Sunday 17 April 2016

Analysis of Beiersdorf 2016

Beiersdorf, a German consumer products company

Company: Beiersdorf 

ISIN DE0005200000 | WKN 520000 

Business: A German consumer products company. They used to have three segments that were carried by their top brands but these days their homepage is screaming no plan is also a plan. They have several different brands but the top four are: Nivea, Eucerin, la prairie and Hansaplast. The only attempt of a structure that I could see was "We care" with focus on Products, Planet and People.

Active: World wide in over 200 countries (I found no new value)

P/E: 30.1

Here you can find the previous analysis of Beiersdorf 2015

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

The P/E of Beiersdorf is awful with 30.1 (last year 38!) and the P/B is also bad whith 4.7 which gives a very clear no go signal from Graham. The earnings to sales I find ok with 10% and the ROE is also pretty ok with almost 16%. The book to debt ratio is however excellent with 1.6.
In the last five years they have had a good yearly revenue growth rate of 3.5% which means that the motivated P/E is around 12 to 16 which still means that Beiersdorf is highly overvalued by the market today.
They are trying to improve their future and for this reason they push in 28% of their earnings into R&D which I find very reasonable.
The dividend is completely meaningless with its 0.9% and still that represents 27% of their earnings so they better keep improving.

Conclusion: Graham says no and so do I. Excellent products but I am not prepared to pay this much for a company that does not have an insane growth rate. Compared to last year they now appear to have a nice revenue growth rate which to a certain extent can be explained with 2011 being a very bad year. So the P/E and P/B is far too high and the dividends are too low for me to even start to consider buying this company but if it ever drops down to P/E around 20 then one should take a much closer look at it again.

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