Krones AG : Undervalued relative to peers, but don’t ignore the other factors

Krones AG relative valuation is now UNDERVALUED. It was previously rated NEUTRAL, and has a fundamental analysis score of 56.

Our analysis is based on comparing Krones AG with the following peers – EnPro Industries, Inc., Actuant Corporation Class A, Graco Inc. and Gorman-Rupp Company (NPO-US, ATU-US, GGG-US and GRC-US).

Relative Valuation

Krones AG’s price of USD 50.59 is lower than CapitalCube’s implied price of USD 59.46. CapitalCube believes that at these levels, Krones AG is undervalued and has upside potential. Over the last 52 week period, the stock has fluctuated between USD 50.41 and USD 62.26.

Relative Valuation

Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • Krones AG Unsponsored ADR’s current Price/Book of 2.54 is about median in its peer group.
  • We classify KRNTY-US as Harvesting because of the market’s relatively low growth expectations despite its relatively high returns.
  • KRNTY-US‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • KRNTY-US‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively low gross margin and median pre-tax margin suggest operations may be constrained on pricing versus peers.
  • While KRNTY-US‘s revenues growth in recent years has been around the peer median, the stock’s below peer median P/E ratio suggests that the market likely sees the company’s long-term growth prospects to be fading.
  • The company’s level of capital investment suggests it might be under-investing in a business with above median returns.
  • KRNTY-US has the financial and operating capacity to borrow quickly.

Investment Outlook

Krones AG has a fundamental score of 56 and has a relative valuation of UNDERVALUED.

Krones AG’s Fundamental Analysis Score is about average at 56, thus not allowing for a specific classification into the Value – Price Matrix.

Fundamentals Vs Relative Valuation

Quadrant label definitions. Hover to know more

Safety, Value Play, Value Trap, Speculative

Drivers of Valuation

KRNTY-US has a Harvesting profile relative to its peers.

We classify KRNTY-US as Harvesting because of the market’s low expectations of growth (P/E of 18.19 compared to peer median of 24.09) despite its relatively high returns (ROE of 14.62% compared to the peer median ROE of 8.37%).

The company’s current Price/Book of 2.54 is about median in its peer group.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

KRNTY-US has moved to an Harvesting from a relatively high ROE profile at the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Krones AG engages in the production of machineries and systems for filling and packaging and for beverage production. The company operates through the following segments: Product Filing and Decoration, Beverage Production/Process Technology, and Machines and Lines for the Compact Class segments. The Product Filing and Decoration segment offers machines and complete lines for filling, packaging, labeling, and conveying products. The Beverage Production/Process Technology segment includes brewhouse and cellar systems. The company was founded by Hermann Kronseder in 1951 and is headquartered in Neutraubling, Germany.

Disclaimer

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