Monday 23 December 2013

Analysis of MAN

A German truck, bus and ship engine producer

Company: MAN

Business: A German producer of commercial vehicles and engines which means that they are producing trucks, buses, diesel engines, turbo machinery and turnkey power plants.

Active: Sales are pretty much world wide and they have production sites in North and South America, Europe and in Asia.

P/E: 73.8

Comment: I was annoyed by their homepage. When I go to the investor page of a company there are some things that should just be there, directly up front, in my face and on the MAN homepage it just was not there... Also Volkswagen owns 75.2% of the shares and have left an offer of 83 € for buying th rest of the shares so the market is betting on getting out more...

contrarian values of P/E, P/B, ROE as well as dividend
The P/E of MAN is bad with 73.8 and the P/B is also not good with 2.3 which then of course leads to an upset Graham. the earnings to sales are at a fantastic 1% and they ROE is kicking in at 3.2% which is... also bad. The book to debt is at a ratio of 0.4 so also that is not very good. Their growth in the last five years has been yearly 1.1% which is not even inflation looking globally which leads us to a motivated P/E of around 9 to 11 which means that MAN on the market today with those pathetic earnings are overvalued. They also paid out the exciting dividend of 1.1% which represented 83% of the earnings so non sustainable. Earnings wise they had a bad year in 2012 which is definitely also reflected in the analysis but not at all in the share price. They are cyclical and their earnings dramatically goes up and down but still... The comment is based on that they are running a broken half year.

Conclusion: Neither Graham or I have any interest in this company. Too high P/E, too high P/B, ROE is bad, almost no dividend etc. etc. With a dramatic crash they can probably be of interest but as they are today no chance.

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