AFLAC quack quack Benjamin Graham Intrinsic Value analysis

AFLAC is an insurer in the USA and Japan.

The last AFLAC 2 for 1 stock split was a few weeks ago on the 16th of March 2018: http://investors.aflac.com/stock-information/stock-dividend-split-history.aspx

P/E RATIO: PASS

The Price/Earnings (P/E) ratio, based on the greater of the current PE or the PE using average earnings over the last 3 fiscal years, must be "moderate", which this methodology states is not greater than 15. Stocks with moderate P/Es are more defensive by nature. AFL's P/E of 13.60 (using the 3 year PE) passes this test.

PRICE/BOOK RATIO: PASS

The Price/Book ratio must also be reasonable. That is, the Price/Book multiplied by P/E cannot be greater than 22. AFL's Price/Book ratio is 1.40, while the P/E is 13.60. AFL passes the Price/Book test.

Increasing Dividend: Currently $2,08 / $44 = 5% plus 4% sharebuybacks per year.

AFLAC isn't a standard insurer. It gives people extra cash in one day when they get sick or injured. Here is there first duck commercial that explains the idea.

Later Melania Trump starred in an AFLAC commerical.

AFLAC has consistently outperformed the index:

http://investors.aflac.com/stock-information/interactive-chart.aspx

Some more explanation from the Motley Fool:

https://www.fool.com/investing/2017/06/07/6-things-you-didnt-know-about-aflac.aspx

It is still run by the original family: https://en.wikipedia.org/wiki/Aflac

Note: Why are revenues falling?
Answer: Weakening Yen

Checklist: 5 x M: Marktpotentieel, Marge, Moat, Management, Money

1. Marketpotential: Can the company grow exponentially?
FAIL: due to demographic trends in Japan and high current penetration

2. Marge: Margin and/or Return on Equity
15-20% ROE pass

3. Moat: Pass Economies of Scale and Brand

4. Management: Pass

5. Money: Is the price ok? Pass

Checklist failure: market potential for growth

 Personal note: Many Americans don't save and invest. Customers would probably be better off saving and investing their money in a cheap index fund than paying premiums to AFLAC and its shareholders. That way they would have more money for a rainy day.

Stand april 2018 inleg 2 450 Eur, Graham Waarde 4 532 Eur, korting 32%

Mr. Market vroeg minder geld voor hetzelfde aandeel in bedrijven waardoor we nu meer aandelen hebben en minder cash per persoon (nu €39,-). De aankoop beslissing hangt samen met onze "value averaging" techniek.

Het lijkt een prima moment voor nieuwe Machinisten om in te stappen.

Steinhoff blijft spannend, is zeker geen Graham Defensive aandeel.

Steinhoff International Balance Sheet estimate

Steinhoff stock has fallen since a report by https://viceroyresearch.org/  pointed out a system of off-balance sheet deals and other accounting irregularities. The question is: "Will shareholders lose everything or will the company survive?" 

In the Annual Report, the book value seemed to be 3,8 Euros per share, but most of that was Goodwill which will now be written off.

Currently, the share price is 27 cents, it seems that book value should be about twice that?

Update: "Vacant" value of Hemisphere €1,1b lower. Book Value per Share: €0,37 ?

Flexsteel furniture factories Graham Defensive Analysis

Graham Defensive Stock Analysis voor Machine One

-          Bedrijf: Flexsteel Stock Ticker FLXS -

Machinist:…Ansgar John maart 2018……..

Hoe verdient het bedrijf geld? Het ontwerpt, produceert en distribueert meubelen in de VS en Mexico.

Hoe heet de CEO? Karel K. Czanderna

Hoe lang is hij al in functie? Sinds 2012

AANDELEN SELECTIE VOOR DE DEFENSIEVE BELEGGER:

· Is het een hightech bedrijf of financiële instelling?  Nee PASS

· Omzet hoger dan €300miljoen? $ 470 miljoen €380 miljoen PASS
· Financiering: (Current Ratio): vlottende activa (Current Assets)…$202m…… moet twee keer zo hoog zijn als de kort vreemd vermogen (Current Liabilities) ……$39………………. Current Ratio: …5,2 PASS zeer goed…………

· Netto vlottende activa moeten hoog genoeg zijn om de lange termijn schulden te kunnen betalen: (Vlottende activa – Kort Vreemd Vermogen) – (Lange termijn schulden) = $160 PASS
· Groei van de winst over 7 jaar   ……100%………………. meer dan 20%? PASS
· Is het een Money Making Machine, dat wil zeggen, een bedrijf die de afgelopen 7 jaar elk jaar winstgevend was ? ……JA PASS…… (of in ieder geval positieve cash-flow?) …………
· Earnings Yield: winst per aandeel …$3,3…./ …$39……koers =  8,5% PASS..  %  (minstens 7%)
· Koers $39. / boekwaarde per aandeel (equity per share) $31. verhouding lager dan 1,5 PASS
· Dividend ………$0,88………. ? ………2,2…. % (bij voorkeur wel) PASS
· Aandeleninkoop (share repurchase) …Nee………………..

Graham Number = … $47….  (Liefst hoger dan koers) PASS

Wortel uit (15 x Winst per Aandeel x 1,5 x Boekwaarde per Aandeel)

Deze criteria zijn afgeleid van Benjamin Graham's meesterwerk: 'De Intelligente Belegger’ pagina 100, Hoofdstuk 4: Algemeen Porfoliobeleid: De Defensieve Belegger 

Kansen en bedreigen: Bestaat dit bedrijf(stak) over 7 jaar?

Ja, maar een recessie zou slecht zijn voor meubelverkoop. Import uit Azie en IKEA vormen een bedreiging.

Gaat de winst waarschijnlijk stijgen of dalen? Stijgen als gevolg van lagere belastingspercentage in de VS (Tax Reform).

PC Connection Inc Benjamin Graham Defensive Screen

The Gurufocus Peter Lynch chart. Notice the price bubble around 2000. The red and blue line is 15x Earnings per Share. The price is PE (Price/Earnings) would be 15.

Graham Defensive Stock Analysis voor Machine One

-          Bedrijf:…PC “Connection” Inc….Stock Ticker…CNXN…………….-

Machinist:…Ansgar John maart 2018………………………..

Hoe verdient het bedrijf geld? Leverancier van IT producten en software oplossingen aan bedrijven en overheden.

Hoe heet de CEO? Timothy McGrath werkt bij het bedrijf sinds 2005

Hoe lang is hij al in functie:       ? Oprichters zijn nog deel van Raad van Commissarissen (Board of Directors: Mr. David Hall co-founded PC Connection, Inc. with Patricia Gallup in 1982. )

AANDELEN SELECTIE VOOR DE DEFENSIEVE BELEGGER:

· Is het een hightech bedrijf of financiële instelling? (Liever niet) ……Nee PASS

· Omzet hoger dan €300miljoen? $2 900 miljoen…PASS……………..
· Financiering: (Current Ratio): vlottende activa (Current Assets)……$616m…… moet twee keer zo hoog zijn als de kort vreemd vermogen (Current Liabilities) ………$248………………. Current Ratio: …2,5 PASS…………

· Netto vlottende activa moeten hoog genoeg zijn om de lange termijn schulden te kunnen betalen: (Vlottende activa – Kort Vreemd Vermorgen) – (Lange termijn schulden) = …$350 PASS…………
· Groei van de winst over 7 jaar   ………100% PASS………………. meer dan 20%?
· Is het een Money Making Machine, dat wil zeggen, een bedrijf die de afgelopen 7 jaar elk jaar winstgevend was ? ……Ja PASS……… (of in ieder geval positieve cash-flow?) ………………………
· Earnings Yield: winst per aandeel …$2,1…./ ……$26……koers =  …8 % PASS (minstens 7%)
· Koers …$26. / boekwaarde per aandeel (equity per share)  …$18…….. verhouding lager dan 1,5 PASS
· Dividend ……$0,34…………. ? ………1 % (bij voorkeur wel)
· Aandeleninkoop (share repurchase) …Nee…………..

Graham Number = ……$29….. PASS (Liefst hoger dan koers)

Wortel uit (15 x Winst per Aandeel x 1,5 x Boekwaarde per Aandeel)

Deze criteria zijn afgeleid van Benjamin Graham's meesterwerk: 'De Intelligente Belegger’ pagina 100, Hoofdstuk 4: Algemeen Porfoliobeleid: De Defensieve Belegger 

Kansen en bedreigen: Bestaat dit bedrijf(stak) over 7 jaar?

Waarschijnlijk wel, maar niet 100% zeker?

Gaat de winst waarschijnlijk stijgen of dalen? ?????

Nagacorp a textbook example of Mr. Market's mood swings: intrinsic value and price

 A little over a year ago I did a Benjamin Graham Defensive Analysis of Nagacorp a casino in Cambodia. The price was 4,27 HKD (Hong Kong Dollars), this was the value investing graph:

http://sinaas.blogspot.nl/2017/01/nagacorp-intrinsic-value-benjamin.html 

This is the graph today:

This is value investing theory:

Nagacorp Graham Analysis today March 2018. 

An assumption of Earnings per Share growth ( through Nagacorp 2 expansion and extra gambling "junkets" from China) to 0,87 Hong Kong Dollars EPS is made.

SECTOR: [PASS] Nagacorp is in the gaming sector. Technology and financial stocks were considered too risky to invest in when this methodology was published. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Nagacorp' sales of HKD 7 253 million, (€926m) based on 2017 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. Nagacorp' current ratio HKD1 222m/HKD618m of 2,0 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). The long-term debt for Nagacorp is HKD 0 million (or have convertibles been issued to the CEO for the Vladivostok expansion??), while the net current assets are  HKD 595 million. Nagacorp passes 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. Nagacorp' earnings per share have increased 240% since 2007.

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. Nagacorp's  E/P of 8%  (using the average of the last 2 years Earnings and a 2018 estimate) passes 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. Nagacorp has a Graham number of √ (15 x HKD 0,7 EPS x 1,5 x HKD 3,4 Book Value) = HKD 7,3 

Dividend ? : HKD 0,22/ HKD 7,91 = 3%

ASM International ASMI intrinsic value based on Benjamin Graham number

ASM International is doing well. Business in ALD : Atomic Layer Disposition, about half of sales, is going well and expected to increase. 2017 profit of €7,6 per share was connected to the sale of part of ASMPT. Dividend has been increased to €0,80 from €0,70 and there will be a special dividend of €4,- per share.

SECTOR:  [FAIL]  ASM is in the Technology sector, which is one sector that this methodology avoids. Technology and financial stocks were considered too risky to invest in when this methodology was published. At that time they were not the driving force of the market as they are today. Although this methodology would avoid ASM, we will provide the rest of the analysis, as we feel times have changed.

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. ASM's sales of €737 million, based on 2017 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. ASM's current ratio €1 158m/€151m of 7.7 passes this test with flying colors.

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 ASM is €14 million, while the net current assets are €1 007 million. ASM passes this test easily.

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. ASM's earnings have increased 200% 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. ASM's E/P of 5% (using this years adjusted Earnings of €3,2) 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. ASM has a Graham number of √(15 x €3,7 EPS x 1,5 x €38,9 Book Value) = €57 

Dividend: €0.8/€62 = 1,3% and has increased over the years. ASM International is also buying back shares using its cash.

Conclusion: ASM has a very strong balance sheet and seems like a good pick for the Defensive Investor at a price of around €55, currently the price of €62, seems reasonable. 

Note: I haven't done much homework and don't understand the business or why profits were so high in 2013.  MachineOne.nl bought at €34,5 and sold at €45,97 February 1 st 2017, a 30% gain in less than a year.

In September 2017, we bought again at €51 and will sell around €65 if the price goes up quickly.

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