Analysis of Linde 2015

Company: Linde

ISIN DE0006483001 | WKN 648300

Business: A German gas & engineering company. It is divided into three divisions: Gases (production and distribution of gases ranging from oxygen to acetylene and argon), Engineering (engineer and construction of industrial plants for gas extraction) as well as Gist (logistics and supply of gas products).  

Active: world wide in more than 100 countries with 600 affiliated companies.

P/E: 32.4

Here you can find the previous analysis of Linde 2014. 

This company was analysed due to a request posted on the Analysis Requests page. 

The P/E for Linde is extremely high with 32.4 and the P/B is high with 2.5 but it is not as bad as the P/E. This gives a very clear no go from Graham. The earnings to sales seems reasonable with 6% but the ROE is horrible with only 7.7%. The book to debt ratio is a bit too low with 0.7.
In the last five years they have had an excellent yearly revenue growth of 5.8% (the earnings have however been pretty flat during the same period) which gives us a motivated P/E of 15 to 20 which means that Linde is highly overvalued on the market today.
They try to stay ahead and are therefore investing almost 10% of their earnings into research which in my opinion could be improved slightly.
They pay a silly dividend of 1.6% which, even worse, already represents 53% of their earnings so several pointers are indicating that Linde must improve their earnings significantly!

Conclusion: Graham as well as I give a very clear no to Linde. None of the key values are even remotely interesting for making an investment. Why would I want to wait for 32 years to have them earn back my investment when I can buy a company that does it in less than 10 years? So Linde is at its current state not of interest to me.

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