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7 profit growth frontrunners from Europe
14
Jul
7 profit growth frontrunners from Europe

 

Today we’re talking about European companies meeting the following conditions:

— The company’s financial reports show strong 5-year profit growth (compared to other companies in the market). The measure determines the company’s place in the rating.

— A market cap of at least €280M.

 A P/E ratio of not more than 30. That means the shares are not overpriced, and there’s almost no risk for investors to find themselves in a bubble.

Despite the pound’s fall and the ongoing debate about other consequences of Britain’s withdrawal from the EU, British companies are regularly mentioned in our reviews in terms of high profit growth, even taking into account that all indicators are considered in euros. Today there are two British companies in the euro, and both of them are investment funds. In general, the rating turned out to be quite multinational and based on different currencies, as companies from 5 different countries made the list this time. We must note a fairly weak representation of the eurozone: only 3 companies in the lit are traded in euros, although the vast majority of the EU uses this currency.

The stock charts use the currencies of the respective exchanges. The companies’ market capitalization and turnover are shown in euro (exchange rate adjusted). The review is based on data from https://www.google.com/finance. The letter «M» stands for millions, «B» means billions.

1. Adler Real Estate

Complex of premises that Adler Real Estate leases

— Symbol: ADL

— Exchange: XETRA

— Country: Germany

— Currency: : EUR

— Market cap: : €762M

— Annual turnover: : €252M

— P/E: 7.0

— Dividend yield: −

— Share price change YoY: +20%

— 5-year profit change: +340%

— 5-year turnover change: +101%

Description. A real estate company engaged in planning, development, construction and leasing of commercial and residential properties, as well as in asset management services.

Chart. After the short triumph of 2004, the company’s shares fell in price by an order of magnitude. The stock began to grow steadily only in 2012, and by 2014 the price set a new record. Then in 2015 the stock hit an all-time high, exceeding the previous record 2.3 times. Now the price seems to be fluctuating near this level.

Pros. Largest five-year profit growth in this review, good turnover growth, positive long-term share price trend, low P/E ratio.

Cons. No dividend.

2. Eik fasteignafelag

Eik fasteignafelag’s building

— Symbol: EIK

— Exchange: NASDAQ OMX Iceland

— Country: Iceland

— Currency: ISK

— Market cap: €314M

— Annual turnover: €57M

— P/E: 12

— Dividend yield: 2.5%

— Share price change YoY: +37%

— 5-year profit change: +299%

— 5-year turnover change: +63%

About the company. Real estate company that is specialized in industrial and commercial buildings. It rents them out and leases, as well as reconstructs and provides services to the premises. The company owns about 500 buildings: among them there are warehouses, shopping capacities, offices, restaurants and hotels. They are primarily located in Reykjavik.

Chart. The company has a trading record of fewer than three years, and all this time, except for recent months, its share price is growing steadily. Now it’s about 2 times more expensive than 2 years ago. The company pays yearly dividend.

Pros. Excellent five-year profit growth, good turnover growth, positive long-term share price trend.

Cons. In recent months, the share price is declining, and the P/E ratio is still quite low, suggesting that the decline may continue.

3. Scottish Investment Trust

Dancers in Scottish skirts

— Symbol: SCIN

— Exchange: London Stock Exchange

— Country: United Kingdom

— Currency: GBP

— Market cap: €752M

— Annual turnover: €240M

— P/E: 4.3

— Dividend yield: 2.9%

— Share price change YoY: +20%

— 5-year profit change: +279%

— 5-year turnover change: +57%

About the company. The company invests in the production sector. It also works in energy production, retail, healthcare, finance, information technology and other spheres. The trust operates in a number of countries, from Asia to Latin America.

Chart. The trust has a long track record, full of ups and downs, but in general the stock price has been climbing up since 2003. The growth was particularly rapid in 2016, and the stock hit a new all-time high just recently. The trust steadily pays dividend twice a year.

Pros. Excellent five-year profit growth, significant turnover growth, low P/E ratio, positive long-term share price trend (despite current P/E multiple), largest dividend in the review (although still moderate in absolute terms).

