Thursday 15 August 2013

Analysis of Alstria

A German commercial real estate company

Company: Alstria

Business: This German real estate company are focused on acquiring, owning and managing office real estate. Their portfolio contains 84 properties for commercial usage.

Active: Only in Germany

P/E: 17.9

Containing values of P/E, P/B, ROE as well as dividend

The P/E of Alstria is too high for my taste with 17.9 but the P/B is very good with 0.9 and therefore we end up with an acceptable value according to Graham which indicates a buy. The earnings to sales is shockingly high (in a good way that is!) with 39% and the ROE is 4.8% which is a little too low. The book to debt is in a ratio of 0.9 which seems to be good for a real estate company. The growth in the last five years have been -0.2% which is bad and the motivated P/E therefore becomes around 8 to 10 which means that the stock is still twice as expensive in comparison to what it should be according to the motivated P/E. They pay a very nice dividend of 5.5% but that on the other hand represents 99% of their earnings and looking back in the past then the previous four years they paid out more in dividends than their earnings so they must soon decrease / remove it.

Conclusion: By sticking to Grahams first formula it is a buy but when implementing the second one then it is a no go. I would not recommend this stock due to two reasons. They should not be able to keep up the dividends payments with the effect of decreased price of the shares and secondly the P/E is today far to high for what the company actually should be at due to performance in the past.
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