Intrum AB is market-leading credit management company. Intrum has wide-ranging expertise in debt collection services, and do business in 24 countries in Europe plus Latin America (Brazil). Intrum have more than 9,000 experienced employees and their headquarter is in Stockholm, Sweden.
I’ve owned this company in the past. I’m having another look at it today after reading an article about the top 10 most shorted stocks in Sweden.
Top 10 most shorted stocks (Stockholm Stock Exchange)
- Intrum
- Elekta
- JM
- Fingerprint Cards
- SAS
- Hoist Finance
- Saab
- MTG
- Electrolux Professional
- Mycronic
Source: Holdings
Charts
Statistics
The numbers analysis below is the first step in Rule 1 Investing by Phil Town. In his book Rule #1: The Simple Strategy for Successful Investing in Only 15 Minutes a Week! (no affiliate) he writes about his investing philosophy which centers around four key principles he refers to as the Four M’s: Meaning, Moat, Management and Margin of Safety.
The first requirement is an average annual growth rate of at least 10%, the past 10 years, in the ROIC (Return On Invested Capital), Sales, EPS (Earnings Per Share), Equity and Cash Flow. The average 5 year and 1 year growth rates should also be above 10%. High growth growth rates suggest a sustainable MOAT.
Next step is to analyse the the Four M’s: Meaning, Moat, Management and Margin of Safety.
The aim is to find a fantastic company, with a great track record, to invest in for at least 10 year. The expected average yearly return is at least 15%. This is used in the calculations. With an investment of 100 USD and a yearly return of 15%, 100 USD will have increased to 405 USD in 10 years time because of interest-on-interest or compound interest.
| Year | 2010 | 2011 | 2012 | 2013 | 2014 |
| ROIC | n/a | n/a | n/a | n/a | n/a |
| Sales (MSEK) | 3766 | 3950 | 4048 | 4566 | 5184 |
| EPS (SEK) | 5.67 | 6.91 | 7.32 | 10.3 | 13.48 |
| Equity (MSEK) | 2577 | 2778 | 2986 | 3316 | 3014 |
| Cash flow from operating activities (MSEK) | 1630 | 1768 | 1986 | 2305 | 2672 |
| P/E | 18.3 | 15.6 | 13.2 | 17.5 | 17.21 |
| Year | 2015 | 2016 | 2017 | 2018 | 2019 |
| ROIC | 20.0% | 20.0% | 16.0% | 14.0% | 15.0% |
| Sales (MSEK) | 5419 | 5869 | 9434 | 13442 | 15985 |
| EPS (SEK) | 15.92 | 20.15 | 14.62 | 14.18 | -2.76 |
| Equity (MSEK) | 3166 | 4130 | 22439 | 25672 | 24893 |
| Cash flow from operating activities (MSEK) | 2905 | 3374 | 4535 | 6154 | 6392 |
| P/E | 18.12 | 15.25 | 20.75 | 13.9 | n/a |
Growth Rates
| Yearly average | 10 year | 5 year | 1 year |
| ROIC | n/a | 17% | 15% |
| Sales Growth Rate | 17% | 31% | 19% |
| EPS Growth Rate | n/a | n/a | n/a |
| Equity Growth Rate | 29% | 67% | -3% |
| Cash Flow Growth Rate | 16% | 22% | 4% |
Due to a negative EPS 2019, the EPS Growth rates can not be calculated. Using the EPS from 2010 to 2018 the average annual growth rate is 12%.
Price (fair value) calculations using historic growth rates and different P/E
| Growth rates x 2 | Average P/E | Median P/E | Average Low and High P/E | |
| P/E | 58 | 16.7 | 17.2 | 37.4 |
| Calculated future price in 10 years | n/a | n/a | n/a | n/a |
| Calculated Price (fair value) | n/a | n/a | n/a | n/a |
| Margin of Safety (50%) | n/a | n/a | n/a | n/a |
Due to the negative EPS 2019 the price can not be calculated. Using the Historic average annual EPS Growth rate from 2010 to 2018 and the average EPS (10.6) the following calculations can be made :
| Growth rates x 2 | Average P/E | Median P/E | Average Low and High P/E | |
| P/E | 58 | 16.7 | 17.2 | 37.4 |
| Calculated future price in 10 years | 7846 | 2252 | 2328 | 5059 |
| Calculated Price | 1971 | 563 | 582 | 1265 |
| Margin of Safety (50%) | 981 | 281 | 291 | 632 |
Current price: 210 SEK
I believe that the negative EPS is because of an recent acquisition. If they can turn their numbers around the calculations above suggest that the stock is undervalued. Further analysis is needed.
However to be considered for further analysis, as a growth stock, the requirement is that the 10 year yearly average growth rate is at least 5% in all five categories. They are not.