Friday, May 12, 2017

Analysis of Hugo Boss 2017


Logo of Hugo Boss 2017

Company: Hugo Boss

Business: A German high-end fashion retailer and accessories for both men and women. They have several different brands: BOSS, BOSS Orange, BOSS Green, HUGO and finally HUGO BOSS. The brands consist of business wear, evening wear, shoes and leather accessories. They are also active with licensed fragrances, glasses, watches and other areas they consider to be able to make contributions to.

Active: Due to active marketing the Boss brand is well known in the world and they sell products in 127 countries world wide. Production is in Asia & Eastern Europe. They have more than 7,700 sale points.

P/E: 25.0

Contrarian analysis of Hugo Boss 2017

The P/E for Hugo Boss is very high with 25.0 and the P/B is also not very appealing with 5.5 which gives, as so often, a no go from Graham. The earnings to sales appear to be low with only 7%  but the ROE is great with over 20%. The book to debt ratio is good with 1.0.
In the last five years they have had a poor yearly growth rate of only 2.8% which then gives us a motivated P/E of 12 to 14 which means that Hugo Boss is today highly overvalued by the market.
They pay out a good dividend of 3.8% however that corresponds to 95% of their earnings so also Hugo Boss needs to start bringing home some more money.

Conclusion: Hugo Boss had a bad year and the market punished them for it. The P/E is therefore high, they had to decrease their dividend payment, P/B is high etc. Graham would not find this company of interest but I did however and I will remain as a shareholder for the time being.

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