Sunday 16 June 2013

Analysis of Fortum

A Finnish energy company

Company: Fortum

Business: A Finnish energy company that themselves claim to have four division: Power, Heat, Russia & finally Electricity Solutions & Distribution.
Active: Very strong Nordic presence, then of course Russia with its on division (13% of the sales but... 50% of the employees are there...), Poland and the Baltic countries.

P/E: 9.2

Also this company came from a request as can be seen here.

The P/E is very close to 9 which I find excellent! The P/B being close to 1.3 is also not bad at all and this gives a very, very clear buy signal according to Graham. The earnings to sales are as high as 23% which is also very good but I will soon analyse some more energy companies to future will tell how good it is. At least I can directly say that it beats E.On. The book to debt is fully ok with a ratio of 0.74 however the growth in the last five years has only been 1.8%. That might be ok for Finland but can hardly keep up with the inflation taking place in Russia, the Baltics and Poland. Still the motivated P/E is around 12 which means that it is definitely a buy. They pay an excellent dividends of 6.9% however that is 63% of their earnings which is far, far too high if one considers that they really want to expand especially in Russia.

Conclusion: Fortum is worth buying also today. I do not expect them to start making an insane higher revenue or earnings in the next couple of years but they have solid excellent earnings and they pay a very good dividend. Its a buy and hold stock!

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