| CompuGroup Medical SE & Co. KGaA (DE000A288904) | |||
22,66 EURStand (close): 24.06.25 |
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| 07.03.25 07:03:30 | CompuGroup Medical SE & Co KgaA (CMPUY) Q4 2024 Earnings Call Highlights: Navigating ... |  |
| Organic Revenue Development: Down by 2% year-over-year, ending within the revised guidance range. Recurring Revenues: Grew by 5%, exceeding the guided goal by 4 percentage points, now accounting for almost three-quarters of total revenues. Adjusted EBITDA: EUR225 million, within the revised guidance range, but down year-over-year. EBITDA Margin: 19%, 3 percentage points below last year. Free Cash Flow: EUR66 million, exceeding the revised guidance. Net Debt: Increased from EUR700 million to EUR773 million. R&D Expenses: Slight increase, with R&D expenses as a percentage of revenue remaining high at 22%. AIS Segment Revenue: Decline of 5% due to a decrease in one-time revenues; recurring revenues increased by 3%. Hospital Segment Revenue: Grew by 1% year-over-year, driven by growth in recurring revenues. Pharmacy Segment Revenue: Overall revenues remained at the prior year level, with a strong margin above 30%. Dividend Proposal: Legal minimum dividend of EUR0.05 per share. Warning! GuruFocus has detected 7 Warning Signs with CMPUY. Release Date: March 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points CompuGroup Medical SE & Co KgaA (CMPUY) enhanced its market position through strategic acquisitions, including Freo and AmbulApps, which expand their product offerings and strengthen their presence in northern Europe and France. The company received a C5 attestation, demonstrating significant progress in IT security, which is crucial for maintaining trust in digital health solutions. Recurring revenues grew by 5% in 2024, exceeding the guided goal, and now account for almost three-quarters of total revenues, showcasing the resilience of their business model. CompuGroup Medical SE & Co KgaA (CMPUY) is committed to innovation, with ongoing investments in AI and cloud-based solutions, such as the AI-driven phone assistant CGM1 and CGM STELLA. The company has secured a strategic partnership with CVC Capital Partners, which is expected to catalyze the next phase of innovation, growth, and transformation in healthcare. Negative Points Organic revenue development in 2024 was down by 2%, attributed to a decline in one-off revenues, which impacted overall financial performance. Adjusted EBITDA decreased year-on-year, with a margin 3% points below the previous year, indicating challenges in maintaining profitability. Free cash flow was below the prior year level, affected by higher tax payments and restructuring payouts, although it exceeded revised guidance. The AIS segment experienced a revenue decline of 5% due to a decrease in one-time revenues, impacting the segment's overall performance. Net debt increased from EUR700 million to EUR773 million, raising concerns about the company's leverage, which is now above 3 times EBITDA of the last 12 months. Story Continues Q & A Highlights Q: When do you expect to return to margin expansion, and how should we think about free cash flow and capitalization in 2025? A: Daniela Hommel, CFO, stated that while they aim for an increase, the focus is on balancing investments and operational excellence rather than solely expanding margins. Free cash flow is expected to improve, supported by working capital measures. Capitalization is anticipated to remain flat as new products are developed. Q: Is there any restructuring planned for 2025, and how should we think about potential adjustments or extraordinary expenses? A: Daniela Hommel, CFO, mentioned that there are no restructuring programs planned for 2025. The focus remains on operational efficiency and strategic initiatives, with no significant extraordinary expenses anticipated. Q: Could you elaborate on the expected growth in the Ambulatory business and the status of the buyout process? A: Daniela Hommel, CFO, explained that growth in the Ambulatory business is expected from enhancements in G2 and G3 products and AI modules. Regarding the buyout process, merger control clearance has been obtained in Germany and Austria, with some foreign directive investment clearances still pending. Q: What expectations for the Hospital Future Act and other regulatory initiatives have been factored into the 2025 guidance? A: Daniela Hommel, CFO, noted that regulatory initiatives, including the Hospital Future Act, have been considered with risk adjustments in the budget. The second wave of US initiatives is expected to start late in 2025 or move to 2026, depending on the French Government's decisions. Q: How do you plan to address the delays in monetizing the Hospital Future Act and other projects? A: Daniela Hommel, CFO, acknowledged the delays in 2024 but stated that catching up on these projects is part of the 2025 plan, with a focus on delivering products to customers. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments |
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| 27.08.24 06:56:58 | Should You Be Concerned About CompuGroup Medical SE & Co. KGaA's (ETR:COP) ROE? | |
