Tuesday 23 December 2014

Analysis of TUI Group 2014

TUI Group, a German-UK travelling company

Company: TUI Group


Business: A German-U.K. travelling company that recently merged. So previous TUI and TUI Travel merged into the TUI Group. They currently have three segments: Mainstream (with tour operators, hotels & resorts and cruises), Non-Mainstream (with online accommodation and specialist & activity) and finally Container Shipping (held for disposal)

Active: 31 countries world wide servicing 31 million customers per year.

P/E: 41.7

Comment: The data is based on the annual report which only involves TUI and are not showing the effect of the merger.

Here you can find the previous analysis of TUI.

contrarian values of P/E, P/B, ROE as well as dividend for TUI Group

The P/E of the TUI Group is far too high with 41.7 but the P/B is more ok with 1.7. In the end this gives us a no go from Graham. The earnings to sales are very poor with only 1% and the ROE is equally bad with 4.2%. The book to debt ratio I also do not care much for with its 0.2.
In the last seven years they have had a flat yearly revenue growth rate which is very bad and this then also gives us a motivated P/E of 8 to 10 which means that TUI Group is today overvalued by the market.
The decided to pay dividend in the size of 2.4% which is pretty low but what is much worse it correspond to 101% of their earnings so in my opinion a poor decision of dividend size from the management.

Conclusion: Both Graham and I still find TUI Group to be a far too expensive company on the stock market. Lately the price has jumped up a little due to the announcement of the merger deal so let us see what comes out of that in the end. Anyway... P/E too high, ROE to low, dividend to low and especially that it corresponds to over 100% of the earnings is unacceptable.

If this analysis is outdated then you can request a new one.

No comments: