Wednesday 15 October 2014

Analysis of Swiss Re

Swiss Re, A Swiss reinsurance company

Company: Swiss Re

ISIN CH0126881561 | WKN A1H81M

Business: A Swiss reinsurance company. They have three business units: Reinsurance (with Property & Casualty and Life & Health), Corporate Solutions (which concerns risk management and financing needs of corporations) and finally Admin Re (consultancy for insurance companies).

Active: Globally with presence on each continent reinsuring companies with global presence themselves.

P/E: 6.4

Contrarian values of P/E, P/B, ROE as well as dividend for Swiss Re

The P/E for Swiss Re is excellent with 6.4 and the P/B is equally great with 0.9 which gives us a very clear buy signal from Graham. The earnings to sales are very good with 12% and the ROE is acceptable but also not more with 13.5%. The book to debt ratio is low at 0.2 which is common with insurance companies.
In the last five years they have had a horrible yearly revenue growth of only 0.2% which then gives us a motivated P/E of 8 to 10 which still means that Swiss Re is today undervalued on the market.
They pay a very nice dividend of 5.7% which correspond to 36% of their earnings so fully acceptable. However 2013 was an excellent year for Swiss Re. Their half year report for 2014 is looking flat with 2013 which is, at least so far, pretty good news.

Conclusion: Graham gives his clear for take-off signal and I also find Swiss Re to be highly interesting! the P/E, P/B and dividend is excellent and the ROE is fully acceptable. Due to their low growth rate they do not end up on the stocks of interest list and as a dividend investment one must be prepared that the dividends goes up and down in Swiss Re.

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