Tuesday, January 6, 2015

Analysis of Surteco


Surteco, a German plastic and paper surface company

Company: Surteco

ISIN DE0005176903 | WKN 517690

Business: A German surface technology company. They are working with two pillars and those are: Paper (trips, flat foils, decorative printings, release papers and impregnated products) and secondly Plastics (manufacture and sell edging systems, technical extrusions, roller-shutter systems, plinth-strip systems).

Active: Production in 21 countries on four continents and are having sales offices in additionally 16 countries.

P/E: 17.0

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

The P/E of Surteco turned out to be much higher than expected with 17.01 but the P/B is really good with 1.2 which gives us in the end a go from Graham. The earnings to sales are ok with 5% but the ROE is weak with only 7%. The book to debt ratio is however good with 1.0.
In the last five years they have had a yearly revenue growth rate of 4% which gives us a motivated P/E of 13 to 16 which means that Surteco is fairly valued on the market today.
They pay an ok, but also not more, dividend of 2.7% which correspond to 46% of their earnings to they should be able to keep it up.

Conclusion: Graham says a weak yes to this company and I say no. It looked good in the screener but when I analysed it myself I simply find that the P/E is too high, the ROE too low and the dividends are not high enough to be of interest for me.

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