Analysis of Adidas

Company: Adidas AG

Business: A German company that are delivering state-of-the-art sports footwear, apparel and accessories. The most well known brands are: Adidas, Reebok, TaylorMade, Rockport and CCM-Hockey.

Active: Global presence with representation in markets all over the world.

P/E: 31.9

This company was analysed due to a request that can be found here.

The P/E of Adidas end up with a high 31.9 and the P/B is not much better with 3.16. This of course leads to that the company is not considered to be a buy according to Graham. The earnings to sales I find very low with only 4% and the ROE is almost acceptable but not more with 9.9%. The book to debt is currently at a ratio of 0.8 which is only so, so. The yearly growth has been 6.6% in the last five years which is an ok growth and this gives us a motivated P/E of 20 to 22 which means that today the stock market is overvaluing Adidas. They pay a small dividend of 1.7% which represents almost 54% of their earnings so it is do-able but they need to improve their earnings!

Conclusion: I find Adidas to be too expensive today and I would therefore not make an investment... especially since all the three values that I like to observe: P/E, P/B and dividends are far from my criteria.

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