Analysis of Accell Group 2014

Company: Accell Group

ISIN NL0009767532 | WKN A1JADL

Business: A Dutch, mainly, bicycle holding company. They are active with the design, development, production, marketing and sales of bicycles, bicycle parts and accessories and fitness equipment. They are frequently buying out successful bicycle brands in various countries. They already have several well-known bicycle brands under their umbrella such as: Raleigh, Batavus, Juncker and Brasseur.

Active: Strong presence in the Netherlands and Germany. Recently bought a company in Spain and they have some presence in the US.

P/E: 17.4

Here you can find the previous analysis of Accell Group.

The P/E has become far too high for me with 17.4 and the P/B is fully ok with 1.4 still it falls slightly outside of Grahams investment criteria. The earnings to sales are low with 2% and the ROE is not much better with 7.9%. The book to debt ratio is in my opinion low for this company with 0.7 which I am also not so happy with.
In the last six years they have however had an excellent yearly revenue growth rate of 7.9% which then also gives us a motivated P/E of 19 to 24 which means that Accell Group is slightly undervalued on the market today.
They pay a very nice dividend of 4.1% which however is paid out either as shares or cash which leads to a yearly dilution and the pay out ratio is almost 72% of the earnings which I find far too high but it is easy to do by simply printing more shares...

Conclusion: Graham says no to Accell Group and there are many points with it that I also do not appreciate any longer. I would no longer make an investment because I find the share price to be too high at the moment... by this I mean there are over 4% more shares, the share price has increased by an additional 4% and the earnings have dropped by over -20% since the last analysis which then also gives us a high P/E, bad ROE and extreme pay out ratio.

Funny enough, due to their high growth rate which is still excellent, they survived on the Stocks of Interest list but they are very, very close to entering the kicked out list. If they manage to keep growing and get their costs under control then the earnings will follow but right now I am not seeing that...

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