Thursday 7 November 2013

Analysis of Axel Springer

A German publishing house and media provider

Company: Axel Springer

Business: A German publishing house and media provider that are divided into five segments: Digital Media (online news papers and magazines, 36% of revenue and the segment they are currently pushing the hardest which is not strange since it is also available and giving world wide access), Newspapers National (German newspapers, 35% of revenue), Magazines National (German magazines, 14% of revenue), Print International (the few newspapers and magazines that are publish internationally, 13% of revenue) and finally Services/Holdings (Newspaper printing plants as well as logistics etc., 4% of revenue)

Active: Very much focused on Germany and are currently trying to expand much more internationally via digital media.

P/E: 18.4

contrarian values of P/E, P/B, ROE as well as dividend
The P/E for Axel Springer is not my cup of tea since it is up at 18.4 and the P/B is also far too high for my liking with 1.9 which then of course also gives a very clear no buy according to Graham. The earnings to sales seems to be pretty ok at 7% and I expect that is something they want to improve by going more digital. The ROE is at almost 11% so not very good at the moment. The book to debt has a ratio of 0.9 so it is also ok. Their yearly growth for the last five years has been almost 4% which gives a motivated P/E of 15 to 17 which means that the company is fairly valued on the market today. They pay a fully accept dividend of 3.8% which represents as much as 71% of their earnings so I find that to be far to high especially if they now want to push digital so strongly. Looks as if it would have been better to invest the money there instead.

Conclusion: Seems to be an interesting company. It is one of the biggest publishing houses and they have definitely survived and are trying to join more and more into the digital world which they also seem to do pretty well. Currently they are however too highly valued for me and therefore I will not buy any shares in Axel Springer.

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