Monday 27 January 2014

Analysis of TUI

A German travelling group company

Company: TUI

Business: A German travelling group company that are divided into three sectors: TUI Travel (represented in over 30 countries and dealing with 30 million customers per year for the travelling plans, flight bookings, hotel bookings, activities etc. Here they also have 140 aircrafts for the charter trips), TUI Hotels & Resorts (They have 248 hotels in 24 countries and many travel bookings are of course going to those...) and finally Cruises (which is done via Hapag-Lloyd Cruises. Hapag-Lloyd is a large container company (150 ships) that is to 22% owned by TUI)

Active: Sales are made in 30 countries but the destinations are of course world wide.

P/E: -211.4 (the P/E6 was almost 60)

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

Due to the negative earnings the P/E is of course messed up with -211 but still when recalculated on six years it ended up around 60 so far off what I like to see. The price to book is also slightly too high for me but less crazy than the P/E. Still it leads to no interest from Graham. E/S and ROE is of course bad also. Book to debt is very low with 0.2 which is bad. In the last five years they have had a yearly growth of -0.7% which then gives us a motivated P/E of around 8 to 10 which means for the P/E6 that it is highly overvalued on the market today. Interesting point though is that in 2009 their earnings dropped down to 5.5 billion €! I would be worried as an investor to see such cyclic activity with revenue drops of as much as 70% from year to year... then again 2009 was extreme in every way possible. They pay no dividends.

Conclusion: Neither Graham nor I find this company of interest to invest in as it looks today. P/E, bad, P/B bad, ROE bad, book to debt bad and they do not even pa a dividend. I am glad I am not sitting on shares in this company. Only good thing I can say is that they have had a very nice recovery growth since the huge drop in 2009 and they have indeed managed to push down their costs significantly in comparison to what they had in 2008 (when they had their highest revenue and yet showed minus result).

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