Monday 24 February 2014

Analysis of Mobistar

A Belgian telecommunications company

Company: Mobistar

Business: A Belgian telecommunication company. They offer mobile telecom products and services as well as DSL with fixed telephony and high-speed internet. For companies they offer free telephone calls between colleagues etc.

Active: Belgium and Luxembourg

P/E: 4.4

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

The P/E of Mobistar is excellent with 4.4 but the P/B is too high for my liking. Still according to Graham it is a very clear buy. Their earnings to sales are excellent with 11% and the ROE is spectacular with 52%. The book to debt is however not so interesting with its ratio of 0.4. In the last five years they have had a yearly revenue growth of 1.7% which is well... not more than inflation so nothing impressive still it gives a motivated P/E of around 9 to 11 which indicates that the stock is undervalued on the market today. They pay an excellent dividend of 13.1% which represented 58% of the earnings. However... their revenue might be up but their earnings are dropping like a stone! In the last five years their earnings have dropped with 8 to 16 % each year and if Q4 2013 was as bad as Q3 2013 they will only have earnings of around 100 million euro for 2013 which would mean an even bigger earnings drop than previously.

Conclusion: Graham is all for this company but I am less certain. There are some very interesting parameters here such as the P/E and the dividend but my guess is that they will be forced to bring that down one step further due to the poor earnings in 2013. The question is then how much? If it drops to 0.7 € per share then that would still be 5.1% but what about next year? Will their earnings drop even further?

If this analysis is outdated then you can request a new one.

No comments: