Friday 30 August 2013

Analysis of Investor AB

A Swedish investment company

Company: Investor AB

Business: A Swedish investment company with focus on Nordic high quality company with international business. To see the entire list of companies that they are shareholders in the please check that out here. This company was started by the Wallenberg family which is a strong investment family in Sweden. They love to be in power and therefor make sure to get the A stocks in the Swedish companies since this give you much more voting power. It has existed in Sweden for a long while as a cheap way for a few people to remain in power of the companies even though financially they have a very little part of it.

Active: In the Nordic country with world expansion through their investments.

P/E: 6.1

contrarian values of P/E, P/B, ROE as well as dividend

 The P/E for Investor is very good with 6.1 and the P/B is also nice with 0.8, all in all it gives a very clear buy according to Graham. The earnings to sales is 93% which is impressive but on the other hand they have no "raw" material costs etc. The ROE is good with 13.8% but I would have expected slightly higher. The book to debt is excellent with a ratio of 3.2. The growth during the last four years have been jumpy. Some years they get plenty of dividends from their companies and some years little to none. The sale of companies are also highly influencing their revenue flow and therefore in the last four years they have had a negative growth of -5.2%. The motivated P/E is very difficult but I would expect them to manage around 8% growth which would lead to a motivated P/E of around 22 and considering that American investment companies are up there I do not look upon it as something strange. Therefore the market is today highly undervaluing the value of Investor. The also pay dividends in the value of 3.6% which represents only 22% of the earnings so they can keep that up.

Conclusion: I could buy investor today with a long term hold strategy. Either investment companies or the companies that they own are being disliked by the market... still the stock is cheap with a P/E of 6.1. It will be added to the Stock of interest page with the next update.

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