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 53.

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 51.01 is lower than CapitalCube’s implied price of USD 54.75. 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 47.03 and USD 62.26.

Relative Valuation


Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • Krones AG Unsponsored ADR currently trades at a higher Price/Book ratio (2.77) than its peer median (2.18).
  • 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.
  • 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.
  • KRNTY-US‘s return on assets has improved from below median to about median among its peers over the last five years.
  • 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 capital investment seems appropriate for a business with peer median returns.
  • KRNTY-US currently does not have any debt.


Investment Outlook

Krones AG has a fundamental score of 53 and has a relative valuation of UNDERVALUED.

Krones AG’s Fundamental Analysis Score is about average at 53, 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 18.78 compared to peer median of 24.97) despite its relatively high returns (ROE of 14.45% compared to the peer median ROE of 8.83%).

The company currently trades at a higher Price/Book ratio of 2.77 compared to its peer median of 2.18.

Valuation Drivers

Quadrant label definitions. Hover to know more

Outperforming, Harvesting, Challenged, Turnaround

KRNTY-US has maintained its Harvesting profile from 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 Low Output Range (KOSME) 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 Low Output Range (KOSME) segment offers a product range that caters smaller and mid-sized companies that do not need high-speed machines. The company was founded by Hermann Kronseder and is headquartered in Neutraubling, Germany.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party’s use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you’re agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website www.analytixinsight.com.