Monday 14 October 2013

Analysis of Henkel

A German consumer products company

Company: Henkel

Business: A German consumer products company that are divided into three business units: Laundry and Home Care, Beauty Care and finally Adhesive Technologies. Many of you have probably used their products already just a few examples: Persil, Schwarzkopf, Pritt, Pril and Purex.

Active: They are present all over the world with their products and brands.

P/E: 21.4

This company was analysed due to a request that can be found here.

contrarian values of P/E, P/B, ROE as well as dividend
The P/E of Henkel is far too high with 21.4 and the P/B is also off the scale with 3.4 which leads to Graham shaking his head. The earnings to sales are nice with 9% and the ROE is pretty ok also with almost 16%. Looking at the book to debt then the ratio there is 1.0 which is also ok. In the last five years they have had a yearly growth of 3.2% which is above inflation but not by a lot I would have expect more. Still this gives us a motivated P/E of 14 to 16 which means that the market today is overvaluing the shares of Henkel. They do indeed spend some money on research to the quantity of 27% of their earnings which is acceptable. They also pay a tiny dividend of 1.3% which represents almost 28% of their earnings.

Conclusion: I have no interest to step in as a shareholder in Henkel today since the shares are simply to highly valued at the moment. It is a company with excellent brands of which several are very well known all over the world.

If this analysis is outdated then you can request a new one.

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