| One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. By way of learning-by-doing, we'll look at ROE to gain a better understanding of CompuGroup Medical SE & Co. KGaA (ETR:COP). ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Put another way, it reveals the company's success at turning shareholder investments into profits. View our latest analysis for CompuGroup Medical SE KGaA How To Calculate Return On Equity? The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for CompuGroup Medical SE KGaA is: 5.2% = €33m ÷ €645m (Based on the trailing twelve months to June 2024). The 'return' is the income the business earned over the last year. Another way to think of that is that for every €1 worth of equity, the company was able to earn €0.05 in profit. Does CompuGroup Medical SE KGaA Have A Good Return On Equity? Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. However, this method is only useful as a rough check, because companies do differ quite a bit within the same industry classification. As shown in the graphic below, CompuGroup Medical SE KGaA has a lower ROE than the average (14%) in the Healthcare Services industry classification. roe That certainly isn't ideal. Although, we think that a lower ROE could still mean that a company has the opportunity to better its returns with the use of leverage, provided its existing debt levels are low. When a company has low ROE but high debt levels, we would be cautious as the risk involved is too high. Our risks dashboard should have the 4 risks we have identified for CompuGroup Medical SE KGaA. Why You Should Consider Debt When Looking At ROE Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same. CompuGroup Medical SE KGaA's Debt And Its 5.2% ROE It's worth noting the high use of debt by CompuGroup Medical SE KGaA, leading to its debt to equity ratio of 1.24. With a fairly low ROE, and significant use of debt, it's hard to get excited about this business at the moment. Investors should think carefully about how a company might perform if it was unable to borrow so easily, because credit markets do change over time. Story continues Summary Return on equity is one way we can compare its business quality of different companies. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have the same ROE, then I would generally prefer the one with less debt. But ROE is just one piece of a bigger puzzle, since high quality businesses often trade on high multiples of earnings. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to check this FREE visualization of analyst forecasts for the company. Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 17.07.24 04:00:40 | CompuGroup Medical SE KGaA Second Quarter 2024 Earnings: EPS: €0.27 (vs €0.60 in 2Q 2023) | |
| CompuGroup Medical SE KGaA (ETR:COP) Second Quarter 2024 Results Key Financial Results Revenue: €285.6m (down 8.6% from 2Q 2023). Net income: €13.9m (down 56% from 2Q 2023). Profit margin: 4.9% (down from 10% in 2Q 2023). The decrease in margin was driven by lower revenue. EPS: €0.27 (down from €0.60 in 2Q 2023). earnings-and-revenue-growth All figures shown in the chart above are for the trailing 12 month (TTM) period CompuGroup Medical SE KGaA Earnings Insights Looking ahead, revenue is forecast to grow 1.7% p.a. on average during the next 3 years, compared to a 11% growth forecast for the Healthcare Services industry in Europe. Performance of the market in Germany. The company's shares are down 1.9% from a week ago. Risk Analysis We don't want to rain on the parade too much, but we did also find 4 warning signs for CompuGroup Medical SE KGaA (1 is potentially serious!) that you need to be mindful of. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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| 12.07.24 07:46:56 | Insiders are the top stockholders in CompuGroup Medical SE & Co. KGaA (ETR:COP), and the recent 32% drop might have disappointed them | |
| Key Insights Insiders appear to have a vested interest in CompuGroup Medical SE KGaA's growth, as seen by their sizeable ownership A total of 4 investors have a majority stake in the company with 52% ownership Institutions own 30% of CompuGroup Medical SE KGaA If you want to know who really controls CompuGroup Medical SE & Co. KGaA (ETR:COP), then you'll have to look at the makeup of its share registry. With 52% stake, individual insiders possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company. And last week, insiders endured the biggest losses as the stock fell by 32%. In the chart below, we zoom in on the different ownership groups of CompuGroup Medical SE KGaA. View our latest analysis for CompuGroup Medical SE KGaA ownership-breakdown What Does The Institutional Ownership Tell Us About CompuGroup Medical SE KGaA? Institutions typically measure themselves against a benchmark when reporting to their own investors, so they often become more enthusiastic about a stock once it's included in a major index. We would expect most companies to have some institutions on the register, especially if they are growing. We can see that CompuGroup Medical SE KGaA does have institutional investors; and they hold a good portion of the company's stock. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see CompuGroup Medical SE KGaA's historic earnings and revenue below, but keep in mind there's always more to the story. earnings-and-revenue-growth We note that hedge funds don't have a meaningful investment in CompuGroup Medical SE KGaA. The company's largest shareholder is Frank Gotthardt, with ownership of 34%. With 6.9% and 6.5% of the shares outstanding respectively, Daniel Gotthardt and Brigitte Gotthardt are the second and third largest shareholders. To make our study more interesting, we found that the top 4 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making. While studying institutional ownership for a company can add value to your research, it is also a good practice to research analyst recommendations to get a deeper understand of a stock's expected performance. