Krones AG – Value Analysis (XETRA:KRN) : December 26, 2017

Capitalcube gives Krones AG a score of 47.

Our analysis is based on comparing Krones AG with the following peers – WashTec AG, Amiad Water Systems Ltd, I.M.A. Industria Macchine Automatiche S.p.A. and Schuler AG (WSU-DE, AFS-GB, IMA-IT and SCUN-DE).

Investment Outlook

Krones AG has a fundamental score of 47 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • From a peer analysis angle, relative underperformance over the last year has improved more recently.
  • It’s current Price/Book of 2.69 is about median in its peer group.
  • The market expects KRN-DE‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • KRN-DE‘s relative asset efficiency and net profit margins are both around the median level.
  • Changes in annual revenues are in line with its chosen peers but lags in terms of earnings suggesting that the company is less cost conscious and may be spending for growth.
  • KRN-DE‘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.
  • KRN-DE‘s revenue growth in recent years and current P/E ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • KRN-DE has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

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

  • With debt at a relatively low 3.38% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 12.13%), and a well-cushioned interest coverage level of 90.15x, KRN-DE can probably borrow quickly. We classify the company as Quick & Able in terms of its capacity to raise additional debt.
  • All 4 peers for the company have an outstanding debt balance.

KRN-DE has maintained its Quick & Able profile from the recent year-end.

  • KRN-DE‘s interest coverage is similar to last year’s high of 90.15x, which compares to a low of 16.61x in 2012.
  • Though its interest coverage has remained relatively stable at 90.15x compared to 2016, its peer median has increased to 12.82x from 10.37x during this period.
  • Interest coverage fell 2.45 points relative to peers.
  • KRN-DE‘s debt-EV is its highest relative to the last five years and compares to a low of 0.01% in 2015.
  • While its debt-EV increased to 3.38% from 0.01% (in 2016), its peer median decreased during this period to 12.13% from 13.21%.
  • Relative to peers, debt-EV rose 4.45 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
WashTec AG 3.04 1.01 91.25 128.88
Amiad Water Systems Ltd 51.91 2.08 3.34 27.91
I.M.A. Industria Macchine Automatiche S.p.A. 12.13 1.02 12.82 33.23
Schuler AG 25.23 1.64 6.29 53.85
Krones AG 3.38 1.52 90.15 372.01
Peer Median 12.13 1.52 12.82 53.85
Best In Class 3.04 2.08 91.25 372.01

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Company Profile

Krones AG is engages in production of machineries and systems for filling and packaging and for beverage production. The company operates through the following segments: Machines and Lines for Product Filing and Decoration, Machines and Lines for Beverage Production or Process Technology, and Machines and Lines for the Compact Class. Machines and Lines for Product Filing and Decoration segment offers machines and complete lines for filling, packaging, labeling, and conveying products. The Machines and Lines for Beverage Production or Process Technology segment includes machinery and equipment for products and treating beer, soft drinks, fruit juices, milk, and dairy drinks. The Machines and Lines for the Compact Class segment offers products such as filling and labelling technology. The company was founded by Hermann Kronseder in 1951 and is headquartered in Neutraubling, Germany.

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