Analysis of Gerresheimer

Company: Gerresheimer

Business: A German plastic and glass packaging and products company that are focused towards pharmacy and healthcare. They are divided into three divisions: Plastic & Devices (complex, customer specific objects for the administration of medicine), Primary Packaging Glass (glass packaging objects for cosmetics and medicine) and finally Life Science Research (produce re-usable glassware for research).

Active: More than 40 production plants in Europe, North & South America and Asia. Over 57% of all their business is however in Germany (23%) and Europe (34%).

P/E: 24.7

The P/E for Gerresheimer is far, far too high for me with 24.7 and the P/B is also too high with 2.8 which according to Graham means it is of no interest to invest in. Their earnings to sales are ok with 5% but the ROE is not as high as one would have liked with only 11%. The book to debt ratio is at 0.6 which could also have been a bit higher. In the last five years they have had a yearly growth rate of 2.8% which is ok based on that over 57% of their business is in Europe and we have been stalling a little. The motivated P/E then becomes 12 to 15 which means that Gerresheimer is today overvalued by the market. They pay a tiny dividend of 1.4% which represents 34% of their earnings so they should at least be able to keep paying this very tiny dividend.

Conclusion: Today Gerresheimer is far too expensive for both me and Graham which means that we have no interest in making an investment and we will therefore leave it alone until better days arrive.

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