Tuesday 12 August 2014

Analysis of WashTec

WashTec, a German producer of car wash units

Company: WashTec

ISIN DE0007507501 | WKN 750750

Business: A German producer of vehicle washing products. They have several car wash product lines such as Gantry Car Wash, Conveyor Tunnel, Commercial Vehicle Washing and Hobby Wash. Additionally they provide Water Recovery Systems as well as Washing Materials (anything from soap to the brushes)

Active: Product distribution in around 60 countries in Europe, North America and Asia.

P/E: 14.0

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

The P/E for WashTec ended up higher than what I had expected with its 14.0 which in combination with a slightly too high P/B of 1.8 gives us a no go from Graham. The earnings to sales are not very high with 4% and the ROE is so, so with 12.7%. The book to debt ratio is great with 1.0.
In the last five years they have had a yearly revenue growth of 3.1% which is good and it then gives us a motivated P/E of 12 to 15 which means that WashTec today is fairly valued by the market.
They pay an ok dividend of 2.8% which represents 40% of their earnings so at least they should be able to keep it up. They do however tend to pay out dividend according to their result and back in 2011 they were negative and then also skipped paying dividend.

Conclusion: WashTec ended up just barely outside of the criteria from Graham and I thought when I started looking at the company that it would turn out much nicer than what it did in the end. I still find it an interesting company and the more countries bringing in regulations concerning water consumption and pollution concerning car washing the more this company will profit by selling car wash units which then gets followed up with service and maintenance products. At the price WashTec is being traded on today I do however not find it an interesting investment.

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