PUMA SE – Value Analysis (XETRA:PUM) : December 19, 2017

Capitalcube gives PUMA SE a score of 72.

Our analysis is based on comparing PUMA SE with the following peers – adidas AG, Lafuma SA, Rapala VMC Oyj and Christian Dior SE (ADS-DE, LAF-FR, RAP1V-FI and DIO-DE).

Investment Outlook

PUMA SE has a fundamental score of 72 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • Compared to peers, relative outperformance over the last year has faded more recently.
  • It currently trades at a Price/Book ratio of (3.41).
  • The market expects PUM-DE to grow faster than its peers and for the company to improve its current ROE.
  • PUM-DE‘s relative asset efficiency and net profit margins are both around the median level.
  • 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, PUM-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 margins are around the peer medians and do not suggest any benefit from a pricing or an operating cost advantage versus peers.
  • While PUM-DE‘s revenues growth has been around the peer median in recent years, the market seems to see faster growth ahead and gives its shares a higher than peer median P/E ratio.
  • The company is likely overinvesting in a business with only median returns.
  • PUM-DE has the financial and operating capacity to borrow quickly.

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Leverage & Liquidity

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

  • With debt at a relatively low 1.20% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 4.36%), and a well-cushioned interest coverage level of 8.28x, PUM-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.

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

  • PUM-DE‘s interest coverage is less than (but within one standard deviation of) its five-year average interest coverage of 16.37x.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (8.28x) and the peer median (17.17x).
  • PUM-DE‘s debt-EV is similar to its five-year average debt-EV of 1.03%.
  • Though its debt-EV has remained relatively stable at 1.20% compared to 2016, its peer median has decreased to 4.36% from 5.43% during this period.
  • Relative to peers, debt-EV rose 1.08 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
adidas AG 4.36 1.38 17.17 102.69
Lafuma SA 0.93 2.25 110.7 661.22
Rapala VMC Oyj 47.1 1.86 1.58 10.63
Christian Dior SE 21.33 1.79 60.6 34.64
PUMA SE 1.2 1.82 8.28 507.97
Peer Median 4.36 1.82 17.17 102.69
Best In Class 0.93 2.25 110.7 661.22

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Company Profile

Puma SE is engaged in the design, manufacture, sale, and distribution of sports lifestyle products which include footwear, apparels and accessories. Its brands include puma, cobra golf and tretorn. The puma brand offers sport performance and lifestyle labels in categories of football, running, motor sports, golf, and sailing. The cobra golf brand produces and sells golf equipment offering innovative design such as 9 point face technology, adjustable flight technology, and baffler rail technology. The tretorn brand provides leisure shoes, rubber boots, tennis balls, and other rubber-made products. The company was founded by Rudolf Dassler on October 1, 1948 and is headquartered in Herzogenaurach, Germany.

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