Thursday, March 24, 2016

DB analysis 2016


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 (dirty laundry).

Active: in 70 countries world wide.

P/E: -3.5 (P/E5: also negative!)


Here you can find the previous analysis of DB 2015.

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

The P/E of DB is -3.5 due to losses and what is even worse is that even the P/E5 is negative. The P/B is however excellent with 0.4 but still we get a no go from Graham. Earnings to sales as well as ROE is useless but the book to debt ratio is very, very low with 0.04.
In the last five years they have had a poor yearly revenue growth rate of 0.7% which then gives us a motivated P/E of 8 to 10.
Due to the massive loss in 2015 they decided to cut the dividend payments which I find fully reasonable however I do not like it.

Conclusion: Graham says no to DB and I say yes and I purely base it on the P/B value. The average historical P/B value for banks is around 1.8. Today one can buy DB at a P/B of 0.35 that is simply very, very cheap. I would love to buy more DB but I am currently very heavy into DB and banks in general and for this reason I will probably not buy more but I will remain as a shareholder.

If this analysis is outdated then you can request a new one.

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