Analysis of E.On 2018

Company: E.On 

ISIN DE000ENAG999 | WKN ENAG99 

Business: A German energy provider and electricity producer. They are still claiming to have ten different business areas: Renewable Energy, Conventional Generation, Energy Efficiency, Exploration & Production, Gas Supply, Gas Storage & Transport, Trading, Distribution, Sales and finally Technical Services.

Active: They are present in several countries in Europe as well as in Russia and in Brazil. 

P/E: 5.0

Here you can find the previous analysis of E.On. 2017. 

The P/E of E.On is looking excellent with 5.0 but the P/B is slightly off the chart with 4.9 which still gives a no go from Graham. The earnings to sales are excellent with 10% and the ROE is insane, due to high debt leverage, with 98%. The book to debt ratio is very low with only 0.08.

In the last three years they have had a negative yearly growth rate of -3.9% this gives us a motivated P/E of around 8 which would mean that E.On is undervalued by the market right now.

They pay an acceptable dividend of 3.4% which corresponds to almost 17% of the earnings so there would have been room to increase it if they would not have decided for the RWE deal.

Conclusion: Graham says no but I am more excited. If E.On can manage to push up their earnings nicely with the new investment then they will have a bright future. The P/B is however looking bad but the dividends is ok. I will remain a grumpy, but as I mentioned yesterday, a hopeful shareholder.

E.On annual report 2017

For the report in full please go here and to see my previous summary please visit E.On annual report 2016 and to find out more about E.On then please go to analysis of E.On 2017.

Interesting developments in the German market. E.On will buy Innogy from RWE and pass over some of their assets to RWE. This is big. One goes for the net and the other one for electrical generation. Very interesting.

This year E.On actually managed to make some money as can be seen in the income statement below. A large chunk of it and some directly goes to buying the majority shares Innogy. This year they had a profit of 3.9 billion € compared to last year with a loss of -8.5 billion €. The large reason for this profit comes from lowered material costs as well as cutting expenses.

Conclusion: I must say that I feel excited about the deal between E.On and RWE. Two companies that I own, both with a mixture of it all, is now refining their strategies and hopefully this will lead to even stronger cost cuttings. On top of this they also increased their dividend payment compared to last year but of course it is not at the 50% that they locked down two years ago... so that pretty much lasted 0 years. I will remain grumpy shareholder but with a small amount of hope for the future.

Analysis of DB 2018

Company: Deutsche Bank 

ISIN DE0005140008 | WKN 514000

Business: A German investment bank. They have five products and services pillars: Private & Business Clients (classical banking services: accounts, deposits, loans, pensions products), Asset & Wealth Management (helps institutions and wealthy individuals to increase their wealth across all asset classes), Corporate Banking & Security (sales, trading etc of financial products such as equity, bonds etc. as well as dealing with mergers and acquisitions), Global Transaction Banking (world wide banking services and products for corporate and institutions) and finally None-Core Operations Unit (dirty laundry).

Active: in 70 countries world wide.

P/E: -31.5

Here you can find the previous analysis of DB 2017.

The P/E for DB is negative with -31.5, which is horrible, while the P/B is very good with 0.4. The end result is still the same because Graham says no to this one. Earnings to sales and the ROE is negative and being a bank the book to debt ratio is low with only 0.04.

In the last five years they have had a yearly decrease in interest income by -0.8% and this gives us a motivated P/E of around 8 which means that DB is most likely overvalued by the market.

They pay a meaningless dividend of 1%, please stop it, which correspond to a negative value due to their losses.

Conclusion: Graham says no and also I have to say no. Not because the bank, based on P/B, looks expensive but simply due to that I cannot plough any more money into DB. I will remain a grumpy shareholder.

DB annual report 2017

The report in full you can find here and for my previous summary of the DB annual report 2016 then please click on that link and to find out more about DB then visit DB analysis 2017.

The C/I is improving and was now at 93.4% and once again for the third year in a row they published a loss. This time it was-751 million €. So one can pretty much conclude that the C/I is meaningless to follow for DB since it has no meaning in terms of them starting to have some earnings. If we look at the income statement below then we see that their interest income decreased one step further 24 billion compared to 25.6 billion that they received last year. same trend as with Coba. I truly wonder what the German banks are up to. The CEO has now been forced out and we are back to having a German CEO that have spent his entire life in DB. I have mixed emotions about this and in my opinion it is time for the chairman to throw in the towel. I am generally chocked that they have not managed to remove more full time employees from DB it is almost as if it is a governmental institution. In general I am against massive workforce cuts but in the case of DB I suspect this should have been done directly when the financial crisis hit almost 10 years ago.

Conclusion: DB is still performing very poorly. Their internal hire of the new CEO feels like grasping for a needle in a haystack. It is time for the chairman to go and I will remain as a grumpy shareholder, by now, for the sixth year in a row.

Analysis of Coba 2018

Company: Commerzbank 

ISIN DE000CBK1001 | WKN CBK100 

Business: A German bank. Their five pillars are: Private Customers (accounts, credits, wealth management etc.), Mittelstandbank (medium sized companies as well as institutions), Central & Easter Europe (mBank big in Poland), Corporate & Markets (Corporate finance, equity, currencies etc.) and finally Non-Core Assets (Real Estate and ship-building). They actually only claim to have four pillars but I prefer to add their "bad bank", the NCA, as the fifth.

Active: Claim presence in 50 countries. Europe with Germany and Poland the biggest. 

P/E: 85

Here you can find the previous analysis of Coba 2017. 

The P/E for Commerzbank is a blast with 85 and the P/B is still good with 0.5 which, all considered, gives thumbs done from Graham. Earnings to sales is at 2% which is bad, the ROE is laughable with 0.5% and the book to debt ratio is nothing to sneer at with 0.7.

In the last five years they have kept showing a wonderful decline in revenue which by now corresponds to a yearly revenue loss of -9.6%. This gives us a motivated P/E of 8 which means that Commerzbank is highly overvalued by the market.

They pay no dividends but they keep talking about it.

Conclusion: Graham says no and so do I. Only good value is the P/B and that is just not enough. The day I step out of the German banks it will be like a stone leaving my heart. I will remain as a grumpy shareholder for now.