FRIWO AG – Value Analysis (XETRA:CEA) : November 6, 2017

Capitalcube gives FRIWO AG a score of 78.

Our analysis is based on comparing FRIWO AG with the following peers – SMA Solar Technology AG, paragon AG, Nucletron Electronic AG, Efore Oyj Class A and R. Stahl AG (S92-DE, PGN-DE, NUC-DE, EFO1V-FI and RSL2-DE).

Investment Outlook

FRIWO AG has a fundamental score of 78 and has a relative valuation of NEUTRAL.

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 currently trades at a Price/Book ratio of (7.89).
  • We classify CEA-DE as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • CEA-DE has a successful operating model with relatively high net profit margins and asset turns.
  • Compared with its chosen peers, changes in the company’s annual earnings are better than the changes in its revenue, implying better than median cost control and/or some economies of scale.
  • Over the last five years, CEA-DE‘s return on assets has improved from median to better than the median among its peers, suggesting the company has found relative operating advantages.
  • The company’s relatively high pre-tax margin suggests tight control on operating costs versus peers.
  • While CEA-DE‘s revenue growth in recent years has been above the peer median, the stock’s P/E ratio is less than the peer median suggesting that the company’s earnings may be peaking and the market expects a decline in its growth expectations.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • CEA-DE has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

CEA-DE has the financial and operating capacity to borrow quickly.

  • With debt at a relatively low 10.49% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 12.88%), and a well-cushioned interest coverage level of 19.86x, CEA-DE can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • Of the 5 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include NUC-DE.

CEA-DE has maintained its Quick & Able profile from the prior year-end.

  • CEA-DE‘s interest coverage is its highest over the last four years and compares to a low of -0.36x in 2012.
  • The increase in its interest coverage to 19.86x from 16.93x (in 2015) was also accompanied by an increase in its peer median during this period to 6.95x from 3.02x.
  • Interest coverage fell 1.00 points relative to peers.
  • CEA-DE‘s debt-EV continues to trend upward and is now over one standard deviation above its four-year average debt-EV of 6.64%.
  • Like the interest coverage trend, the increase in its debt-EV (to 10.49% from 6.96%) was also accompanied by an increase in its peer median during this period (to 12.88% from 11.21%).
  • Relative to peers, debt-EV rose 1.86 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
SMA Solar Technology AG 4.34 2.66 11.18 317.12
paragon AG 15.28 1.03 2.71 24.52
Nucletron Electronic AG 0 3.39 No interest exp 999
Efore Oyj Class A 24.81 0.8 -0.35 0.74
R. Stahl AG 19.56 1.69 -1.36 14.06
FRIWO AG 10.49 1.54 19.86 77.3
Peer Median 12.88 1.61 6.95 50.91
Best In Class 4.34 3.39 No interest exp 999

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Company Profile

FRIWO AG is a management holding company, which engages in the manufacture of power supply and charging devices. Its product applications include household appliances, mobile devices, information technology & communications, industrial applications, and measuring, weighing, lighting, and medical equipment. The company was founded in 1967 and is headquartered in Ostbevern, Germany.

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