Friday 16 May 2014

Analysis of BASF 2014

BASF a German chemical company

Company: BASF

Business: A German chemistry and polymer company. They are active with five different business units: Chemicals (with intermediates and polymers), Performance Products (pigments, care chemicals, health chemicals and paper chemicals), Functional Materials & Solutions (catalysts, construction chemicals and coatings), Agricultural Solutions (crop protection) and finally Oil & Gas (exploration and extraction).

Active: World wide with both production (376 sites in total) and of course with sales to customers.

P/E: 15.8

Here you can find the previous analysis of BASF.

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

The P/E of BASF is too high for me with 15.8 and the P/B is equally too high with 2.8 which means that it is a no go for Graham. The earnings to sales are good with 7% and the ROE is still very good with 17.4% but it is less than what they had last year. The book to debt ratio is running at 0.8 which is ok. In the last six years they have had a yearly growth rate of 2.9% which is only so, so and it is down a lot compared to last year so 2013 revenue wise was not very good. this then gives us a motivated P/E of 12 to 14 which means that BASF is today a little bit overvalued on the market. They try to stay ahead of the game and therefore spend almost 38% of their earnings on research and this figure was pushed up since last year so that is good news. They pay a fully acceptable dividend of 3.3% which represents 51% of their earnings so they should bee able to keep it up.

Conclusion: BASF is a great company that one should become a shareholder of at good moments. Today is unfortunately not a good moment neither according to me or to Graham and therefore even though ROE and dividends are looking good we decide to stay away from BASF.

If this analysis is outdated then you can request a new one.

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