Company: Deutsche Euroshop
Business: A German commercial real estate equity owner. They pay entire or equity parts of shopping centres on prime location. The rent is to a certain extent based on the consumer price index meaning that in hard times their rent goes down and on good times it increases which is a system the stores seem to be pretty content with.
Active: Europe with main bulk in Germany with 16 centres and then one in Poland, one in Hungary and one in Austria so 19 in total.
P/E: 14.6
The P/E for Deutsche Euroshop is slightly too high for me with 14.6 and the P/B is also a little bit more than what I like with 1.4. Still according to Graham it becomes a buy. The earnings to sales are excellent with almost 60% but the ROE could have been a bit better since it is only at 9.3%. The book to debt for a real estate company is not bad since it is at a ratio of 0.6. In the last five years they have had a yearly growth of 12.9% which is spectacular! This then gives us a motivated P/E of around 32 to 35. They also pay a dividend that is fully acceptable with 3.6% and that represents 53% of their earnings which is high but they are not exactly a high tech company so I consider it to be fine! They have at least for the last five years been paying out a steady dividend.
Conclusion: I find this to be a very interesting company. However in the last five years they have more or less doubled their amount of shares. So on one hand they sell shares and on the other hand they hand out dividend which I find only so, so. Still Graham says that it is a buy. I am not as certain about it but I think that it is interesting enough to end up on the Stocks of Interest list which will soon get its long lasted update!
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