Sunday 13 April 2014

Analysis of OMV Group

An Austrian oil and gas company

Company: OMV Group

Business: An Austrian oil and gas exploration company. They are divided into four different segments: Exploration & Production (of oil and gas currently mainly in Austria and Romania are expanding towards Africa), Gas & Power (using their gas for energy production), Refining & Marketing (running three refineries and over 4k filling stations) and finally Global Solutions (offering services solutions for their clients).

Active: Mainly in Austria, Romania and in Germany some presence in additional eight countries and are expanding with their exploration towards Africa / Middle East.

P/E: 9.0

contrarian values of P/E, P/B, ROE as well as dividend
The P/E of OMV Group is great with 9.0 and the P/B also very nice with 0.7 which gives a very clear buy signal from Graham. The earnings to sales are only at 3% which I find low and the ROE is also low with only 8%. The book to debt ratio is ok with 0.8 not like the American giants though! Their growth has been spectacular in the last five years and it has been yearly 18.8% which then gives us (and I am being very cautious here) a motivated P/E of 16 to 46 which means that they are highly undervalued on the market today. They spend a nice amount of money on research with is almost 46% of their earnings. They pay a nice dividend of 3.9% which represents 35% of their earnings so their is still room to go up.

Conclusion: I like this company and so does Graham. Besides from ROE all the other values are excellent! The massive revenue jumps took place during four years and in 2013 they were more or less flat in comparison to 2012. I will think a little about it if I will add it to the stocks of interest list...

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