Monday, May 26, 2014

Analysis of Daimler 2014


A German automobile company
Company: Daimler

Business: A German automobile company that is active in several segments: Mercedes-Benz Cars (Mercedes-Benz and Smart), Daimler Trucks (MB, Freightliner, Fuso etc.), Mercedes-Benz Vans (MB and Freightliner), Daimler Buses (MB and Setra) and then they have Daimler Financial Services (leasing of automobiles and financing the buy). All the brands can be found here. They also have the car rental service called Car2Go and it costs 29 ct/min at least in Berlin.

Active: World Wide. Cars, trucks, buses etc. are distributed in over 200 countries and they have production facilities on five continents.

P/E: 10.5


Here you can find the previous analysis of Daimler.

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

The P/E is still very nice for Daimler with 10.5 and only slightly higher compared to the last analysis. The P/B is a little bit too high with 1.7 but all in all we still get a green light from Graham. The earnings to sales are 6% which is ok and the ROE is good with 16% (even improved from last year). The book to debt Is less good with 0.3 but nothing out of the ordinary for automobile companies bad thing though is that it has become worse from last analysis due to an increased pension liability. In the last six years they have had a yearly growth rate of 3.5% which is fully acceptable and this then also gives us a motivated P/E of 12 to 16 which means that Daimler is today undervalued by the market. The spend surprisingly much on research with 60% of their earnings going into that. I find the value ok but high. They pay a very nice dividend of 3.4% which represents 35% of their earnings so at least with remained or increased earnings they should be able to keep it up.

Conclusion: Graham gives the green light and mine is as frequently in these cases more yellow. I like the P/E, and the P/B is ok (I have started to value P/B a little bit less lately...), the ROE is good and the dividend as well. If I would have own shares in Daimler I would not have sold them but I am hesitant to step in as a shareholder today. Not much has changed with the analysis since the last time even though the price of the shares has increased with 16% but this comes from increased revenue and increased earnings just like it should be done in a healthy well run company.

If this analysis is outdated then you can request a new one.

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