Friday 10 January 2014

Analysis of Turbon

A German laser toner cartridge producer

Company: Turbon AG

Business: A German producer of laser toner cartridges. They have in a way two different areas: Laser Toner Cartridges (were they offer replacement toners from recycled parts when possible to almost any laser printer included fax machines) and then Turbon Brands (they make the replacements for IBM & HP printers, as well as having the brands Evergreen, Keymax and Premium/PrintMaster).

Active: They sell their toners world wide wherever the printers and fax machines are.

P/E: 7.7

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 Turbon is great with 7.7 and the P/B is almost acceptable with 1.2 which gives a very clear buy according to Graham. Their earnings to sales are at 5% which seems to be pretty ok but on the other hand they are riding on the fact that the printer producers charge almost nothing for the machine and try to extract everything form the cartridges so I would probably have preferred to see a slightly higher value. The ROE is very nice with 15% and the book to debt is so, so with 0.6. In the last five years they have had negative yearly growth of -2.8% which gives us a motivated P/E of 8 to 12 which means that the company is only slightly undervalued today on the market. They pay an excellent dividend of 6.3% which represents 48% of their earnings so at least they should be able to keep it if their earnings remained.

Conclusion: Graham recommends a buy on Turbon due to excellent P/E, good P/B, nice ROE as well as excellent dividend payment and I also find it very interesting but I must also raise a danger flag due to the size of this company. I did not care about the size of the companies before but lately I have started to put some more weight onto that parameter.

The company will be added to the Stocks of Interest list with the next update.

If this analysis is outdated then you can request a new one.


Falk said...

Graham said buy and so did I :)

Again, a very interesting analysis. Thank you, Fredrik.

Turbon also has a shareholder oriented management. No big compensation packages including stock options.

You (still) own stocks of Commerzbank (today > 3 percent up), so you know what I mean :)


Fredrik von Oberhausen said...

Your welcome Falk!

It is indeed a very interesting company and I must admit that I found it very juicy!

I think you made the correct decision and besides from being small the company is really perfect!

So I wish you all success with your new ownership!

Concerning Commerzbank I stepped in as shareholder for the long run. Management will come and go and I managed to get the second largest bank in the biggest European economy very cheap. I will therefore stay with them for now.