Sunday 26 April 2020

Analysis of DBAG 2020

DBAG, logo, 2018


Business: A German private equity company. Their focus lies with the management buy out of small and medium sized companies that have excellent products. To see their full company portfolio then please click here. They divested four companies and invested in four new ones during 2019.

Active: Germany, and surroundings. The companies owned are often more globally oriented. 

P/E: 9.7

Here you can find the previous Analysis of DBAG 2018.

The P/E is great with 9.7 and the P/B is also great with 1.0 which leaves us with a clear buy signal from Graham. The earnings to sales are artificial due to the nature of their business and reporting but the ROE is only so, so with 9.8%. Since they have pretty much no debt also the book to debt ratio is excellent with almost 15.

In the last five years they have had an amazing yearly growth rate of 11.6%. This then gives us a motivated P/E value of around 25.

They pay out an acceptable dividend in the size of 5.2% which however corresponds to 50% of their earnings so they need to start to be a bit careful. Clearly they are good and getting value from the companies they buy and then they should consider to give lower or no dividends.

Future: Investment companies will always have a future. Their approach of MBO have been very successful taking over mid sized family owned companies in Germany. With the retiring, innovative and hard working war baby boomers this was clearly a great strategy but that should start to come to an end and hopefully they will be able to pick up other companies which they are doing when I looked over their holdings.

Conclusion: Graham would go for this and I will seriously consider to potentially increase my holding in DBAG based on the latest dip that has occurred. 

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