Friday 14 June 2013

Analysis of Allianz

A German very large insurance company

Company: Allianz

Business: Insurance company divided into two parts: Insurance Operations with a wide range of Property-Casualty and Life/Health insurance products for both private and corporate customers. Secondly they have with their float also Asset Management with more than € 1,852 billion assets under management with active investment strategies. (we know that active does not always equalise good... Buy index funds people!)
Active: Biggest insurance company in Germany, besides from that active in 70 countries with 78 million customers.

P/E: 10.0

The P/E for Allianz is looking very good since it is below my 10 border! The price to book is almost one which is also very good and this ends up giving us a very clear buy! We should however not forget that in the last five years last years earnings were the absolutely best ones! Earnings to sales are similar to Münchener Rückversicherung with 6% but far, far from Sampo that are excellent there. The book to debt is looking fairly similar to a bank which I do not really like. The growth has for the last 5 years been only 1.6% per year which means they have followed the German inflation rate pretty evenly which is not something to be proud of and the big earnings comes mainly from paying out less for disasters. This gives according to Lynch and Graham a motivated P/E of around 10 to 12 which means that the stock, with the big earning from 2012 is fairly valued by the market. They pay out a good dividend and have done so also for at least the last 10 years currently it is at 4% which represented 40% of the earnings which means there is room to pay out more.

Conclusion: Allianz is a good stock to own. I could buy it today even though I should have bought it when I started to follow it at 75€ per share. It is however still today a good buy due to the high earnings and they will keep pumping out a good dividend. Allianz is one of those companies one should buy when it is cheap and keep for life. Today it is fairly priced.

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