on energy storage with 

CATL battery company.

This summer in The Netherlands solar will generate 30 GW on sunny days whilst electricity use is 15 GW. Electricity will be free for hundreds of hours and expensive at other times. The demand for storage is also increasing worldwide. See https://www.tesla.com/ns_videos/Tesla-Master-Plan-Part-3.pdf for the numbers involved in the worldwide energy transition.

Alfen expects to see revenue increase by roughly a quarter in 2024 and Earnings to increase to EUR 100m? by 2027 (they predict EBITDA, not net earnings). That would be roughly EUR 5 per share. At a multiple of 15 the share price would be EUR 75 an increase of 50% in 4 years. 

Alfen Graham Defensive Analysis

SECTOR: [PASS] Alfen 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. Alfen's sales of €504 million, based on 2023 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. Alfen's current ratio €315m/€191m of 1.6 just fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS:  [PASS] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that meet this criterion display one of the attributes of a financially secure organization. The long-term debt for Alfen's is €26m, while the net current assets are €124m million. Aalberts passes 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. Alfen's EPS growth over the past years of > 1 000% passes the EPS growth 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. Alfen's E/P of 4% (using last years earnings) 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. Alfen's has a Graham number of √(15 x €1,9 EPS x 1,5 x €8,3 Book Value) = €21

Dividend: There is no dividend payment because all proceeds are reinvested in the company.

Conclusion: February 2023 at 77 Euros: The company operates businesses for which demand can easily double, possibly doubling profits as well within a few years. The stock price seems reasonable at EUR 77, not for the Graham Defensive Investor. 

Conclusion: March 2024 at 49 Euros: The stock is more expensive than the recent dip to EUR 28 but more attractive than 77 last year. The company seems set to keep growing and profiting from the energy transition and demand for storage solutions.