Tuesday, May 23, 2017

DB analysis 2017

Logo of DB 2017

Company: Deutsche Bank 

ISIN DE0005140008 | WKN 514000

Business: A German investment bank. They have five products and services pillars: Private & Business Clients (classical banking services: accounts, deposits, loans, pensions products), Asset & Wealth Management (helps institutions and wealthy individuals to increase their wealth across all asset classes), Corporate Banking & Security (sales, trading etc of financial products such as equity, bonds etc. as well as dealing with mergers and acquisitions), Global Transaction Banking (world wide banking services and products for corporate and institutions) and finally None-Core Operations Unit (dirty laundry).

Active: in 70 countries world wide.

P/E: -5.2 (P/E5: also negative!)

Here you can find the previous analysis of DB 2016.

Contrarian analysis of DB 2017

The P/E is awful with -5.2 due to losses but the P/B is still very good with 0.6. No matter what, due to the losses, this is not a company for Graham. The earnings to sales are bad as is the ROE. The book to debt is scary low with 0.04 and Europe should never have allowed the European banks to leverage that much as they did and still do in some cases such as DB.
In the last five years they have had a negative yearly revenue growth rate of -4.5% which is awful and it gives us a motivated P/E of around 8. Due to the losses it is hard to tell where DB actually is but I would still say that they are overvalued by the market today.
On one hand they ask for more money from their shareholders and on the other hand they then pay out a dividend in the size of 1.1% which is, due to negative earnings, yet another burden on the balance sheer. Pathetic! There are moments when I think that it should be forbidden to pay out dividends if the company makes a loss. You as a shareholder will then have to be fully aware of this and invest accordingly.

Conclusion: Graham is not positive towards DB and neither am I. I strongly despise companies that ask for more money from their shareholder and then pay out dividends. Shameful behaviour! Yes, I understand that they did that to attract institutional investors but I do not care. Make it illegal. I will remain as a grumpy shareholder.

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