Monday 16 September 2013

Analysis of Amer Sports

A Finnish sports shoes and outdoor company

Company: Amer Sports

Business: A Finnish sports goods company that technically-advanced sports equipment, footwear, apparel and accessories improve performance and increase the enjoyment of sports and outdoor activities. They have several well known brands, at least to Europeans such as: Salomon, Wilson, Atomic and Arc'teryx for the full list please look here. Salomon was a French company that was bought by Adidas, I think it was in the 90s' for around 2.5 billion euros. Adidas never managed to get it running and therefor sold it to Amer Sports for around 550 million euros.

Active: They are present world wide and are making almost as much sales in North and South America as they do in Europe. Their own sales network is present in 33 countries.

P/E: 30.9

contrarian values of P/E, P/B, ROE as well as dividend
The P/E of Amer Sports is running too high for me with 30.9 and the P/B is also high with 2.3. This means according to Grahams formula that the company should not be bought today. The earnings to sales is also low with only 3% and also the ROE is too low with its 7.6%. The book to debt could also have been better since it is at 0.7. The yearly growth in the last five years has however been pretty ok with 7.7% which gives us a motivated P/E of 22 to 24. This means that the company is slightly overvalued today on the market. To stay on top they are investing into research in a quantity which represents 126% of their earnings so pretty much to make sure that they will have a successful future. They pay out dividends of 2.3% which represents 72% of their earnings. This I find to be a bit too high because they need to push growth more but many of their large investors are pension funds etc. so I guess they are scared of loosing them (meaning a strong drop in the share price) if they would decrease the dividend.

Conclusion: To me it is too expensive today but I do find it to be a great Finnish company. It would  be interesting to observe them because if they one day drop or decrease the dividends then I am sure one would be able to find an excellent moment to buy this very nice company.

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Fredrik von Oberhausen said...

I see from google analytics that this page is the most visited page. My question is why? What is so interesting with Amer Sports? Why do you come here to check it out?

Anonymous said...

It is an interesting company!

Fredrik von Oberhausen said...

I agree that they have excellent products and that does indeed make it an interesting company!

It is only a pity that it is so expensive today but maybe that is only because I am not enough of a visionary concerning their future expansion and future profits.