Saturday 28 December 2013

Analysis of Osram

A German light and light system producer

Company: Osram Licht AG

Business: A Germany registered company (was split off from Siemens this year) but the roots of the company is from the UK. Osram is one of the two leading light manufacturers in the world and they are very strong with LED but have the entire value chain from components to electronic control gears as well as complete luminaires, light management systems and lighting solutions.

Active: They are active world wide but main focus is still today Europe

P/E: -11.2 (counted with P/E3 then around 66)

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

The P/E is due to a negative results awful with -11.2 but still the P/E3 ended up with 66 so not much better... they P/B is also very high with 2.6 which means that Graham finds it uninteresting. Earnings to sales of course also minus as well as the ROE. When I looked at the P/E3 then ROE was still below 5% so bad. Book to debt is also not too good with a ratio of 0.5. They have however had a pretty good growth in the last three years of 4.9% per year which then gives a motivated P/E of 15 to 18 which means that according to P/E3 it is highly overvalued by the market today. They spend a lot of money on research which corresponds to around 100% of their earnings with more "normal" earnings. They have not paid out any dividends.

Conclusion: As a contrarian value investor Osram is today uninteresting to step into. If they manage to push up their earnings again then they would however become a bit more interesting but when I see that happen then I will also reconsider my decision.

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