Wednesday, January 7, 2015

Analysis of Splendid Medien


Splendid Medien, a German media company

Company: Splendid Medien

ISIN DE0007279507 | WKN 727950

Business: A German media company that stands on two pillars: the Content Segment (which covers licensing of film rights, film exploitation in cinema and home entertainment with DVDs etc.) and the second is the Services Segment (specialising in digitisation/new media and dubbing).

Active: German speaking countries as well as the Benelux region

P/E: 5.6

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

The P/E of Splendid Medien is excellent with 5.6 and the P/B is also great with 0.8 which gives us a very clear go from Graham. The earnings to sales seem to be at an ok level with 7% and the ROE is also fully acceptable with 14%. The book to debt ratio is down at 0.7 which is ok.
In the last five years they have had an excellent yearly revenue growth of 8.9% which then correspond to a motivated P/E of 15 to 20 which means that Splendid Medien is today undervalued by the market.
They pay a very nice dividend in the size of 4.7% which correspond to only 27% of their earnings so with remained earnings they should be able to keep it up. A warning though the running year does not look so good for them especially since they have made large investments into the movie portfolio and the movies they did get did not reach the expectations.

Conclusion: Graham gives it a very clear go and I must say that I find it of interest. Each year they have a chance to get and distribute the next blockbuster which means that sometimes they fail and sometimes they gain and 2014 will probably end up as being a failed one. My biggest problem is the size of Splendid Medien even though the P/E, P/B, ROE as well as dividend are all between great to excellent.

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