Analysis of Coba 2017


Logo of Commerzbank 2017

Company: Commerzbank 

ISIN DE000CBK1001 | WKN CBK100 

Business: A German bank. Their five pillars are: Private Customers (accounts, credits, wealth management etc.), Mittelstandbank (medium sized companies as well as institutions), Central & Easter Europe (mBank big in Poland), Corporate & Markets (Corporate finance, equity, currencies etc.) and finally Non-Core Assets (Real Estate and ship-building). They actually only claim to have four pillars but I prefer to add their "bad bank", the NCA, as the fifth.

Active: Claim presence in 50 countries. Europe with Germany and Poland the biggest. 

P/E: 42.5

Here you can find the previous analysis of Coba 2016


Contrarian analysis of Coba 2017

The P/E of Coba is shockingly high with 42.5 which comes from very poor earnings but either way the P/B is very good with 0.4 which gives surprisingly enough a go from Graham. The earnings to sales a very poor with 3% and the ROE is laughable with 1%. The book to debt is as always very unpleasant which is normal for the German banks by the look of things.
In the last five years they have had the indecency of showing a yearly negative revenue growth rate of -7.5%. This is of course not good at all and it gives a motivated P/E of around 8 which means that Coba is today overvalued by the market.
They pay no dividends but on the other hand since they do not manage to bring in any earnings this is also how it should be.

Conclusion: Graham kind of says yes and I say grrr. I really thought that the turn around had started but that was clearly not the case. My patience for the German banks is very low at the moment. The only value looking ok is the P/B value and every other looks today very bad. It is interesting to see how fast things can go bad again. I will remain as a grumpy shareholder.

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