Analysis of Ascopiave

Company: Ascopiave

ISIN IT0004093263 | WKN A0LF39

Business: An Italian distributor and seller of natural gas. They are divided into three activities: Distribution (with 8,600 km of pipelines), Gas Sales (to 830,000 clients) and finally Other Services (generation and sale of heat and electricity).

Active: Italy only

P/E: 10.4

The P/E of Ascopiave is excellent with 10.4 and the P/B is also excellent with 1.1 which gives us a very clear buy signal from Graham. The earnings to sales ratio is ok at 5% and the ROE is so, so with 10.7%. The book to debt ratio is excellent with 1.7.
In the last five years they have had a revenue growth of only 2.3% but considering them being only present in Italy it is still higher than what inflation has been. This then gives us a motivated P/E of 9 to 13 which means that Ascopiave is today fairly valued on the market.
They paid last year an excellent dividend of 6.2% which however represents as much as 64% of their earnings which I like much less and it can often be a risk due to the market response of a decreased dividend.

Conclusion: Graham is saying yes to this company and so do I. The P/E, P/B and the dividend payment is excellent even though one needs to be a little careful there. They have not always paid out dividend. The first half year is looking worse than in 2013 which makes it additionally a little bit of a question mark. Due to their low growth rate they do not qualify for the stocks of interest list but for dividend investors this company could be of interest. Personally I like to have a couple of them in my portfolio which is why I find this company exciting but there are currently others on the stocks of interest list that has both potential as well as pay an acceptable dividend.

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