Numbers analysis: Deutsche Lufthansa AG

Deutsche Lufthansa AG holds hub airlines, point-to-point airlines, and aviation service companies. It has four business segments: passenger airline group (approximately three fourths of total revenue); logistics; maintenance, repair, and overhaul; and catering. The company offers short- and long-haul routes, and has established a multihub to offer comprehensive flight schedules. The logistics division focuses on airport-to-airport airfreight business. It transports standard and express freight, along with more specialized and valuable products. The MRO services tend to civil and commercial aircraft, with technical operations located around the world. Europe accounts for approximately half of total revenue, but the company does reach various regions of the world.

Description taken from www.nordnet.se

Charts

10 year weekly chart
1 year daily chart

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 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.

Year20102011201220132014
ROIC5.2%4.2%4.9%5.0%6.8%
Sales (MEUR)2645928734301353002730011
EPS (EUR)2.47-0.032.680.680.12
Equity (MEUR)83408044483961084031
Operational cash flow (MEUR)29922356284232901977
P/E
Year20152016201720182019
ROIC10.9%16.8%15.4%12.3%6.4%
Sales (MEUR)3205631660355793554236424
EPS (EUR)3.673.814.984.582.55
Equity (MEUR)584571499110957310256
Operational cash flow (MEUR)33933246536841094030
P/E3.973.226.174.36.41

ROIC rates are from finbox.com and P/E from gurufocus.com

Growth Rates

Yearly average10 year5 year1 year
ROIC9%12%6%
Sales Growth Rate4%3%2%
EPS Growth Rate0%-9%-44%
Equity Growth Rate2%15%7%
Cash Flow Growth Rate3%4%-2%
Growth rates x 2Average P/EMedian P/E
P/E4.004.804.30
Calculated future price in 10 years121513
Calculated Price343
Margin of Safety (50%)222

Current price: 8.44 EUR

I’m mainly looking into airline companies because I’m looking for possible trades.

To be considered for further analysis here, 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.

However I will also have a look at Finnair and Norwegian Air Shuttle since these are some of the companies I can trade through my broker.

To read my post where I compare with Finnair and Norwegian Air Shuttle follow the link below.
Finnair vs Lufthansa vs Norwegian – comparing airlines

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