Friday 3 January 2014

Analysis of Rational

A German professional kitchenware producer

Company: Rational

Business: A German machine producer that are producing high tech thermal units for the preparation of food in professional kitchens. They have four product lines: SelfCookingCenter, CombiMasterPlus, Special Versions and finally Accessories.

Active: Main presence is without doubt Europe. A little in North and South America and in Asia.

P/E: 29.5

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

The P/E of Rational is insane high with almost 30 and the P/B also high with over 11 which then of course leads to a no go from Graham. Their earnings to sales are however very nice with 21% and the ROE is spectacular with almost 40%. The book to debt is also great with a ratio of 2.7. In the last five years they have had an excellent yearly growth of 4.9% which gives us a motivated P/E of 16 to 19 which means the market is highly overvaluing the shares today. They try to stay ahead so they spend around 15% of their earnings on research which could have been a bit more but I guess the competition is not very large. They pay an acceptable dividend of 2.4% which does however represent almost 70% of their earnings and with the ROE they have I would probably have preferred them to put the money to work instead of paying it out.

Conclusion: I must admit that I love the ROE of this company, the earnings to sales and the book to debt. With a nice dip in share price and I would have no problem to step in as a shareholder. Still... as it looks today it is a no go.

If this analysis is outdated then you can request a new one.

No comments: