Shares on Polish stock exchange: SI0031102120
SECTOR: [PASS] Krka Group is a pharmaceutical company and neither a technology nor financial Company, and therefore this methodology is applicable.
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. Krka Group's current ratio: €848m current assets / €317m current liabilities of 2.7 passes the 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 Krka Group is €116 million, while the net current assets are €131 million. Krka Group passes this test.
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. Krka Group's E/P (using the current 2017 profits) are €4,5 / €9 = 8,5% and passes this test.
Dividend: 2,75/53 Euros is 5,1% note that the dividend has been increasing during the past years.
Conclusion: Krka Group is a defensive stock. The increase in earnings over the past 10 years is slightly lower than Graham stipulated. The stock probably won't make you rich over-night but should help increase your wealth over time.
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