Thursday, April 30, 2015

Analysis of Deutsche Börse 2015


Deutsche Börse, a German stock exchange company

Company: Deutsche Börse

ISIN DE0005810055 | WKN 581005

Business: A German stock exchange company. They still have their five business areas: Cash Market (offering services of listing, trading and clearing services), Derivative Market (same services as for the Cash Market), Market Data (data feeds, news services, indices and exchange infrastructure), Post Trading (delivery of securities, custody of securities and financing services) and finally Information Technology (software development, internal information technology). 

Active: In over 110 countries world wide,

P/E: 19.0

Here you can find the previous analysis of Deutsche Börse 2014

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

The P/E for Deutsche Börse is too high for me with 19.0 and the P/B is also a bit too high with 4.2 which gives a no go from Graham. Earnings to sales are excellent with 32% and so is the ROE with 22%! The book to debt does however scare me since they are at a ratio of 0.02.
In the last five years they have had a poor yearly revenue growth of 1.5% which then gives us a motivated P/E of 9 to 12 which means that Deutsche Börse is highly overvalued on the market today.
They pay a dividend in the size of 2.8% which already represents 53% of their earnings and in the last five years they have paid out this quantity (2.1 €) in four of them.

Conclusion: Graham says a clear no and so do I. The P/E and P/B is too high for me even though I must admit that I find the ROE great and the dividend is still fully acceptable. What I do find annoying are when things do not add up and when companies are calculating better figures based on them holding their own shares in the books (around 10 million in this case). If you buy back shares and annul them then it is correct but if you hold them in your books and hand out to your employees then please do not feed me some bonk values as an attempt to look better!

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