Here a simple Graham analysis: My assumption is that Ajax is doing relatively well on the field and should thus be profitable again. Earnings per Share €1?
SECTOR: [PASS] AJAX is neither a technology nor a 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. AJAX's sales of €152 million, based on 2023 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. AJAX's current ratio €184m/€164m of 1.1 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 AJAX is €190 million, while the net current assets are €20 million. AJAX 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. AJAX made a small loss in 2015, 2021 and 2023 thus fails the test.
Earnings Yield: [PASS] [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. AJAX's E/P of 0% (using last year's Earnings) fails this test.
SECTOR: [PASS] AJAX is neither a technology nor a 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. AJAX's sales of €152 million, based on 2023 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. AJAX's current ratio €184m/€164m of 1.1 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 AJAX is €190 million, while the net current assets are €20 million. AJAX 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. AJAX made a small loss in 2015, 2021 and 2023 thus fails the test.
Earnings Yield: [PASS] [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. AJAX's E/P of 0% (using last year's Earnings) fails this test.
Graham Number value: [PASS] [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. AJAX has a Graham number of √(15 x €0,9 EPS x 1,5 x €12,1 Book Value) = €15
Dividend 2022 0 cents = 0,0%
Conclusion: not for the Graham Defensive investor, more of a gamble...
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