I would like some help evaluating a security using Graham's Defensive Investing Criteria (Chapter 14 of the Intelligent Investor).
As an example security, let's look at NYSE:MEI and each of the criteria:
1.) Adequate size of the Enterprise. Not less than 100 million in annual sales (587 Million today).
Passed: Checked the SEC 10-K filing and looks like they have 881M in Net Sales.
2.) A Sufficiently Strong Financial Condition: Current assest should be >= 2 x current liabilities (2:1 ratio) Long term debt should not exceed working capital
Passed: Balance Sheet says that current assets are 427.10M and current liabilities are 104.00M. That makes the ratio 4.1. The long term debt is 2M which does not exceed working capital (current assets less current liabilities).
3.) Earnings Stability Some earnings for the common stock in each of the past ten years. (Note: I could only find 4 years worth of historical data).
Passed: Looked at Income Available to Common on the Income statement looks positive for the last 4 years.
4.) Dividend Record: Uninterrupted payments for the last 20 years.
Failed: Looks like dividends only started paying out in 2008.
5.) Earnings Growth Minimum increase of at least one third in per-share earnings in the past 10 years using three-year averages at beginning and end. (Note: I can only view 4 years of data).
Not Sure: I do not know what to look at here. Checking the Diluted Normalized EPS on the Income Statement but I'm not sure if that is correct. The leading average of this EPS is
2.0 and the trailing average is
1.33 * 1.18 = 1.57. So that would mean this passed if my math is right. Help needed here.
6.) Moderate Price to Earnings Current Price should not be more that 15 times average earnings of the last 3 years.
Not Sure: Again not sure where to find "earnings". If it is Diluted Normalized EPS then that leading average is
2.0 and so
2.0 * 15 = 30 and the current stock price is
$30.50. If that math is correct, then this test would fail. Help needed here.
7.) Moderate Ration of Price to Assets (Not going to analyze this at this time)