Thursday 5 May 2016

Analysis of Siemens 2016

Siemens, a German electrical engineering company

Company: Siemens 

ISIN DE0007236101 | WKN 723610 

Business: A German electrical engineering company. They are divided into divisions and those are: Power and Gas, Wind Power and Renewables, Power Generation Services, Energy Management, Building Technologies, Mobility, Digital Factory, Process Industries and Drives, Healthcare and finally Financial Services 

Active: World wide in over 190 countries. 

P/E: 11.2

Here you can find the previous analysis of Siemens 2015

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

The P/E of Siemens is excellent with 11.2 and the P/B is also fully ok with 2.4 still they end up just outside of the formula from Graham which means that it would be a no go for him. Their earnings to sales are good with 10% and the ROE is excellent with 21%. The book to debt ratio is so, so with 0.4.
In the last five years they have had a very poor yearly revenue growth rate of 0.6% which then gives us a motivated P/E of 8 to 10 which means that Siemens is today fairly valued.
They spend a large chunk on R&D since it correspond to over 60% of their earnings which I find to be a lot.
They pay a good dividend in the size of 3.8% which only corresponds to 42% of their earnings so with remained earnings they should be able to keep it up.

Conclusion: Graham says no and looking on the key figures I would have said yes but I do not. The reason is that they had too much money coming in from sale of businesses which is not part of the operating income. So the earnings are doped. So even though the P/E, P/B, ROE and dividend all look good I will not go fro Siemens today.

If this analysis is outdated then you can request a new one.

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