MKS passed all the value investor tests for a defensive value investor. In particular MKS looks cheap in relation to current earnings. The price in relation to current earnings is particularly attractive for value investors due to the relatively low level of earnings in the 2016 Annual Report.
The more advanced or entrepreneurial value investor can make a judgement about the company’s capital expenditure plans. The company is planning to reduce capital expenditure. A reduction in capital expenditure is likely to mean increased future reported earnings. However, an entrepreneurial value investor will also want to look carefully at the level of capital expenditure in relation to depreciation. If depreciation remains higher than capital expenditure for an extended period of time the asset base of the company will reduce.
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