Monday, April 13, 2099

Valuation of all stocks listed in Holland AEX All Share AAX: Benjamin Graham Defensive Investor method

Warren Buffett: "Well, start with the A’s." Click on the companies below for Graham Evaluation:

Aalberts Industries AEX:AALB, NL0000852564
ABN AMRO AEX:ABN48 NL0011540547
Accell Group AEX:ACCEL NL0009767532
Ahold Koninklijke AEX:AH, NL0010672325
Accsys Technologies AEX:AXS, GB00BQQFX454: Too small, making a loss, but growing sales.
Aegon AEX:AGN, NL0000303709
AFC AJAX AEX:AJAX NL0000018034
Air France-KLM PSE:AF, FR0000031122
Akzo Nobel AEX:AKZA NL0000009132Randstad AEX:RAND NL0000379121
Altice AEX:ATC, NL0011333752
AMG Advanced Metallurgical Group NV AMG:AEX NL0000888691
Amsterdam Commodities AEX:ACOMO NL0000313286
AND International Publishers
Apollo Alternative Assets AEX:AAA1, GB00B15Y0C52
Aperam AEX:APAM LU0569974404
Arcadis AEX:ARCAD, NL0006237562
ArcelorMittal AEX:MT, LU0323134006
ASM International AEX:ASM NL0000334118 BUY under €35
ASML Holding NV
Batenburg Techniek HAL Trust AEX:HAL, BMG455841020
BAM Koninklijke Groep 
Basic Fit ?! don't buy above 7,50
BE Semiconductor Industries AEX:BESI, NL0000339760
Beter Bed Holding AEX:BBED, NL0000339703
Bever Holding: Small real estate fund, bleeder, selling under 5 Euro book value.
Boskalis Westminster Koninklijke AEX:BOKA, NL0000852580
Boussard & Gavaudan Holding Ltd. An expensive hedge fund.
Brill, Koninklijke kopen onder 20 Euro
Brunel International AEX: BRNL, NL0010776944
Corbion AEX:CRBN, NL0010583399
Core Laboratories AEX:CLB, NL0000200384
Ctac buy under €2,50
Curetis loss making biotech company = too difficult pile
Docdata: Cocoondd telt 0,35 euro in contanten neer per aandeel.
Delta Lloyd numbers expected August 17th 2016 with 220 million new shares.
DPA Groep N.V. buy at €1,1
DSM Koninklijke don't buy over 40 Euros
Esperite: Stem Cell Bank losing money hand over fist.
Eurocastle NPL Non Performing Loans in Italy... Results August 3rd
Eurocommercial Properties: Buy at €35
Euronext buy at €30
Fagron EPS -6,3 and negative Book Value per share -€2, not for the defensive investor...
ForFarmers a Graham Defensive Pick up to €6,50
Flow Traders outside my circle of competence, seems like a buy under €30
Fugro's Graham Value has decreased, buy at €10?
Gemalto buy under €45
Galapagos is a clinical-stage biotechnology company, not profitable (yet?).
GrandVision : Don't buy over €20
Groothandelsgebouwen N.V. buy under €40
HAL Trust: check November 17th 2016
Heijmans losing money
Heineken, buy under 60?
Holland Colours buy now under €61
Hunter Douglas, good balance sheet, buy if under €41
Hydratec buy now, sell at €60
ICT Group NV buy under 7 Euros
IEX Group Sales 2m, losses 600k, not for the defensive investor
IMCD buy under 20 Euros
ING Bank buy around 10 Euros
Intertrust too little history: Earnings per share 2016 Euro 1,3 x 15 = 19,5 Euros: Price = 19,86 Euros
Inverko used to be Newconomy, is for sale, garbage (disposal) Price = 0,60 Euros
Kardan made a loss 4 out of the last 5 years including H1 2016
KAS Bank cheap now under 10 Euros ?
Kendrion buy at 20 Euros
Kiadis Pharma bleeder, not for Defensive Investor, no sales
Klepierre French Retail Real Estate 5% dividend
KPN not for the Graham Defensive Investor


Porceleyne Fles Koninklijke Check under 5 Euros.

