Tuesday, April 14, 2015

DB analysis 2015


DB, a German investment bank

Company: Deutsche Bank

ISIN DE0005140008 | WKN 514000

Business: A German investment bank. They have five products and services pillars: Private & Business Clients (classical banking services: accounts, deposits, loans, pensions products), Asset & Wealth Management (helps institutions and wealthy individuals to increase their wealth across all asset classes), Corporate Banking & Security (sales, trading etc of financial products such as equity, bonds etc. as well as dealing with mergers and acquisitions), Global Transaction Banking (world wide banking services and products for corporates and institutions) and finally None-Core Operations Unit (the place to hide the dirty laundry, -2.9 billion euro in 2014). 

Active: in 70 countries world wide.

P/E: 27.4

Here you can find the previous analysis of Deutsche Bank (DB) 2014

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

The P/E is far too high for Deutsche Bank with 27.4 but the P/B value is indeed excellent with 0.6 which then surprisingly gives a buy signal from Graham. The earnings to sales are a bit too low with 5% and the ROE is horrible with only 2.3%! The book to debt ratio *gulp* is at 0.04.
In the last five years they have had a revenue growth of 2.5% which is barely ok and this then gives a motivated P/E of 9 to 13 which still means that DB is highly overvalued on the market today.
They pay a small dividend of 2.3% which correspond to 62% which in this case I find acceptable since they have shown over and over again that they cannot handle the money and with a ROE of 2.3% they should better pay out ALL the earnings in dividend.

Conclusion: Graham says yes to DB and I do not. They have still not managed to get back on their feet even if they seem to pretend to have done that in this latest report. The P/E is too high, the ROE is bad and the dividend is almost an insult. Only one good value can be seen and that is P/B. I will at the moment keep my shares but I will not increase my holding any further.

If this analysis is outdated then you can request a new one.

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