Cons. No significant cons were found.

4. F&C Global Smaller Companies

F&C Global invests in small companies

— Symbol: FCS

— Exchange: London Stock Exchange

— Country: United Kingdom

— Currency: GBP

— Market cap: €843M

— Annual turnover: €196M

— P/E: 4.3

— Dividend yield: 0.8%

— Share price change YoY: +16%

— 5-year profit change: +233%

— 5-year turnover change: +86%

Description. An investment trust focusing on small companies from different countries, mainly in the US and Europe, but also in Asia, Latin America and other regions. The trust invests in shares, but also buys other assets, such as mutual funds units. Most of the companies in the trust’s portfolio are engaged in financial, manufacturing or consumer goods industry. The trust is managed by F&C Asset Management.

Chart. Just as in the case of the Scottish Investment Trust, a noticeable increase in the F&C Global Smaller Companies share price has been observed since 2003. During the period, the stock became 4 times more expensive and is now trading close to an all-time high.The company steadily pays dividend twice a year, but its dividend yield is still quite low.

Pros. Excellent profit growth, good turnover growth, positive long-term share price trend, low P/E ratio.

Cons. Tiny dividend.

5. Fingerprint Cards

Instruction on using Fingerprint Cards’s data sensor

— Symbol: FING-B

— Exchange: NASDAQ OMX Stockholm

— Country: Sweden

— Currency: SEK

— Market cap: €974M

— Annual turnover: €690M

— P/E: 6.0

— Dividend yield: −

— Share price change YoY: −68%

— 5-year profit change: +198%

— 5-year turnover change: +123%

Chart. The key period in the company’s track record was a huge bubble during 2015-2016. In mid-2016, it seemed that the bubble had already burst, but the share price continues to decline, and it is impossible to predict when it will hit the bottom.

Pros. Excellent profit and turnover growth, low P/E ratio.

Cons. A significant decline in share prices over the year, virtually no dividend.

6. Koenig & Bauer

Koenig & Bauer’s workshop

— Symbol: SKB

— Exchange: XETRA

— Country: Germany

— Currency: EUR

— Market cap: €978M

— Annual turnover: €1.2B

— P/E: 11

— Dividend yield: 0.9%

— Share price change YoY: +38%

— 5-year profit change: +190%

— 5-year turnover change: 0%

Description. A printing press manufacturer with the broadest product range in the industry. The company provides various printing services ranging from publishing newspapers and magazines to printing on dishes, metal, and other non-paper items. The company also has equipment for printing banknotes. Koenig & Bauer operates 11 factories in Germany, the Czech Republic, Italy and Austria.

Chart. Koenig & Bauer can not boast of such a long-term increase in share prices, as some other British companies do. From 2009 to 2014, its shares were very cheap. But in January 2015 the company entered a phase of truly impressive growth: its share price increased 6-fold in 2.5 years. The stock set a new record in 2017 at $60 a share, doubling the previous high set ten years ago.The company pays dividends quite irregularly, and their size is very small.

Pros. Excellent five-year profit growth, low P/E ratio, great three-year share price growth.

Cons. Tiny dividend.

7. Global Dominion Access

Global Dominion Access develops and builds industrial facilities

— Symbol: DOM

— Exchange: Bolsa de Madrid

— Country: Spain

— Currency: EUR

— Market cap: €661M

— Annual turnover: €613M

— P/E: 27

— Dividend yield: −

— Share price change YoY: +62%

— 5-year profit change: +186%

— 5-year turnover change: +37%

About the company. Development company that operates in telecommunications, energy production, and other industrial directions. It constructs new buildings and provides service and maintenance to the existing ones. GDA works in many countries of Europe, Asia, as well as in North and South Americas.

Chart. The share price data is available only since 2016. For most of this time, the share price grew at an impressive rate.

Pros. Excellent five-year profit growth, good share price growth, decent turnover growth.

Cons. Highest P/E ratio in this review, no dividend, short track record.

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