Saturday, April 21, 2018

IBM annual report 2017

Front page of IBM 2017

For the report in full please go here, for the previous summary please see IBM annual report 2016 and to find out more regarding IBM then please click on analysis of IBM 2017.

Looking at the financial statement below then the drought continues with an added on tax effect on top of that. So once again they had almost 80 billion USD in revenue but instead of getting around 10 billion USD out in profit they ended up with only 5.7 billion USD. Rometty, Rometty, Rometty when shall you manage to show a year of growth with increasing margins and not only shrinkage of everything as you have as of yet provided us shareholders with?

Income statement of IBM 2017

Conclusion: I have now been a shareholder in IBM for four years. It would be a considered as a long time for many but for me it is not. More than half of my investments were made in 2014 or before. I still believe that IBM can turn this around but it is also very clear that the more years that passes the higher the increase they must show for me to reach an acceptable ROI. I have now, unfortunately, turned into a grumpy shareholder in IBM.

Friday, April 20, 2018

Analysis of HM 2018

Logo of H&M 2018

Company: H&M

ISIN SE0000106270 | WKN 872318

Business: Fashion retail with H&M, & Other Stories, Cheap Monday, COS, Monki, Weekday and Arket. The currently have online offerings in 43 of their markets.

Active: They have over 4700 stores in 69 markets. They are pretty much half the size of Inditex which shows us how large they can become. The main markets are in Europe where they are well established but also in North America. They have few stores in South America, Asia, Middle East and Africa.

P/E: 13.8

For the previous analysis please see Analysis of HM 2017.

Contrarian analysis of H&M 2018 with P/E, P/B, ROE as well as dividend.

The P/E is very reasonable with 13.8 but the P/B is too high with 3.8 which gives it a no go from Graham. The earnings to sales are at 7% which should be higher but the ROE is excellent with 27% and so is the book to debt ratio with 1.3.
In the last five years they have seen a yearly revenue growth rate of almost 9.1% which is excellent and this leaves us with a motivated P/E between 19 to 24 which means that the market is undervaluing H&M at the moment.
They pay an excellent dividend (paid out in two portions per year) in the size of 7.2% which on the down side corresponds to pretty much 100% of their earnings. So they better increase the earnings or soon decrease their dividend payments.

Conclusion: Graham says no but I say yes. H&M is making money, the P/E, ROE and dividend is excellent but large risk for decreased dividend in the future. I will remain as a shareholder that have not yet allowed my self to go grumpy due to the short holding period even though I do regret stepping in too early in H&M.

Thursday, April 19, 2018

HM annual report 2017

Front page HM annual 2017 report

For the report in full please go here no previous summary has been made due to it being an new investment and to find out more about H&M then please go to analysis of HM 2017.

As most of you already know 2017 was not a spectacular year for H&M. For a long time they have been considered to be one of the crown jewels in Sweden and that shine have decreased lately. I see the fears and worries for the future due to online, increased inventory, is the CEO skilled enough, over exploitation etc. For me H&M have indeed issues but, and to me this is a big but, they are still making money. Sometimes it sounds as if online sales such as Zalando is some "new" threat to H&M. Germany is H&Ms largest market. Zalando was started in Germany and have been around for many years now. This threat is not new I would even stretch myself to state that H&M getting their online business up and running is more of a threat to Zalando. They had that market pretty much to themselves for a long time and from now on H&M will start to take market shares back. I know for a fact that they had over exploitation in Germany that I hope will get sorted out now that focus is slightly removed from growth to actually looking over their costs.

That said 2017 was not a great year. They grew their revenue to 232 billion SEK and the earnings coming out in the end of that funnel was 16.2 billion SEK which was almost 2.5 billion less than last year. Yeah, that is not good.

Income statement of HM 2017

Conclusion: As the stupid contrarian investor that I am I decided to invest in H&M last December which turned out to be too early and then I pushed in more money during February after I had received my bonus. As with every investment I make I of course hope it will be successful. In this case I want to see that due to an additional two reasons: I want it to regain the crown jewel status of Sweden and I love their sustainability initiatives.

Wednesday, April 18, 2018

Analysis of Hugo Boss 2018

Logo of Hugo Boss 2018

Company: Hugo Boss

Business: A German high-end fashion retailer and accessories for both men and women. They have several different brands: BOSS, BOSS Orange, BOSS Green, HUGO and finally HUGO BOSS. The brands consist of business wear, evening wear, shoes and leather accessories. They are also active with licensed fragrances, glasses, watches and other areas they consider to be able to make contributions to.

Active: Due to active marketing the Boss brand is well known in the world and they sell products in 127 countries world wide. Production is in Asia & Eastern Europe. They have more than 7,700 sale points.

P/E: 22.5

For the previous analysis please visit analysis of Hugo Boss 2017.

Contrarian analysis of Hugo Boss 2018 with P/E, P/B, ROE as well as dividend.

The P/E for Hugo Boss is high with 22.5 as is the P/B with 5.7 which means Graham would stay away. Earnings to sales is at 8% which is ok but I expect more from "luxury" brands. The ROE is very good with 25% as is the book to debt ratio of 1.1.
In the last five years that have had a yearly revenue growth rate of 2.4% which is a bit on the low side and this gives us a motivated P/E of 12 to 14 which means that Hugo Boss is overvalued by the market today.
They pay a very nice dividend of 3.6% which correspond to around 80% of their earnings which is in the higher bracket of what they want to pay out (60 to 80%) and I would love to see this decrease slightly in the future due to increased earnings.

Conclusion: Graham say no and so do I. The P/E, P/B is far too high even though ROE and dividends are fully acceptable. I will remain as a shareholder.

Tuesday, April 17, 2018

Hugo Boss annual report 2017

Front page of Hugo Boss 2017

For the report in full please click here and for the previous report then please visit Hugo Boss annual report 2016 and for an analysis then please visit analysis of Hugo Boss 2017.

If we take a look at the financial statement below then we see that they only had a minor increase in sales but due to less costs for for instance closing down unprofitable shops, which they did last year, they managed to increase the profits nicely from 194 to 231 million €. I would of course have loved to see an even larger jump but it is ok.

Income statement of Hugo Boss 2017

Conclusion: Hugo Boss is doing ok. They need to push up their earnings one tick next year but I see no reason for worries at this stage. It was supposed to be a very short investment that are now extending. I will remain as a shareholder.