Thursday, 13 June 2013

Analysis of Sampo

A Finish insurance company

Company: Sampo

Business: Insurance company divided into three parts: Property and casualty insurance, Life insurance and Investment (they use their float just like any other insurance company). They own over 20% of the Nordea bank.
Active: Strong Nordic presence so in Finland, Sweden, Norway, Denmark, the Baltic countries and also in Russia.

P/E: 12.4

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

The P/E of Sampo is pretty ok with its 12.4 but in the combination of a P/B of 1.7 we end up with a buy according to Graham but it is close to be passed on. The earnings to sale I find really excellent because Sampo has 40% and for instance Münchener Rückversicherung is only running their business on 5%. So points to Sampo there! The book to debt is also very good with below 0.5 in ratio. The growth has however not been so good and the revenue has dropped significantly since 2008 and in values by -4% per year. I would however suspect a growth of at least 3% per year which would give a motivated P/E of around 10-12 which it is currently also sold at on the stock market. They pay a good dividend of over 4% and this represents a bit over 50% of the earnings which in my opinion is ok for this type of low investment company.

Conclusion: I think that Sampo is a good company that you today can buy at a fair price. Personally I would as always prefer the below P/E 10 stocks but I could go for this one since they pay good dividends and have solid good earnings. A benefit is that they are active in a region with few natural disasters, people are driving safe cars (Volvo) and have generally safe lives.

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