Analysis of Asseco Poland

Company: Asseco Poland

Business: A Polish information technology company. They have two pillars that they stand on and one is the sale of software (platforms for internet based businesses) and services (knowledge management, risk management and workflows)

Active: Poland is their strongest market and from there they are moving out into the rest of Europe. They grow by acquisition of smaller companies using the Polish market and market position as a cash cow for doing so.

P/E: 9.5

The P/E for Asseco Poland is excellent with 9.5 and the P/B is also outstanding with 0.5 which gives us a very clear buy according to Graham. Their earnings to sales are at 7% which seems to be ok but the ROE is not something to be proud of since it is only 5.4%. The book to debt ratio is however excellent with 3.1. In the last six years they have had a yearly growth rate of 13.3% which is excellent! This then gives us a motivated P/E of 30 to 35 which means that Asseco Poland is highly undervalued in the market today. On top of all of this they pay an excellent dividend of 5.8% which however represents 55% of their earnings so they are paying out a lot in dividends which one almost have to ask if it is even too much?

Conclusion: Graham and I both find this Polish company of great interest! The only downside I see is the poor ROE but all the other figures are so nice that I would very much like to become shareholder. Asseco Poland will therefore be added to the Stocks of Interest list with the next update.

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