Analysis of Remy Cointreau

Company: Remy Cointreau

ISIN FR0000130395 | WKN 883206

Business: A French luxury Cognac, Liqueurs and Spirits producer and distributer. The brands in their portfolio are: Remy Martin, Louis XIII, Cointreau, Metaxa, Mount Gay Rum, Bruichladdich, St Remy, Passoa and Izarra.

Active: Selling their luxury products to every continent. Sales are however 57% in Europe/Middle East/Africa, 34% Americas and 9% in Asia/Pacific

P/E: 25.2


This company was analysed due to a request from Chris Bailey posted on the Summary of April 2014 article.

The P/E is far too high for me with 25.2and the P/B is also high with 3.0 which gives a very clear no go from Graham. The earnings to sales looks good with 11% and the ROE is so, so with 11.9%. The book to debt is fully acceptable with 0.9.
In the last five years they have grown yearly 10.8% which is excellent and this then gives us a motivated P/E of 25 to 30 which means that Remy Cointreau is today under- to fairly -valued by the market.
They pay a small dividend of 2% which correspond to 50% of their earnings so it is at an acceptable level. What I like less though is that they now decrease the dividend for the second year in a row and they allow shareholders to take part of the dividend as shares. Already as it is they have had  a growing number of shares for the last couple of years and with this dividend option that number will keep growing even more. I like when it goes in the other direction.

Conclusion: French luxury products is always very interesting especially since the people that can afford to buy them in the first place very rarely stops to consume when bad times hits the rest of the population. Still... Graham says no to this one and so do I. They have shown spectacular growth and there are many more markets to expand into but I still find the P/E to high, the dividend and the ROE too low for being interesting to me.

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