To Be Researched: Handelsbanken
“Handelsbanken is a full-service bank for both private and corporate customers. The Bank has a nationwide branch network in Sweden, the UK, Denmark, Finland, Norway and the Netherlands. The Bank regards these countries as its home markets. Handelsbanken was founded in 1871 and has operations in 24 countries.” (Source: Annual Report, 2013)
Earning Power and Valuation: Quick & Dirty
Diluted earnings per share has grown from 14.55 SEK per share in fiscal year 2004 to 22.26 SEK per share in fiscal year 2013, a compounded annual growth rate (CAGR) of 4,8%. See table below for historical diluted earnings per share data.
Trailing twelve months (TTM) (per Q2, 2014) diluted earnings per share was 23.5 SEK. See table below for a comparison of earnings per share averages for different time periods.
Handelsbanken’s earnings yield calculated from the different averages of diluted earnings per share, ranges from 6.2-7.5%.
Intrinsic business value per share at an earnings multiplier of 15 times, calculated based on the different averages of earnings, ranges from 290-353 SEK.
|TTM||FY 2013||3y Avg.||5y Avg.||7y Avg.||10y Avg.|
|Intrinsic Value, 15x||352.5||337.8||317.5||290.8||302.3||289.5|
|Margin of Safety||11.0%||7.1%||1.2%||-7.9%||-3.8%||-8.4%|
Total dividend per share in 2013 was 16.50 SEK, consisting of 11.5 SEK in ordinary dividend and 5.0 SEK as an extra dividend. Dividend yield (calculated based on ordinary dividend) per today is 3.7%.
Average growth in equity including dividends during 2008-2013 was 15%. See image below (Source: Annul Report, 2013).
Assuming an earning power per share of 21 SEK and an earnings multiple of 15 times, gives an intrinsic business value per share of 315 SEK, in line with the current market price.
|Key Metrics||FY 2013||TTM|
|Earnings per Share, diluted||22.26||23.5|
|Dividend per Share||11.5||N/A|
|Extra Dividend per Share||5.0||N/A|
|Book Value per Share||175.2||183.9|
|Return on Equity||12.8%||14.4%|
|Price per B-share, August 28||313.8|
|Dividend Yield (Ord.)||3.7%|
|Value per Share, 15x||315|
|Margin of Safety||0.4%|
|Margin of Safety||11,1%|
Financial data from Annual Report, 2013.
Handelsbanken will be added to the watch list.
Also, further research will be performed about the business and the industry in which it operates.
Disclosure: I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company or individual mentioned in this article. I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. This article is informational and is in my own personal opinion. Always do your own due diligence and contact a financial professional before executing any trades or investments.