Value8 AEX:VALUE NL0010661864
VOPAK buy under 30

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Sunday, December 04, 2016

Templeton's Way with Money Re-Balancing Program 1955

What will you do if stock prices go up or down? Sir John Templeton gave his customers a program, a plan before the year started: Today in 2016 he might have a higher percentage of stocks because interest rates (on (government) bonds) are currently near 0%.

Friday, December 02, 2016

What is Deep Learning or Artificial Intelligence? A tutorial

Just got this via email: Hello,
My name is Irina Papuc, and I work for a technical publication known as the Toptal Engineering blog. Our blog covers a variety of topics, across many programming languages and dev/design.
I have noticed we share similar areas of focus in our topics including artificial intelligence , which I found here. (On levels of Intelligence in Investing). We’ve recently published an article called "A Deep Learning Tutorial: From Perceptrons to Deep Networks", which has a similar focus on artificial intelligence .
Would you be interested in sharing this with your community by publishing it on your site? In addition, what other topics make sense, and are you open to long-term collaboration? I appreciate your time, so if you don’t think this proposal is a good fit, please let me know and I’ll take note of it!
Kind Regards,
Irina
Looks interesting haven't read it yet.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Tuesday, November 29, 2016

Koninklijke Vopak Valuation Graham Intrinsic Value


SECTOR: [PASS]  Vopak 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. Vopak's sales of €1,492 million, based on 2015 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. Vopak's current ratio €641m/€547m of 1.2 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 Vopak is €2 736 million, while the net
current assets are €99 millionVopak 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. Vopak's EPS growth over that period of 330% 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. Vopak's E/P of 5% (using average of last 3 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. Vopak has a Graham number of (22,5 x €2,2 EPS x €14,75 Book Value) = €29 and fails this test.

DIVIDEND €1/€43 = 2,3%



Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Tuesday, November 08, 2016

Koninklijke DSM intrinsic value based on Benjamin Graham math


SECTOR: [PASS] DSM 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. DSM's sales of €8,935 million, based on 2015 sales, pass this test.

CURRENT RATIO: [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. DSM's current ratio €5,153m/€2,373m of 2.2 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 meet this criterion display one of the attributes of a financially secure organization. The long-term debt for DSM is €3,600 million, while the net current assets are $2,780 million. DSM 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. DSM's EPS decline of 20% 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. DSM's E/P of 2% (using the 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. DSM has a Graham number of (22,5 x €1,1 EPS x €32 Book Value) = €28,5 and fails this test.

Dividend: DSM pays a dividend of 1,65/56.62= 3%

Conclusion: Trader's who bought at 40 Euros in 2015 and sold around 60 Euros in 2016, would have done well, but in the long term DSM hasn't been a great investment and the price seems high at the moment.

See www.beterinbeleggen.nl   



Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Monday, November 07, 2016

Koninklijke Brill Scholarly Publishing Intrinsic Value

Founded in 1683, Brill is a publishing house with a rich history and a strong international focus. The company’s head office is in Leiden, (The Netherlands) with a branch office in Boston, Massachusetts (USA). Brill was listed at the Amsterdam Stock exchange in 1896.


SECTOR: [PASS]  Brill is in publishing and passes this test. Technology and financial stocks were considered too risky to invest in when this methodology was published. 

SALES: [FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million.
Brill's sales of €31 million, based on 2015 sales, fails this test.

CURRENT RATIO:  [PASS] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. 
Brill's current ratio €22,7m/€12,5m of 1,8 is very close and in combination with no long term debt passes this 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 do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for 
Brill is €0 million, while the net current assets are €10 million. Brill passes 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. Brill's earnings have not increased during the past 5 years, but I don't have the figures from 10 years ago.

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. Brill's E/P of 5% (using the average of the last 3 years or last year's 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. Brill has a Graham number of (15 x €1,3 EPS x 1,5 x €14,50 Book Value) = €20,4

Dividend: €1,2/€26 = 5% 

Conclusion: 
Brill has a strong balance sheet and pays a good dividend, but seems a bit expensive for the Defensive Investor at a price of €26 in November 2016. 

