Company:
Heidelberg Cement
Business: A German manufacturer of building materials. They are the global market leader in aggregates and a prominent player in the fields of cement, concrete and other downstream activities such as ready-mixed concrete, concrete products and concrete elements.
Active: They are active in over 40 countries with 2,500 locations.
P/E: 16.2
The P/E of Heidelberg Cement are ok but not more with 16.2 (last analysis it was over 36) and the P/B is great with 1.0 which gives a buy according to Graham. The earnings to sales are ok with 5% but the ROE is horrible with 6.4% especially if we look at how little they pay out in dividends! Because if they are so bad in making a proper return on the equity then they might as well pay it out as dividend to their shareholders. The book to debt is also fully ok with a ratio of 0.8. In the last six years they have had a yearly growth rate of -0.4% which is bad but comes from extreme revenues in 2008. Still in 2013 their revenue was flat compared to 2012 so the construction and building industry has still not taken off. The motivated P/E then becomes 8 to 10 which means that Heidelberger Cement are still overvalued on the market today just like it was with the last analysis but today it is slightly less overvalued. They pay a silly dividend of 0.9% which represents 15% of their earnings so with remained earnings they should be able to increase the dividends in the future.
Conclusion:
Graham says yes and I say no to this one. The earnings looked pimped by having a very low value for "other expenses" in 2013 compared to what they have had in the last couple of years. I might be wrong but then I still consider the P/E to be a little too high, the ROE us too low and the dividend payment is likewise too low for me which means that I skip this one.
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