Analysis of Austrian Post

Company: Austrian Post

ISIN AT0000APOST4 | WKN A0JML5

Business: An Austrian logistics and postal service company. Their business includes the transport and delivery of letters, direct mail items, print media and parcels as well as banking and telecommunications products and services. 

Active: Presence in 12 European markets. Main focus is Austria.

P/E: 20.0

This company was analysed due to a request over email. 

The P/E of Austrian Post is far too high with 20.0 and the P/B is equally high with 4.2 which gives a very clear no go from Graham. The earnings to sales are fully acceptable with 6% and the ROE is excellent with 21%! The book to debt ratio I also find to be acceptable with 0.7.
In the last five years they have had a poor yearly revenue growth of 0.5% which gives us a motivated P/E of 8 to 10 which means that Austrian Post is today highly overvalued on the market.
They pay a very nice dividend of 4.5% which unfortunately correspond to 90% of their earnings! This is bad news in my opinion and they needs to push up their earnings significantly.

Conclusion: Graham says no and so do I! The P/E and P/B is too high and even if the ROE as well as the dividend are both looking very nice but I fear that they are paying out far too much in dividends for having a long term sustainable system. Usually when a company change their dividend payment in a negative direction the market response tend to be very strong.

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