Friday 4 October 2013

Analysis of Daimler

A German automobile producer

Company: Daimler

Business: This German automobile company are active in several segments: Cars (the most well known is Mercedes-Benz, Smart), Trucks (MB, Freightliner, Fuso etc.), Vans (MB and Freightliner), Buses (MB and Setra) and then they have financial services. to see all the brands please look here. They also have the car rental service called Car2Go which is mainly built up of Smarts to decrease fuel consumption and to make parking easier for their customers that maybe not drive on a regular basis.

Active: All over the world. They are distributing their cars, trucks, buses etc. in over 200 countries.

P/E: 10.1

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

The P/E of Daimler is excellent with 10.1 and the P/B is acceptable with 1.4 which gives according to Graham a clear buy. The earnings to sales is down at 5% but it is ok and the ROE is at almost 14% so ok but could be better. The book to debt a find a bit too low with 0.4 and the yearly growth the last five years has been 3.6% which is ok. The motivated P/E ends up around 14 to 15 which means that the market is valuing Daimler a little bit lower but not by much. They spend almost 70% of their earnings on R&D which is a lot but on the other hand they have seriously been pushing that cars will, shall and must be able to drive on their own. They pay a fully acceptable dividend of 3.8% which represents less then 39% of their earnings. The comment is due to that they had less cash then short term debt.

Conclusion: Daimler is looking good. A solid nice cyclic company where the older you get the more interesting their cars become to drive... apparently... personally I am not there yet. And of course the Smarts are very attractive for city driving which means that they are perfect for the rental business. Graham says buy and I understand people that would also today buy it and hold it for a very long time. I will however not jump into it yet I have no real explanation for it since it is only a general feeling that the car industry has been doing too good for too long now.

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