Sunday 9 February 2014

Analysis of Agrana Group

An Austrian agricultural processor company

Company: Agrana Group

Business: An Austrian agricultural downstream processor. They are divided into three segments: Sugar (~35% revenue, traditionally their core business of processing sugar and isoglucose and selling under well-known brands), Starch (~25% revenue, from potatoes and corn sold to food, paper, textile, construction and the pharmaceutical industry some also goes to biofuel) and finally Fruit (~35% revenue, prepared fruit and fruit juices that are sold to the Dairy industry, the Bakery goods sector, Ice-cream manufacturers as well as Soft beverage producers)

Active: With Sugar and Starch mainly in middle, south and eastern Europe. With their fruit section they are active in 40 countries on each continent. 50% of total revenue is however from Austria itself.

P/E: 8.3

contrarian values of P/E, P/B, ROE as well as dividend

The P/E of Agrana is excellent with 8.3 and the P/B is ok with 1.1 which gives a very clear buy according to Graham. The earnings to sales are ok with 5% and the ROE is fully acceptable with 13.3%. The book to debt ratio is ok with 0.8. In the last five years they have had a yearly growth of 9.9% which is excellent and gives us a motivated P/E of around 25 to 29 which means that Agrana is highly undervalued on the market today. They pay a very nice dividend of 4.1% which correspond to 34% of their earnings so it should be no problem to keep it up!

Conclusion: Graham and I actually both say yes to this company! Nice P/E, P/B, ROE as well as dividend that is being paid out. With their fruit segment they have managed to expand out in the world and hopefully will generate a nice growth in the future as well as a diversification. This company will be added to the Stocks of Interest list with the next update.

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