Analysis of Norma Group

Company: Norma Group

Business: A German producer of high and low tech joining products. Meaning pipe clamps, cable ties, tool clips, hose connectors, band straps etc. For a more complete list please look here.

Active: Main activities are in Europe, the US and in South East Asia (including Japan and China)

P/E: 20.5

The P/E of Norma Group is simply too high with 20.5 and the P/B is out of whack with 4.0 which gives a very clear no go from Graham. The earnings to sales are however good with 9% and the ROE is excellent with almost 20%. The book to debt is so, so with a ratio of 0.7. In the last four years they have had a yearly growth of 16.4% woow! That is indeed excellent which then gives a motivated P/E of 36 to 40 which means that the market is currently undervaluing Norma Group based on their excellent growth. They pay a small dividend of 1.8% which represents 37% of the earnings so at least it should be possible to keep if little changes.

Conclusion: It was nice to look over their big list of products and I have probably owned and used many of their products which has been included in the box that I bought with something else. With the ROE and the growth they have had it looks indeed like a very nice growth company but for me the P/E and P/B is simply a bit too scare at the moment to make an investment. If you consider different then let me know!

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