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too. Story continues Insider Ownership Of CompuGroup Medical SE KGaA While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves. I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions. Our most recent data indicates that insiders own the majority of CompuGroup Medical SE & Co. KGaA. This means they can collectively make decisions for the company. Given it has a market cap of €841m, that means they have €436m worth of shares. It is good to see this level of investment. You can check here to see if those insiders have been buying recently. General Public Ownership With a 18% ownership, the general public, mostly comprising of individual investors, have some degree of sway over CompuGroup Medical SE KGaA. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run. Next Steps: While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that CompuGroup Medical SE KGaA is showing 3 warning signs in our investment analysis, you should know about... Ultimately the future is most important. You can access this freereport on analyst forecasts for the company. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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| 24.06.24 05:23:14 | CompuGroup Medical SE KGaA (ETR:COP) Is Reinvesting At Lower Rates Of Return | |
| Finding a business that has the potential to grow substantially is not easy, but it is possible if we look at a few key financial metrics. Firstly, we'll want to see a proven return on capital employed (ROCE) that is increasing, and secondly, an expanding base of capital employed. Basically this means that a company has profitable initiatives that it can continue to reinvest in, which is a trait of a compounding machine. Having said that, from a first glance at CompuGroup Medical SE KGaA (ETR:COP) we aren't jumping out of our chairs at how returns are trending, but let's have a deeper look. Understanding Return On Capital Employed (ROCE) If you haven't worked with ROCE before, it measures the 'return' (pre-tax profit) a company generates from capital employed in its business. Analysts use this formula to calculate it for CompuGroup Medical SE KGaA: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.079 = €124m ÷ (€2.0b - €432m) (Based on the trailing twelve months to March 2024). Therefore, CompuGroup Medical SE KGaA has an ROCE of 7.9%. On its own that's a low return on capital but it's in line with the industry's average returns of 7.9%. See our latest analysis for CompuGroup Medical SE KGaA roce Above you can see how the current ROCE for CompuGroup Medical SE KGaA compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for CompuGroup Medical SE KGaA . What Does the ROCE Trend For CompuGroup Medical SE KGaA Tell Us? When we looked at the ROCE trend at CompuGroup Medical SE KGaA, we didn't gain much confidence. Over the last five years, returns on capital have decreased to 7.9% from 20% five years ago. On the other hand, the company has been employing more capital without a corresponding improvement in sales in the last year, which could suggest these investments are longer term plays. It may take some time before the company starts to see any change in earnings from these investments. The Bottom Line In summary, CompuGroup Medical SE KGaA is reinvesting funds back into the business for growth but unfortunately it looks like sales haven't increased much just yet. And in the last five years, the stock has given away 62% so the market doesn't look too hopeful on these trends strengthening any time soon. All in all, the inherent trends aren't typical of multi-baggers, so if that's what you're after, we think you might have more luck elsewhere. Story continues Like most companies, CompuGroup Medical SE KGaA does come with some risks, and we've found 2 warning signs that you should be aware of. While CompuGroup Medical SE KGaA isn't earning the highest return, check out this freelist of companies that are earning high returns on equity with solid balance sheets. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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| 26.05.24 06:50:07 | Investors in CompuGroup Medical SE KGaA (ETR:COP) have unfortunately lost 57% over the last three years | |
| If you love investing in stocks you're bound to buy some losers. But long term CompuGroup Medical SE & Co. KGaA (ETR:COP) shareholders have had a particularly rough ride in the last three year. So they might be feeling emotional about the 59% share price collapse, in that time. The more recent news is of little comfort, with the share price down 45% in a year. Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns. View our latest analysis for CompuGroup Medical SE KGaA While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. CompuGroup Medical SE KGaA saw its EPS decline at a compound rate of 11% per year, over the last three years. This reduction in EPS is slower than the 26% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. You can see below how EPS has changed over time (discover the exact values by clicking on the image). earnings-per-share-growth Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here. What About Dividends? It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for CompuGroup Medical SE KGaA the TSR over the last 3 years was -57%, which is better than the share price return mentioned above. And there's no prize for guessing that the dividend payments largely explain the divergence! A Different Perspective While the broader market gained around 8.1% in the last year, CompuGroup Medical SE KGaA shareholders lost 43% (even including dividends). Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand CompuGroup Medical SE KGaA better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with CompuGroup Medical SE KGaA , and understanding them should be part of your investment process. Story continues If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this freelist of companies that have proven they can grow earnings. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 11.05.24 07:32:00 | €43.20: That's What Analysts Think CompuGroup Medical SE & Co. KGaA (ETR:COP) Is Worth After Its Latest Results | |
