Monday, June 5, 2017

Analysis of Talanx 2017


Logo of Talanx 2017

Company: Talanx 

ISIN DE000TLX1005 | WKN TLX100 

Business: A German mutual holding insurance company. It is divided into five divisions: Industrial Lines (covering all the insurance needs of industrial companies), Retail Germany (retail and commercial customers covering property/casualty), Retail International (outside of Germany), Reinsurance (non-life reinsurance via especially Hannover Rückversicherung that Talanx own to 50.2%) and finally Financial Services (an internal reinsurance part for the entire group). 

Active: In over 150 countries.

P/E: 9.2

Here you can find the previous analysis of Talanx 2016


Contrarian analysis of Talanx 2017


The P/E of Talanx is excellent with 9.2 and so is the P/B with 0.9 which gives us a clear buy signal from Graham. Earnings to sales are not so impressive with only 4% and the ROE is also not very exciting with only 10% but the book to debt ratio is looking ok with 0.7. They have changed their book keeping there slightly and they no longer calculate their float of 110 billion € as a liability. I am not able to say if this is a correct approach or not.
In the last five years they have shown a yearly increasing revenue growth rate of 3.2% which is good and this then gives us a motivated P/E of 14 to 16 which means that Talanx is today undervalued by the market.
They pay a very nice dividend in the size of 4.1% which represents 37% of their earnings so there is space to increase it.

Conclusion: Graham says yes to Talanx and so do I. The P/E and P/B is great and so is the dividend. Due to that the P/B is still below 1 it makes sense to invest in Talanx and when it goes higher then that interest is gone. Personally I will not buy any more shares but I will remain as a shareholder.

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