See: www.beterinbeleggen.nl for more in depth, qualitative analysis of "good" companies.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Basic Fit intrinsic value ? Discounted Cash Flow ?

Basic Fit is a recent IPO, they are opening gyms hand over fist. The stock price has gone from 17,50 down to 12,60 and back up to 16,45.

It's adjusted EPS (which seem to be EBITDA per share?) = 0,11 per share in first half of 2016. Say full year adjusted earnings are 0,25 per share, then Basic Fit is trading today for a Earnings Yield (inverse PE) of 0,25 Earnings divided by 16,45 share price = 1,5%

Say "profit" doubles and you are willing to pay 15x profit then you get 0,25 x 2 = 0,50 x 15 = 7,50 Euros. Anything more than this seems (to me) ridiculously expensive.

Will be interesting to follow during the coming years, but not an investment for the Defensive Investor today at a Market Cap of 900m Euros and Enterprise Value of more than a billion and annual sales of less than 300m Euros...

Beware of EBITDA, as Charlie Munger says, when you see "EBITDA" think "BullSh*t".

I’ll leave it to Warren Buffett to explain:
“People who use EBITDA are either trying to con you or they’re conning themselves. Telecoms, for example, spend every dime that’s coming in. Interest and taxes are real costs.”  
http://corporate.basic-fit.com/Cms_Data/Contents/California/Media/Results/160825-H1-Report-BFIT.pdf

As far as Discounted Cash Flow is concerned, if there is no CF there is no DCF.

Conclusion: Growing revenue quickly, but stock seems expensive. Not a stock for the Defensive Investor.

See http://www.beterinbeleggen.nl/ for quality profitable companies.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Saturday, November 05, 2016

Value Investing : Where are the components of Value?

KLM = Book Value
Marlboro = Book Value + Earnings
Google (Alphabet) = Book Value + Earnings + Growth

Here's the kicker:
Price (quoted value on stock exchange) is what you pay, Value is what you get.

Danny DeVito explains hows his stock screener computer Carmen found a great Value/Price ratio:





Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Thursday, November 03, 2016

F.A.M.I.L.Y. Company Values


F   -   Fulfill the potential of our suppliers and customers
A   -   Aspire to excellence
M   -   Mission and Vision driven
I     -   Integrity and inclusiveness are our hallmarks
L   -   Leadership in everything we do
Y   -   You are critical to our success
(stolen with pride via my wife from http://www.southernglazers.com/about-us/ )

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Koninklijke BAM Groep intrinsic value

SECTOR: [PASS]  BAM 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. BAM's sales of €7,423 million, based on 2015 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. BAM's current ratio €3,345m/€3,068m 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 BAM is €728 million, while the net
current assets are €277 million. BAM 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. BAM's earnings have declined and were negative in 2012 and thus fails 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. BAM's E/P of 5% (using the last 3 years earnings) 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. BAM has a Graham number of (22,5 x €0,1 EPS x €3,4 Book Value) = €3

DIVIDEND , but SELLING STOCK

BAM is not a Money Making Machine, but might do better in the coming years than during the past 7 years. Not a stock for the Defensive Investor due to Long Term Debt and vulnerability to the economic situation in Europe.

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Wednesday, November 02, 2016

United Therapeutics Peter Lynch chart 15 x Earnings per Share vs Share price


Earnings swing wildly because they are linked to stock price option pay of management. When the stock price goes down, management pay goes down and earnings go up, and vice versa.
Red = Earnings per share (x 15) = Price of share if PE was 15.
Green = Share price

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Kendrion Magnets intrinsic value buy at 20 Euros


More and more share, means Graham Value per share is not increasing as quickly as total company sales and profit growth (not visible here).



Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

KAS Bank intrinsic value using Graham Number




SECTOR: [FAIL] 

KAS Bank is in the Financial sector, which is one sector that this methodology avoids. Technology and financial stocks are considered too risky to invest in. Several of Graham's criteria, like the Current Ratio and Debt to Current Assets, do not apply to financial companies. As a result, the company will not be able to pass this methodology, although we will include the remainder of the analysis for informational purposes.


SALES: [FAIL] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. KAS Bank's sales of €100 million, based on 2015 sales, fails this test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] Long term debt must not exceed net current assets. Companies that meet this criterion display one of the attributes of a financially secure organization. 
KAS Bank is a financial stock so this variable is not applicable and this criterion cannot be evaluated.

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 
KAS Bank haven't increased in the last 5 years including the first 3 quarters of 2016 therefore the company fails this criterion. 

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.
KAS Bank's E/P of 4% using earning per share estimate of this year of 0,3 Euros.

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. KAS Bank has a Graham number of (15 x €0,8 EPS x 1,5 x €14 Book Value) = €11,9

Dividend: Usually about 60 cents. 0,60/8,26 = 7%

Conclusion: KAS Bank is having a tough year. The stock price seems low, so it might be worthwhile to do some research to see whether a return to earnings over 1 Euro per share and a high dividend are in the cards for the coming years. Not a stock for the Defensive Investor.

Voor een gratis ebook over Graham z'n meest succesvolle pupil zie: http://www.warrenbuffett.nl/  

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Monday, October 31, 2016

Charlie Munger on retail and chain stores

A CASE STUDY IN ECONOMIES VS. DISECONOMICS - WAL-MART VERSUS SEARS, ROEBUCK. -------------------------------------------------------------------------------- A chain store can be a fantastic enterprise. Munger: On the subject of advantages of economies of scale, I find chain stores quite interesting. Just think about it. The concept of a chain store was a fascinating invention. You get this huge purchasing power - which means that you have lower merchandise costs. You get a whole bunch of little laboratories out there in which you can conduct experiments. (reducing risk when innovating) And you get specialization. If one little guy is trying to buy across 27 different merchandise categories influenced by traveling salesmen, he's going to make a lot of dumb decisions. But if your buying is done in headquarters for a huge bunch of stores, you can get very bright people that know a lot about refrigerators and so forth to do the buying. The reverse is demonstrated by the little store where one guy is doing all the buying. It's like the old story about the little store with salt all over its walls. And a stranger comes in and says to the store owner, "You must sell a lot of salt." And he replies, "No, I don't. But you should see the guy who sells me salt." So there are huge purchasing advantages. And then there are the slick systems of forcing everyone to do what works. So a chain store can be a fantastic enterprise. Sam Walton played the game harder and better than anyone. Munger: It's quite interesting to think about Wal-Mart starting from a single store in Bentonville, Arkansas - against Sears Roebuck with its name, reputation and all of its billions. How does a guy in Bentonville, Arkansas with no money blow right by Sears, Roebuck? And he does it in his own lifetime - in fact, during his own late lifetime because he was already pretty old by the time he started out with one little store.... He played the chain store game harder and better than anyone else. Walton invented practically nothing. But he copied everything anybody else ever did that was smart - and he did it with more fanaticism and better employee manipulation. So he just blew right by them all. -50- And he had a very shrewd strategy.... Munger: He also had a very interesting competitive strategy in the early days. He was like a prize fighter who wanted a great record so he could be in the finals and make a big TV hit. So what did he do? He went out and fought 42 palookas. Right? And the result was knockout, knockout, knockout - 42 times. Walton, being as shrewd as he was, basically broke other small town merchants in the early days. With his more efficient system, he might not have been able to tackle some titan head-on at the time. But with his better system, he could sure as hell destroy those small town merchants. And he went around doing it time after time after time. Then, as he got bigger, he started destroying the big boys. Well, that was a very, very shrewd strategy. I believe that the world is better for having Wal-Mart. Munger: You can say, "Is this a nice way to behave?" Well, capitalism is a pretty brutal place. But I personally think that the world is better for having Wal-Mart. I mean you can idealize small town life. But I've spent a fair amount of time in small towns. And let me tell you - you shouldn't get too idealistic about all those businesses he destroyed. Plus, a lot of people who work at Wal-Mart are very high grade, bouncy people who are raising nice children. I have no feeling that an inferior culture destroyed a superior culture. I think that is nothing more than nostalgia and delusion. But, at any rate. it's an interesting model of how the scale of things and fanaticism combine to be very powerful. Sears was a classic case study in diseconomics. Munger: And it's also an interesting model on the other side - how with all its great advantages, the disadvantages of bureaucracy did such terrible damage to Sears, Roebuck. Sears had layers and layers of people it didn't need. It was very bureaucratic. It was slow to think. And there was an established way of thinking. If you poked your head up with a new thought, the system kind of turned against you. It was everything in the way of a dysfunctional big bureaucracy that you would expect. In all fairness, there was also much that was good about it. But it just wasn't as lean and mean and shrewd and effective as Sam Walton. And, in due time, all their advantages of scale were not enough to prevent Sears from losing heavily to Wal-Mart and other similar retailers.


Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Thursday, October 20, 2016

ING stock intrinsic value Benjamin Graham valuation

The Intelligent Investor by Benjamin Graham, was first published in 1949. The Graham Defensive Stock Screen used here, was described in Chapter 14 of that book. It is fascinating for me to see how many stock prices follow the simple geometric average calculation of 1,5x Book Value and 15x Earnings per Share of the Graham Number. See https://en.wikipedia.org/wiki/Graham_number


The value of ING seems to be between 15 and 20 Euros, if you could buy it for less than 10 Euros as was possible in 2013 (see below), you would probably be getting a good deal. As Graham said: "In the short term the stock market is a voting machine, in the long term it is a weighing machine,"


SECTOR: [FAIL] 

ING is in the Financial sector, which is one sector that this methodology avoids. Technology and financial stocks are considered too risky to invest in. Several of Graham's criteria, like the Current Ratio and Debt to Current Assets, do not apply to financial companies. As a result, the company will not be able to pass this methodology, although we will include the remainder of the analysis for informational purposes.


SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. ING's sales of €15,296 million, based on 2014 sales, pass this test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] Long term debt must not exceed net current assets. Companies that meet this criterion display one of the attributes of a financially secure organization. ING is a financial stock so this variable is not applicable and this criterion cannot be evaluated.


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 ING haven't increased in the last 5 years and have been negative in the last 10 years therefore the company fails this criterion. 


EARNINGS YIELD:  [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. ING's E/P of 9% using earning per share estimate of €1,06.


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. ING has a Graham number of (15 x €0,9 EPS x 1,5 x €12,42 Book Value) = €15,9

Voor een gratis ebook over Graham z'n meest succesvolle pupil zie: http://www.warrenbuffett.nl/  

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com

Monday, October 17, 2016

Internatio-Müller Chemical Distribution aka IMCD intrinsic value vs market cap and stock price


Internatio-Müller Chemical Distribution (IMCD) is the sister company of IMtech (which went bankrupt). Bain Capital bought IMCD for €610m in 2010 and the market cap now, after coming back to the stock exchange again in 2014, is € 2 130m. 

SECTOR: [PASS]  IMCD 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. IMCD's sales of €1 537 million, based on 2015 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. IMCD's current ratio €481m/€283m of 1.7 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 IMCD is €495 million, while the net current assets are €198 million. IMCD 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. IMCD's EPS were negative in 2012 and 2013 so the company 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. IMCD's E/P of 3% (using the average over 3 years) 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. IMCD has a Graham number of (15 x €1,3 EPS x 1,5 x €13 Book Value) = €19 and fails this test.

Dividend: 0,44 E / 40,41 E = 1% and increasing.

Conclusion: Bain probably wouldn't buy the company now for 3,5x the price it paid in 2010.
For analysis of more great companies, see www.beterinbeleggen.nl 

Comments, questions or E-mails welcome: ajbrenninkmeijer@gmail.com