ISIN FR0000120693 | WKN 853373
Business: A French wine and spirits producer. The best way to look at it from my point of view is that they have two segments: Brand Companies (the famous brands run production and development in their home countries) and the second is Market Companies (they have received various regions where they must push out the products and they therefore hold the entire distribution chain)
Active: On 80 markets world wide biggest base is still Europe.
P/E: 19.4
Comment: This time I almost fell off my chair backwards when I took a look at the brands owned by Pernod Ricard and to my surprise saw Absolut Vodka standing there on the top row (Pernod Ricard brands). I was not aware of that the Swedish Government had sold that back in 2008 and I still thought it was Swedish. Oh, well... another day, another discovery. As the name tells the Ricard (pastis) belongs to Pernod Ricard and when I lived in the South of France every time me and my friends met up for dinner one of those bottles were always consumed before eating the delicious food.
This company was analysed due to a request from Chris Bailey posted on the Summary of April 2014 article.
The P/E for Pernod Ricard is as all of you know by now too high for me with 19.4 and the P/B is also a little to high with 2.1 which gives a clear no go from Graham. The earnings to sales are looking nice with 14% but the ROE is not so good with 10.6%. The book to debt ratio is so, so with 0.7.
In the last five years they have had a nice growth rate of yearly 3.6% which then gives us a motived P/E of 13 to 16 which means that Pernod Ricard is today slightly over valued on the market.
They pay a tiny dividend of 1.9% which correspond to less than 37% of their earnings so there is plenty of room to keep increasing the dividend payments with even remained earnings.
Conclusion: Pernod Ricard have several well known brands and I must admit that I know most of them without even thinking about (or even knowing for that matter) that they belong to Pernod Ricard. Price wise I consider them to be very well placed with high quality products at fair prices in most cases with their biggest brands. Still... Graham says no to this one and so do I. They will continue to grow and make nice sales but this type of companies I would like to catch when they are more pushed down and today they are not in my opinion.
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