Tuesday 26 August 2014

Analysis of Olympic Entertainment

Olympic Entertainment Group, an Estonian casino company

Company: Olympic Entertainment Group

ISIN EE3100084021 | WKN A0LB21

Business: An Estonian gaming and casino company. They are currently engaged in hotel services, catering, bar services and the running of casinos.

Active: They are active in seven countries: Estonia, Latvia, Lithuania, Poland, Slovakia, Belarus and Italy.

P/E: 11.6

Contrarian values of P/E, P/B, ROE as well as dividend for Olympic Entertainment Group

The P/E is acceptable with 11.6 and the P/B is high with 3.0 which gives us a no go from Graham. The earnings to sales are nice with 17% and the ROE is excellent with 25.7%! The book to debt ratio is also excellent with 6.1!
In the last five years they have had a yearly revenue growth of 4.5% which is great and this then gives us a motivated P/E of 14 to 17 which means that Olympic Entertainment Group is slightly undervalued on the market today.
They pay a great dividend of 5.2% which correspond to 60% of their earnings so a little bit too high for my liking.

Conclusion: Graham says no to this one and so do I even though the P/E, ROE and dividend is excellent! They claim that the environment has been tough but that it has now once again become better... I am uncertain, in the sense that I do believe that the environment will become better with more money flowing and more customers once the financial crisis has passed, but I would also guess that there would be more and more competition arriving. So I pass.

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