Wednesday 5 March 2014

Analysis of KSB Group

A German pump and valve producer

Company: KSB Group

Business: A German pump and valve producer. As they claim themselves wherever fluids need to be transported, controlled or shut off they are present with their products. They are servicing water and waste water systems, energy and mining systems as well as building and general industry with their products.

Active: They are present in over 100 countries. Strong focus in Europe a little less in South America and West Africa and to some extent the Middle East and Asia.

P/E: 10.8

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

The P/E for the KSB Group is fully acceptable with 10.8 and the P/B is great with 0.9 which gives us a very clear buy according to Graham! Their earnings to sales are only at 3% so that is not very uplifting and the ROE is at 8.1% so also a bit boring. The book to debt ratio is ok with 0.7 but definitely also not more than ok. In the last five years they have had a yearly growth of 2.6% which is acceptable and this gives us a motivated P/E of 10 to 14 which means that the market today is placing a fair value on the company. They pay a small dividend of 2.6% which however only represents 28% of their earnings so there should be no risk of dropping that. In the last four years they have not increased their dividends and it has been flat on 12 euro.

Conclusion: Graham says yes to this company and I think that it can be a great company to own in the long run. It would however not surprise me if it will take a long time until this company gets an over valuation but the dividends are not great but ok and they seem to push up their revenue slowly but surely so I could probably buy this one and then just put it in the back of my drawer and take a look at it again 10 years from now. Is it boring enough for you?

If this analysis is outdated then you can request a new one.

No comments: