Monday 14 March 2016

Analysis of Fugro 2016

Fugro, a Dutch geotech company

Company: Fugro 

ISIN NL0000352565 | WKN A0ET3V 

Business: A Dutch geotechnology company. They still have their four subunits: Geotechnical (resolve geotechnical problems offshore, nearshore and onshore), Survey (all kind of offshore and geospatial surveys for the development of oil and gas platforms), Subsea Services (repair, construction etc.) and Geoscience (seismic and seabed databases for the exploration of new projects). 

Active: World wide in 60 countries. 

P/E: -4.6 (P/E5: ~80) 

Here you can find the previous analysis of Fugro 2015.

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

The P/E of Fugro, no matter if it is based on last year or the last five years is simply awful. Right now, due to losses it is at -4.6. The P/B is, at least on the paper, ok with 1.2. Still Graham would not go near this company due to the losses.
Earnings to sales and ROE makes no sense due to the losses. The book to debt ratio is ok with 0.8.
In the last five years they have had an awful yearly revenue growth rate of -1.7% which then gives them a motivated P/E of around 8 and they are then also overvalued on the market (at least when considering the P/E5).
They pay no dividends which I do not like but if they would have then I would have found that nuts on the other hand.

Conclusion: Graham says no and so do I today. There is simply too much uncertainty regarding the oil price and these kind of companies are highly dependent of the oil price. They are pushing other areas right now and fairly successfully I might add but they need those oil contracts to really make some money. Once the oil price goes up then Fugro will be an interesting company again. So the clever approach would be to observe the oil supply and demand. Once demand rises above supply then it will be a good time to start thinking about investing into companies such as Fugro. I will remain a grumpy shareholder in Fugro.

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