Thursday, 9 May 2013

Analysis of Carrefour

A French food and retail chain

Company: Carrefour

Business: Food and retail chain with its origin in France. I know this supermarket very well and I found it be excellent! Good selection and excellent quality.

Active: Is very well established in France and parts of Europe, Argentina, Brazil, China, Dominican Republic, United Arab Emirates, Qatar and Saudi Arabia.

P/E: 12.6

The P/E is in this case not very high with its 12.6 but the price to book is slightly too high with over 2. According to Graham it is very close to being a buy in this stock. The earnings per sale is a measly 2% which I find too low and it is only half of what Tesco and Wal-Mart are getting. The book to debt is also not very convincing. In the last five years they have had a negative growth of over -2%. I put in the expected growth value of 3% so almost only inflation and then we end up with a motivated P/E of 9. Meaning that the stock is today valued as it should on the market. They are paying 2.5% in dividends which is ok and it is 32% of the earnings so there is still some room.

Conclusion: I would not buy Carrefour. I like the company and if I once again live in a country with Carrefour stores then I will go there to do my shopping however I would prefer to see three things to find them interesting. Better earnings margin, even lower P/E and simple higher revenue.

No comments: