Sunday 7 September 2014

Analysis of Aurubis 2014

Aurubis, A German copper company

Company: Aurubis

DE0006766504 | WKN 676650

Business: A German company with main focus on the production and recycling of copper. They have three business units that are the same as before: Primary Copper (production of copper and copper cathodes from raw material meaning copper ore), Recycling/Precious Metals (are producing copper cathodes from recycled copper in electronic equipment etc. as well as precious metals are then also being recycled) and finally Copper Products (value-added chain of copper products making wires, rolls and rods).

Active: Production sites in Europe and the US and product sales besides from the two mentioned also in Asia.

P/E: -11.5 (P/E5: 11.0)

Here you can find the previous analysis of Aurubis.

Contrarian values of P/E, P/B, ROE as well as dividend for Aurubis

The P/E of Aurubis is awful with -11.5 due to losses last year and the P/E5 is at 11.0 which is however acceptable. The P/B is also very good with 0.9. Still due to losses it gets a no go from Graham. Earnings to sales and ROE is of course bad due to losses so no need to mention. The book to debt ratio is full ok with 1.0 and they significantly pushed down their debt.
In the last six years they have had a yearly revenue growth of 6.7% which is excellent however it has decreased in the last year. We then receive a motivated P/E of 18 to 21 which means that compared to P/E5 Aurubis is undervalued by the market.
They pay a so, so dividend of 2.8% which they had to take from their retained earnings so they better start making some money again!

Conclusion: Graham says no and I am still kind of interested. They have still not managed to get the company back on track and if they do manage to do that then I think it will be great to be a shareholder. Due to the losses of Aurubis and the margin of safety that I have brought into the new Stocks of Interest list they got kicked out from it. One could argue that as a contrarian it is then a good moment to enter now and yes, that is true but it is even better to decide to step in once the figures (meaning sales and revenues) start to point up and we are not yet there from what I could see in their latest quarter report.

If this analysis is outdated then you can request a new one.

No comments: