Saturday 14 April 2018

Analysis of E.On 2018

Logo of E.On 2018

Company: E.On 


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.

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

P/E: 5.0

Here you can find the previous analysis of E.On. 2017

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

The P/E of E.On is looking excellent with 5.0 but the P/B is slightly off the chart with 4.9 which still gives a no go from Graham. The earnings to sales are excellent with 10% and the ROE is insane, due to high debt leverage, with 98%. The book to debt ratio is very low with only 0.08.
In the last three years they have had a negative yearly growth rate of -3.9% this gives us a motivated P/E of around 8 which would mean that E.On is undervalued by the market right now.
They pay an acceptable dividend of 3.4% which corresponds to almost 17% of the earnings so there would have been room to increase it if they would not have decided for the RWE deal.

Conclusion: Graham says no but I am more excited. If E.On can manage to push up their earnings nicely with the new investment then they will have a bright future. The P/B is however looking bad but the dividends is ok. I will remain a grumpy, but as I mentioned yesterday, a hopeful shareholder.

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