Thursday 25 May 2017

Analysis of E.On 2017


Logo of E.On 2017


Company: E.On 

ISIN DE000ENAG999 | WKN ENAG99 

Business: A German energy provider and electricity producer. They are still claiming to have ten different business areas: Renewable Energy, Conventional Generation, Energy Efficiency, Exploration & Production, Gas Supply, Gas Storage & Transport, Trading, Distribution, Sales and finally Technical Services. Uniper exists as a individual company but the separation has still not been completed and what they offer is (Power Generation, Global Commodities, Energy Storage, Energy Sales, Third Party Services and Engineering Services).

Active: They are present in several countries in Europe as well as in Russia and in Brazil. 

P/E: -2.1 (P/E5: also negative!) 

Here you can find the previous analysis of E.On. 2016

Contrarian analysis of E.On 2017

The P/E of E.On is awful due to losses and it is therefor -2.1. The book value is very fascinating with -14 which means that this company is pretty much dead. Graham shows no interest in this one. Earnings to sales and ROE shows sick values due to losses and negative equity and the same goes for the book to debt ratio.
In the last two years they have shown a yearly revenue loss of -5.5% which is horrible and it means that this should be valued pretty close to 0 which means that the stock market is strongly overvaluing E.On at the moment
Here comes the insane part! E.ON HAS NEGATIVE EQUITY AND YET THEY PAY A DIVIDEND! Please let me know if you have seen something sicker than this before. I complain when companies make a loss a year and how they should probably not be allowed to pay out dividends but this is one level higher on that sickness scale! A company having negative equity should never ever be allowed to pay out a dividend. The dividend is payed out in the size of 2.8%.

Conclusion: Graham says no. So do I. E.On and all its daughters are sick. The CEO needs to be removed. I need to rethink my position is this sick, sick company.

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