Analysis of Eniro 2016

Company: Eniro

ISIN SE0000718017 | WKN 579941

Business: A Swedish search and advertisement company. They have two business units: Digital Search (concerning 69% of revenue and involves desktop, mobile and additional digital products) and Print/Voice (31% of revenue and was the old revenue and earnings base for Eniro)

Active: Sweden, Denmark, Norway, Finland and in Poland.

P/E: -0.2 (P/E5 is not an improvement)

Here you can find the previous analysis of Eniro 2015.

The P/E is, of course due to losses, horrible at -0.2 and the P/B looks good with 0.2 (but if one considers only the tangible then they have a negative P/B) which us a clear no go from Graham. The earnings to sales looks bad, the ROE looks bad and the book to debt ratio looks awful with 0.3 especially considering what that could have been looking only at tangible book. Even the worst of the Greek banks would look like a solid rock in comparison.

In the last five years they have had an awful yearly revenue growth rate of -10.8% which then gives a motivated P/E of 8 and since we have neither any earnings for this year nor a P/E5 I decide not to mention if it is over or undervalued by the market.

They do pay a dividend to the preferred shares but not to the common ones. 

Conclusion: Graham says no to Eniro and so do I. If one values the intangible assets of Eniro as zero then they could be filed as bankrupt by any of the banks that have foolishly borrowed money to them. The thing is that they are making some money and they are kind of able to pay back their loans as well as pay the dividends to the preferred share holders so obviously the show is allowed to go on according to the old saying... "you owe the bank 1 million € then you got a problem but if you owe the bank 1 billion € then the bank got a problem". This saying is 100% Eniro. Once the card house started to fall the banks that had given out the loans realised there was nothing but intangibles left and that they had a problem. For me today it makes no sense to sell these shares and I prefer to keep them as a bitter reminder to keep track of tangible and intangible book value.

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