Wednesday 8 July 2015

Analysis of Wüstenrot

Wüstenrot, a German financial group

ISIN DE0008051004 | WKN 805100 

Business: A German financial group. They are active in three major fields: Banking, Insurance and Real Estate. There seem to be one daughter company dealing with each part of everything including the different banking, insurance and real estate parts. I wonder why they make it look messy when there is no reason for that.

Active: Main focus in German. They have started up some business also in Ireland, Slovakia, Hungary and in the Czech Republic.

P/E: 6.4

This company was analysed due to a request from Falk posted on the Analysis Requests page. 

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

The P/E for Wüstenrot & Württembergische is excellent with 6.4 and the P/B is also spectacular with 0.4 which gives us a very clear buy from Graham. The earnings to sales are great with 17% but the ROE is bad with 6.6% and the book to debt ratio scares me with 0.05.
In the last five years they have had a good yearly revenue growth rate of 3.4% which then gives us a motivated P/E of 10 to 15 which means that W&W is undervalued on the market today.
They pay an ok dividend in the size of 3.2% which only correspond to 20% of their earnings so there is room for improvement. It should however be noted that in the last five years the dividend payment have been fixed at 0.5 € per share and the amount of shares have increased.

Conclusion: Graham gives a direct yes to W&W but I am not certain. The P/E and P/B is great and the dividend is also fine but that they have not increased in five years it is pretty bad. The ROE is pretty bad and the debt is probably the worst thing for me and what makes me very concerned. I also do not like that free float is only 20% of the shares. On one hand the CEO wants the trade volumes of the stocks to increase and on the other hand I doubt the 80% wants to hand away their power so it looks a bit as if they are stuck between a rock and a hard place and at the moment the 20% seems to be more interested in selling their current shares than what buyers are prepared to pay for them because a P/E of 6.4 is low and yes 2014 was a pretty good year on top of things.

If this analysis is outdated then you can request a new one.

No comments: