Based on Chapter 14 of "The Intelligent Investor"
SECTOR: [PASS] AKZO is neither a technology nor a financial Company, so this methodology is applicable.
SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. AKZO's sales of €10 728 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. AKZO's current ratio €6 044m/€5 706m 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 AKZO is €4,306 million, while the net current assets are €338 million. AKZO 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 AKZO haven't really increased.
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. AKZO's earnings yield of 5% (using the 3 year average Earnings) fails this test.
DIVIDEND 1.98 EUR/EUR 55 = 3,6%
Note: Earnings for 2024 and 2025 are forecasted to be $4 and $4,5 At a multiple of 15 and stock price of EUR 60 may be reasonable. Not a stock for the Defensive Investor.
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