woensdag 23 november 2016

KPN Intrinsic Value tracker using Benjamin Graham Number

SECTOR: [PASS]  KPN 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. KPN's sales of €7,008 million, based on 2015 sales, passes this test, but sales are decreasing year to year.

[PA SS]  Current assets  €7 754 divided by short term debt €3 042 = 2.5 which is higher than Graham's limit of 2. 

[FAIL] Long term debt € 9 348 is higher than Net Current Assets €4 712.

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 KPN have decreased since 2003 and therefore the company fails this criterion. It has also lost money during the past 5 years.

Earnings Yield: [FAIL] Graham likes to see 7% or higher. 6% 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. KPN has a Graham number of (15 x €0,1 EPS x €1,2 Book Value) = €1,8

Dividend: € 0,08/€2,7 = 3%

Conclusion: KPN is not a growing, money making machine. The stock price and debt are too high for the Defensive Investor.

2013 evaluation:

2012 numbers: EPS drop from €1,06 to €0,49 , book value/per share and EPS (Earnings per share) will decrease from €2 to €1 and from €0,9 to €0,45 respectively because of a major rights issue which has been announced.

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