Friday 22 April 2016

Analysis of Deutsche Börse 2016

Deutsche Börse, a German stock exchange company

ISIN DE0005810055 | WKN 581005 

Business: A German stock exchange company. They still have their five business areas but now they are differently called: Listing, Trading, Clearing, Post trading and finally Market Data & Service. It must also be mentioned that they are pushing a merger with the London Stock Exchange.

Active: In over 110 countries world wide.

P/E: 21.0

Here you can find the previous analysis of Deutsche Börse 2015

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

The P/E of Deutsche Börse is too high for me with 21 and the P/B is also too high with 3.9 which gives a clear no go from Graham. The earnings to sales are however excellent with 24% and also the ROE is great with almost 19%. The book to debt ratio is awful with 0.02 which is not probably not something spectacular based on the line of business for the company but still... their derivatives business scares me.
In the last five years that have had a good yearly revenue growth rate of 3.4% which means that we get a motivated P/E of 12 to 15 which means that Deutsche Börse is overvalued on the market today.
They pay out an ok dividend in the size of 3.2% which correspond to 65% of their earnings so too high in my opinion!

Conclusion: Graham and I both say no to this company. The P/E and P/B are too high even though the ROE and the dividend are fully acceptable that derivatives business and their high debt scares me too much for stepping into this company.

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