Monday 11 May 2020

Analysis of Skanska 2020

A Swedish construction company

Company: Skanska

Business: A Swedish world leading project development and construction group that is active within three segments: Construction, Residential Development and Commercial Property Development.

Active: Mainly in Europe and North America

P/E: 12.9

Here you can find the previous Analysis of Skanska made in 2013.

The P/E of Skanska is good with 12.9 but the P/B is a bit high with 2.4 which then gives a no go from Graham. The earnings to sales are pretty low with 3% and the ROE is good with 18% but there is some debt leverage. The book to debt ratio is low with 0.33. 

In the last five years they have shown a higher than inflation yearly revenue growth rate of 2.5% which then also gives us a motivated P/E of 10 to 13 which means that Skanska is today fairly valued by the market.

They pay a dividend in the size of 3.4% which corresponds to 43% of their earnings so it can be kept at this level.

Future: We will continue to build homes, build infrastructure and commercial properties - either new or restoration and renovation of older objects. There are claims saying the US part is undervalued today and after Carillion going bust I expect nice growth on the UK market also.

Conclusion: Graham says no but I say that this is a good opportunity to pick up a good company at a temporarily lower price which is why I also bought them last week.

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