Wednesday, April 18, 2018

Analysis of Hugo Boss 2018


Logo of Hugo Boss 2018

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: 22.5

For the previous analysis please visit analysis of Hugo Boss 2017.

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

The P/E for Hugo Boss is high with 22.5 as is the P/B with 5.7 which means Graham would stay away. Earnings to sales is at 8% which is ok but I expect more from "luxury" brands. The ROE is very good with 25% as is the book to debt ratio of 1.1.
In the last five years that have had a yearly revenue growth rate of 2.4% which is a bit on the low side and this gives us a motivated P/E of 12 to 14 which means that Hugo Boss is overvalued by the market today.
They pay a very nice dividend of 3.6% which correspond to around 80% of their earnings which is in the higher bracket of what they want to pay out (60 to 80%) and I would love to see this decrease slightly in the future due to increased earnings.

Conclusion: Graham say no and so do I. The P/E, P/B is far too high even though ROE and dividends are fully acceptable. I will remain as a shareholder.

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