Thursday 14 August 2014

Analysis of Uzin Utz

A German supplier of flooring systems

Company: Uzin Utz

ISIN DE0007551509 | WKN 755150   

Business: A German supplier of flooring systems. The Uzin Utz group contains several brands that are either producing floors or equipment for working with floors. The brands are: Uzin (floor covering and wood flooring), Wolff (Machinery and special tools for floor installations), Pallmann (products for surface treatment of wood flooring), Arturo (making synthetic resin flooring), codex (stone and ceramic flooring), RZ (cleaning products for floors) and finally Ufloors Systems (specialised in providing the clients with combined floor solutions from the in-house producers)

Active: Main activity is in Europe, some activity in the middle east and little activity in the US, China, Australia and Indonesia.

P/E: 12.9

Contrarian values of PE, P/B, ROE as well as dividend for Uzin Utz

The P/E of Uzin Utz is ok but also not more with the 12.9 and the P/B is good with 1.2 which gives a clear buy from Grahams formula. The earnings to sales are also ok with 5% but the ROE could have been much better since it is only at 9.2%. The book to debt ratio is very good with 1.3.
In the last five years they have had a yearly revenue growth of 5.0% which is excellent and this then gives us a motivated P/E of 15 to 19 which means that Uzin Utz is currently slightly undervalued on the market.
They pay an acceptable dividend of 3.1%, which they adjust according to earnings and last year it corresponded to a bit over 40% which means that with remained earnings at least the dividend should be able to remain intact.

Conclusion: Graham is pro this company and I do not know. They family that started the company is still in there both with shares as well as management which could be the reason for the accepted margins. What is not seen in the analysis above is that the earnings have in my opinion not followed the increased revenue. Their target is to become #1 in floors and it seems as if they push that at the expense of current earnings. Usually one says that with increased revenue comes, at some point, increased earnings also but I am not certain that it is always so and I am definitely not enough certain of that for starting a position in Uzin Utz. Would you start a position?

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