Wednesday, March 21, 2018

Analysis of BASF 2018


Logo of BASF 2018

Company: BASF

ISIN DE000BASF111 | WKN BASF11

Business: A German chemistry and polymer company. They are still active with five different business units and those are: Chemicals (with intermediates and polymers), Performance Products (pigments, care chemicals, health chemicals and paper chemicals), Functional Materials & Solutions (catalysts, construction chemicals and coatings), Agricultural Solutions (crop protection) and finally Oil & Gas (exploration and extraction).

Active: World wide and as they say themselves "in almost every country in the world". 

P/E: 12.8

For the previous analysis please see analysis of BASF 2017.

Contrarian analysis of BASF 2018 with P/E, P/B, ROE as well as dividend.

The P/E for BASF is excellent with 12.8 but the P/B is a little bit too high with 2.3 which indicates that Graham would not have been interested in buying BASF at this point in time.
The earnings to sales are ok with 9% but better yet it increased from last year. The ROE is up at 18% which is great and the book to debt ratio is ok with 0.8.
In the last five years they have had a negative yearly revenue growth rate of -2.7% which comes from divestment but I would still say that we have a motivated P/E of around 12 which means that BASF is currently normally valued by the market.
They pay a good dividend of 3.7% which correspond to 47% of their earnings so they can sustain it but they need to push up their earnings a bit.

Conclusion: Graham is not fully satisfied with BASF but I am. I consider the P/E, ROE and dividends to be fully acceptable for stepping into BASF which I also did. I will remain as a shareholder.

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