Airbus SE – Value Analysis (MILAN:AIR) : December 26, 2017

Capitalcube gives Airbus SE a score of 44.

Our analysis is based on comparing Airbus SE with the following peers – CybAero AB, Embraer S.A. Sponsored ADR, BAE Systems plc and Boeing Company (CBA-SE, EMY-DE, BSP-DE and BOE-GB).

Investment Outlook

Airbus SE has a fundamental score of 44 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • It’s current Price/Book of 5.72 is about median in its peer group.
  • The market expects AIR-IT to grow faster than its peers and for the company to improve its current ROE.
  • AIR-IT has relatively low profit margins and median asset efficiency.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • AIR-IT‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • Compared with the peers chosen, AIR-IT has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company’s capital investment program suggests it is under-investing in a business that is producing peer median returns.
  • AIR-IT‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

AIR-IT would seem to have a hard time raising additional debt.

  • With debt at a relatively low 15.82% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 15.82%), and relatively tight interest coverage level of 1.08x, AIR-IT would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • Of the 4 chosen peers for the company, only 3 of the stocks have an outstanding debt balance. Companies with no debt include CBA-SE.

AIR-IT has moved to a Constrained from a relatively low liquidity profile at the recent year-end.

  • AIR-IT‘s interest coverage has increased 0.86 points from last year’s low but is still below its five-year average interest coverage of 7.59.
  • Though its interest coverage increased to 1.08x from 0.21x (in 2016), its peer median remained relatively stable during this period at 1.63x.
  • Interest coverage rose 0.75 points relative to peers.
  • AIR-IT‘s debt-EV is over one standard deviation below its five-year average debt-EV of 21.77%.
  • The decrease in its debt-EV to 15.82% from 22.26% (in 2016) was also accompanied by a decrease in its peer median during this period to 15.82% from 22.05%.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
CybAero AB 0 3.27 -25.15 -410520
Embraer S.A. Sponsored ADR 80.96 2.67 1.84 14.53
BAE Systems plc 21.85 0.98 1.63 33.41
Boeing Company 7.05 1.18 19.32 86.98
Airbus SE 15.82 1.07 1.08 41.19
Peer Median 15.82 1.18 1.63 33.41
Best In Class 7.05 3.27 19.32 86.98

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Company Profile

Airbus SE engages in the design, manufacture, delivery, and provision of aerospace products, space, and related services. Through its subsidiaries, it operates through the following segments: Airbus Commercial Aircraft; Airbus Helicopters; Airbus Defence and Space; and Other/HQ/Consolidated. The Airbus Commercial Aircraft segment develops, manufactures, markets, and sells commercial jet aircrafts; and offers aircraft conversion and related services. The Airbus Helicopters segment deals with the development, manufacture, marketing, and sale of civil and military helicopters. The Airbus Defence and Space segment covers the military combat aircraft and training aircraft; and the provision of defence electronics and of global security market solutions. The Other/HQ/Consolidated segment involves the holding function of Airbus, the Airbus Group Bank, and other activities not allocable to the reportable segments. The company was founded on December 29, 1998 and is headquartered in Leiden, the Netherlands.

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