Company: Elringklinger
Business: A German supplier to the automobile industry. They are divided into five segments: Original Equipment (manufacture and distribution of engines) , Aftermarket (spare parts for engines etc.), Engineered Plastics (high quality PTFE plastics for vehicles), Services (engine test benching for car producers as well as other suppliers) and finally Industrial Parks (leasing of land and buildings)
Active: Strong German and European focus since over 60% of their sales happen there. The remaining 40% goes to the rest of the world and they claim to supply each car and truck producer in the world with some of their products.
P/E: 22.8
The P/E of Elringklinger is to high for me with 22.8 and the P/B is also on a different play ground with 3.1 which gives a very clear no from Graham. Their earnings to sales are very good with 8% and the ROE is also pretty ok with a bit more than 13%. The book to debt ratio is also fully acceptable with 1. In the last five years they have had excellent growth (like the entire car industry) and have had the spectacular yearly growth of 11.4% which then gives us a motivated P/E of 29 to 33 which means that P/E wise the market is today undervaluing Elringklinger. To stay on top they spend 67% of their earnings on research which is ok in my opinion. They pay out a very small dividend of 1.4% which however is only 33% of their earnings so at least they should be able to increase it.
Conclusion: They very recently step into a Swiss company that produce exhaust systems and they are active with fuel cells and generally hybrids. However as interesting as the company might be they are today for my and Graham to highly valued and I see no interest in stepping in as a shareholder.
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