Wednesday 17 May 2017

Analysis of Cez 2017

Logo of Cez 2017

Company: Cez 

ISIN CZ0005112300 | WKN 887832 

Business: A Czech electricity producer and distributor. They offer heat and gas to consumers and are active with telecommunications, informatics, nuclear research, planning, construction and maintenance of energy facilities, mining raw materials, and processing energy by-products. 

Active: Czech Republic, Poland, Bulgaria, Hungary, Slovakia, Romania and in Turkey. They wanted to step into Germany buy buying assets from Vattenfall but have currently taken a step back from that position.

P/E: 16.2

Here you can find the previous analysis of Cez 2016

Contrarian analysis of Cez 2017

The P/E is too high for my liking with 16.2 but the P/B is still good with 1.2 which gives us a go from Graham. The earnings to sales are ok with 7% but the ROE is awful with only 7.3%. The book to debt ratio is looking very good for an energy company with 0.6.
In the last five years they have had a negative yearly revenue growth rate of -0.8% which is pretty bad and this gives us a motivated P/E of 8 to 10 which means that Cez is today overvalued by the market.
They pay an excellent dividend in the size of 9.1% which correspond to almost 150% of their earnings so either they will soon have to stop these dividend payments or they need to shape up and bring in more earnings. I prefer the latter.

Conclusion: Graham says yes to Cez and I am not so happy with it. If it would not have been for the massive dividends that they pay out then I would probably have walked away even though P/E is so, so and the P/B is good. I will remain as grumpy shareholder.

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