Saturday 20 September 2014

Analysis of Deutsche Euroshop 2014

Deutsche Euroshop, a German commercial real eastate investment company

Company: Deutsche Euroshop

ISIN DE0007480204 | WKN 748020

Business:  A German purely commercial real estate investor. They invest in shopping centres on prime location. Currently they have over 99% occupied space. The rent is to a certain extent based on the consumer price index meaning that in hard times their rent goes down and on good times it increases which is a system the stores seem to be pretty content with.
Active: They have 19 shopping centers in Europe with main bulk in Germany with 16 centres and then one in Poland, one in Hungary and one in Austria.

P/E: 11.1

Here you can find the previous analysis of Deutsche Euroshop.

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

The P/E is great with 11.1 and the P/B is also very nice with 1.3 which gives a very clear buy from Graham. Their earnings to sales (like most investment companies) are excellent with 91%. The ROE is ok but also not more with 12%. The book to debt I find reasonable with a ratio of 0.7.
In the last six years they have had an excellent yearly revenue growth rate of 8.5% which then gives us a motivated P/E of 22 to 25 which means that Deutsche Euroshop is today highly undervalued by the market.
They pay a fully acceptable dividend of 3.5% which correspond to almost 40% of the earnings which is also ok.

Conclusion: Graham gives a definitive yes and I also find it to be a very interesting investment. One thing that I am a bit worried about is that they like to print new shares. I can agree that it is a fast (easy?) way to raise money to make a new investment but as a small time investor it is then also not always easy to raise the money needed which means one gets diluted which I do not like. Still the P/E, P/B and dividend payments are excellent so I would not mind stepping in as a shareholder in Deutsche Euroshop as it looks today.

Due to this fresh analysis they jumped a bit higher in the live update of the Stocks of Interest list.

If this analysis is outdated then you can request a new one.

No comments: