Saturday 7 September 2013

Analysis of Deutsche Balaton AG

A German investment company

Company: Deutsche Balaton AG

Business: A German investment company that are focused on making investments in other smaller investment and holding companies. For the full list of their investment portfolio please look here.

Active: Their main focus is in German speaking parts of the world. However their investments stretches far further.

P/E: 4.7

contrarian values of P/E, P/B, ROE as well as dividend
The P/E is looking very good with 4.7 and the P/B is excellent with 0.7 which gives according to Graham a very clear buy. The earnings to sales are at 23% and the ROE is up at 15% which is acceptable. The book to debt is running at a ratio of 2 which is good. The yearly revenue growth for the last five years has been almost 40% but as they say themselves in the year report those things go up and they go down. They already in the half year report 2013 have a better net result then in the full year 2012 but lower revenue. I would therefore put a more reasonable yearly growth as being around 8% which would then lead to a motivated P/E of 23 to 25. They, just like Berkshire, do not pay any dividends and place it in new investments.

Conclusion: I see due to the contrarian analysis no reason for not investing in Balaton today. The company looks very cheap just like many other investment companies what I personally do not really like is that they pay no dividends. It will be added to the Stock of Interest list when it gets updated.

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