Monday, May 18, 2015

Analysis of Infineon 2015


Infineon, a German semiconductor company

Company: Infineon

ISIN DE0006231004 | WKN 623100

Business: A German semiconductor company. They still have three focus areas: Energy Efficiency, Mobility & Security and four business areas: Automotive (chips manufacturing), Industrial Power Control (components for industrial applications), Power Management & Multimarket (power components for high frequency applications and smart grids) and finally Chip Card & Security (security systems for passports). 

Active: Claim to have 35,000 employees world wide.

P/E: 24.3

Here you can find the previous analysis of Infineon 2014.

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

The P/E of Infineon is very high with 24.3 and the P/B is also on the high side with 3.1 which gives a clear no go from Graham. Their earnings to sales are excellent with 12% but they ROE is unfortunately down at 13%. The book to debt ratio is excellent with 1.8.
In the last five years they have had an excellent yearly revenue growth rate of 5.6% which gives us a motivated P/E of 16 to 20 which means that Infineon is a bit overvalued on the market at the moment.
They spend a too handsome amount of money on R&D in my opinion since it is up at 103% of their earnings.
They pay a dividend in the size of 1.6% so nothing to run around being happy about which then also correspond to 38% of their earnings so I still think that Infineon needs to improve their earnings.

Conclusion: Graham and I are equal nay sayers to Infineon. It is simply too highly overvalued for being of any interest. The P/E is high, the P/B is high, the ROE is so, so and the dividend is very poor. So also this is nothing for us contrarians... at the moment.

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