Sunday, September 6, 2015

Analysis of eQ


eQ, a Finnish financial institute

Company: eQ

ISIN FI0009009617

Business: a Finnish financial institute. They have become the largest in Finland due mainly to an intensive acquisition period. They stand on three legs: Asset Management (for institutional and rich people), Private Equity (consulting for pension and insurance companies) and finally Investment (private equity investments made from own balance sheet).

Active: Finland

P /E: 26.5

Comment: My blog neighbour 4020 is running a databas called börsdata. Before it was only Swedish companies but today he is expanding into the Nordic countries. Please click on  this link to find out more on eQ. There are differences from my analysis based mainly on that Börsdata updates each quarter and I look only on 2014. His dividend is also different because what he has taken is the dividend + return of capital and there I strictly take the dividends paid out to shareholders.


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

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

The P/E is far too high for me with 26.5 and the P/B is also a bit high with 2.5 which gives a very clear no go from Graham. The earnings to sales are good with 30% but the ROE is not very impressive with only 9.2%. The book to debt value is however excellent with 8.4 but please be warned they have intangible assets in the size of over 30 million € from their acquisition run.
They have therefore also enjoyed an excellent yearly growth rate of 11.5% which gives us a motivated P/E of 25 to 30 which means that eQ is today fairly valued on the stock market.
They pay a fully acceptable dividend of 3.9% which on the other hand correspond to 103% of their earnings which means that the slightest bad wind and they should directly lower their dividend payment.

Conclusion: Graham says no and so do I. The company is too small for my liking with only 24 million € in revenue and 80 employees most of them too well paid either in direct money or by getting large amounts of options. The P/E is too high, the P/B also and they pay out a too large %-age of their earnings in dividends. 

If this analysis is outdated then you can request a new one.

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