Monday 19 May 2014

Analysis of Beiersdorf 2014

A German consumer product company

Company: Beiersdorf

Business: A German consumer goods company. It is divided into two business segments: Consumer Business Segment (with skin and body care products such as Nivea) and the second is Tesa Business Segment (self-adhesives) .

Active: World wide with marketing and product sales in over 100 countries using 150 affiliates.

P/E: 34.9

Here you can find the previous analysis of Beiersdorf.

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

The P/E of Beiersdorf is insane high with 34.9 (it has become better compared last year) and the P/B is equally crazy with 5.5 which gives us a very clear NO from Graham. Their earnings to sales are good with 9% and the ROE is good with 15.7% (also improved compared to last year). The book to debt ratio is at 1.4 which is also very good. In the last six years they have had a yearly growth of 0.5% which is awful and we then end up with a motivated P/E of 8 to 10 which means that Beiersdorf is still highly, highly overvalued by the market. The try to stay on top and therefore they spend almost 30% of their earnings on research so this is good news but less compared to last year. They pay a silly dividend of 0.95% which still represents 33% of their earnings. At least they should be able to keep it up as they have done for the last five years that it has now remained at 0.7 € per share.

Conclusion: Graham and I say no to Beiersdorf. Last time I made the analysis of this company I lost the eye on the ball for a moment and therefor I even got tempted to short Beiersdorf. In the end I re-read Rules for Investing & Divesting page again and happily decided against it because I would otherwise have broken rule #3. Since last years analysis the share price of Beiersdorf has increased with over 12% and I would have ended up with large losses from shorting it. The overvaluation of Beiersdorf is a conundrum to me and I keep observing this company and the share price development with some kind of chocked amazement.

If this analysis is outdated then you can request a new one.

No comments: