Monday, June 20, 2016

Brunel International Intrinsic Value AEX: BRNL NL0010776944

SECTOR: [PASS]  Brunel 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. Brunel's sales of €1 229 million, based on 2015 sales, passes 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. Brunel's current ratio €439m/€128m of 3.4 is very good.

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 Brunel is €2,6 million, while the net current assets are €311 million. Boskalis 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. Brunel's earnings have not increased much over the past ten years.

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. Brunel's E/P of 4% (using this years estimated 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. Brunel has a Graham number of (15 x €0,7 EPS x 1,5 x €7 Book Value) = €10,6 

Dividend: €0,75/€17 = 4% ? Dividend 2016?  

Conclusion: Brunel has a strong balance sheet. The business is not capital intensive so it will not have a high book value compared to share price. Business is bad due to the low oil price. Brunel provides staff for the energy sector amongst other things.  

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

Old chart before 2 for 1 stock split. The 40 Euro price (now 20) was too high a few years ago.

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