Analysis of Amer Sports 2014

Company: Amer Sports

ISIN FI0009000285 | WKN 870547

Business: A Finnish sports goods company. They produce high technological sports equipment, footwear, apparel and accessories. They are divided into three business segments: Winter and Outdoor, Ball Sports and Fitness.
They have several well known brands, such as: Salomon (mainly shoes and skiis), Wilson (ball sports equipment), Atomic (ski equipment), Nikita (female street fashion brand), Mavic (bicycle and bicycle equipment), Bonfire (snowboard equipment), DeMarini (baseball bats and baseball equipment), Precor (fitness equipment), Suunto (sports precision equipment ) and Arc'teryx (outdoor cloth and equipment).

Active: Their own sales network is now established in 34 countries.

P/E: 20.2


Here you can find the previous analysis of Amer Sports.

The P/E of Amer Sports is high with 20.2 and the P/B is also high with 2.4 which gives us a no go signal from Graham. The earnings to sales are at 4% which I find a little bit low and the ROE is also a bit low with 11.9%. The book to debt ratio is so, so with 0.6.
In the last five years they have had an excellent yearly revenue growth rate of 6.9% and this then gives us a motivated P/E of 19 to 22 which means that Amer Sports is today fairly valued on the market.
They spend a lot of money on research, especially on their outdoor segment, and it is as high as 84% of their earnings which I find to be very high but not unreasonable due to their high tech equipment.
They pay an ok dividend of 2.6% which correspond to 53% of their earnings which I find to be a little bit too high. I prefer when it is around 30 to 40% since that means they can use more for expansion.

Conclusion: Graham gives a very clear no to Amer Sports and I am less certain in my response. The first half year has not been excellent for Amer Sports and last year was really good which also has an impact on the key figures... still... what will keep me awake in the night will be asking myself the question "if today is not a good moment to buy a share of a great growth company at a fair price?". There is one thing that I do not like. They have during 2014 been buying back plenty of shares, which I like, but they intend not to destroy them but to hand it out to key figures in the company and that I like less. After digging a little I found that the share hand out to the key employees are in reasonable quantities... but I still prefer to see bought back shares destroyed to directly increase my value as shareholder and not via a longer route by potentially better achieving employees via bonus payment in shares. So there are question marks for me... am I just being silly?

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