Saturday, 22 June 2013

Analysis of Beijer Alma

A Swedish conglomerat working with wires

Company: Beijer Alma

Business: A Swedish small conglomerate with three daughter companies: Lesjöfors that are making springs and wires, Habia Cable that are making cables and cable systems and Beijer Tech that are working with Industrial rubber and industrial products.
Active: The three companies have different level of activity in different countries. All of them are active in Europe but as an example... Lesjöfors is now stepping in on the German market, Habia Cable in China and Beijer Tech is expanding in Norway. Overall the group seems to have a presence in over 50 markets world wide.

P/E: 16.7

Also this company came from a request as can be seen here.

The P/E for Beijer is high with almost 17 and what I really do not like is the P/B of 2.7. This gives according to Grahams recommendation a no go. The earnings to sale is on 9% which one could have hoped to be better. The book to debt is however very good with almost 2.8. They have had an excellent growth for the last five years with annually 9% which gives a motivated P/E of around 28. This means that there is still roam for the stock to increase in price. They have paid a good dividend of 5% however that represented 85% of the earnings last year (and last year was not a bad year) so the question is if they can keep the dividends up. It seems as if the expansion is costly or the revenue increase from that have not yet kicked in.

Conclusion: I would not buy this stock today because I do not really see that their expansion is working out in terms of increased earnings and also I find the stock too expensive in terms of P/E as well as P/B for my taste. If I would own the stock today then I would definitely continue to keep it to see if it would crawl closer to the motivated P/E.

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