Monday 8 July 2013

Analysis of Loews Corporation

American conglomerate focsued towards Hotel and oil/gas

Company: Loews Corporation

Business: An American conglomerate run by the Tisch family. They started off having hotels but have since then expanded and have now five principal subsidiaries: CNA Financial Corporation, Diamond Offshore Drilling, Inc., High Mount Exploration and Production, Boardwalk Pipeline Partners and Loews Hotels & Resorts. They are working similar to Berkshire Hathaway and sometimes buy stocks and sometimes entire companies but for some time they have been focused towards the oil industry.

Active: They are mainly active in the US. However the companies they own fully as well as the companies they own stock in are active all over the world.

P/E: 31.0

containing P/E and P/B values as well as dividend

The P/E for Loews is running very high with 31 and this is based on that they have very fluctuating incomes based on their companies performance. The P/E5 would be very close to 10 but that I usually do not bring in to my calculations. The price to book is very good with 0.9 which push down the Graham value but still not deep enough for being a buy. They have an earnings to sales of 4% which I would have expected to be much higher. The book to debt I do not really like because I would preferred much lower debts! The calculated growth for the last five years has been a weak 1.9% so well... that is inflation not more. The motivated P/E is around 12 which means that based on the earnings from 2012 they are overvalued and based on P/E5 I would say that they are fairly valued. They do pay a small amount of dividends which is only 0.6% which represents 17% of their earnings so they can push that much higher put why? They should use the cash to buy companies and stocks and I would probably have preferred them not to pay dividends.

Conclusion: Loews Corporation is a buy and hold company and today they are slightly over priced but they will with their oil part make big profits in the next couple years due to the shale oil/gas that are booming in the US. So... I could buy it today but I think that are other companies of interest. Buying Loews or Berkshire is something similar to buying an index fond and I still have some time until I must start doing that!

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