| Last week, you might have seen that CompuGroup Medical SE & Co. KGaA (ETR:COP) released its first-quarter result to the market. The early response was not positive, with shares down 2.8% to €27.82 in the past week. Revenues came in 2.1% below expectations, at €285m. Statutory earnings per share were relatively better off, with a per-share profit of €0.88 being roughly in line with analyst estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results. Check out our latest analysis for CompuGroup Medical SE KGaA earnings-and-revenue-growth Following last week's earnings report, CompuGroup Medical SE KGaA's ten analysts are forecasting 2024 revenues to be €1.24b, approximately in line with the last 12 months. Statutory earnings per share are predicted to jump 76% to €1.69. Before this earnings report, the analysts had been forecasting revenues of €1.24b and earnings per share (EPS) of €1.78 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year. It might be a surprise to learn that the consensus price target fell 6.2% to €43.20, with the analysts clearly linking lower forecast earnings to the performance of the stock price. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on CompuGroup Medical SE KGaA, with the most bullish analyst valuing it at €64.00 and the most bearish at €31.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business. Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that CompuGroup Medical SE KGaA's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 1.6% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 10% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than CompuGroup Medical SE KGaA. Story continues The Bottom Line The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of CompuGroup Medical SE KGaA's future valuation. Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple CompuGroup Medical SE KGaA analysts - going out to 2026, and you can see them free on our platform here. Even so, be aware that CompuGroup Medical SE KGaA is showing 2 warning signs in our investment analysis, you should know about... Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 09.05.24 04:23:31 | CompuGroup Medical SE KGaA First Quarter 2024 Earnings: EPS: €0.35 (vs €0.28 in 1Q 2023) | |
| CompuGroup Medical SE KGaA (ETR:COP) First Quarter 2024 Results Key Financial Results Revenue: €299.9m (flat on 1Q 2023). Net income: €18.5m (up 29% from 1Q 2023). Profit margin: 6.2% (up from 4.8% in 1Q 2023). EPS: €0.35 (up from €0.28 in 1Q 2023). earnings-and-revenue-growth All figures shown in the chart above are for the trailing 12 month (TTM) period CompuGroup Medical SE KGaA Earnings Insights Looking ahead, revenue is forecast to grow 3.6% p.a. on average during the next 3 years, compared to a 10% growth forecast for the Healthcare Services industry in Europe. Performance of the market in Germany. The company's shares are down 1.4% from a week ago. Risk Analysis You still need to take note of risks, for example - CompuGroup Medical SE KGaA has 2 warning signs we think you should be aware of. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 01.05.24 08:58:09 | Estimating The Intrinsic Value Of CompuGroup Medical SE & Co. KGaA (ETR:COP) |  |
| Key Insights Using the 2 Stage Free Cash Flow to Equity, CompuGroup Medical SE KGaA fair value estimate is €23.60 Current share price of €28.12 suggests CompuGroup Medical SE KGaA is potentially trading close to its fair value The €46.05 analyst price target for COP is 95% more than our estimate of fair value Today we will run through one way of estimating the intrinsic value of CompuGroup Medical SE & Co. KGaA (ETR:COP) by estimating the company's future cash flows and discounting them to their present value. Our analysis will employ the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. Check out our latest analysis for CompuGroup Medical SE KGaA The Calculation We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: 10-year free cash flow (FCF) estimate 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Levered FCF (€, Millions) €90.3m €135.0m €101.5m €83.2m €72.8m €66.5m €62.7m €60.2m €58.7m €57.7m Growth Rate Estimate Source Analyst x4 Analyst x5 Analyst x2 Est @ -18.07% Est @ -12.48% Est @ -8.57% Est @ -5.83% Est @ -3.91% Est @ -2.57% Est @ -1.63% Present Value (€, Millions) Discounted @ 5.8% €85.3 €120 €85.6 €66.3 €54.8 €47.4 €42.1 €38.3 €35.2 €32.7 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = €608m Story continues After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (0.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 5.8%. Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = €58m× (1 + 0.6%) ÷ (5.8%– 0.6%) = €1.1b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €1.1b÷ ( 1 + 5.8%)10= €625m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is €1.2b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of €28.1, the company appears around fair value at the time of writing. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. dcf The Assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at CompuGroup Medical SE KGaA as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 5.8%, which is based on a levered beta of 1.146. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. SWOT Analysis for CompuGroup Medical SE KGaA Strength Debt is well covered by earnings and cashflows. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Healthcare Services market. Opportunity Annual earnings are forecast to grow faster than the German market. Good value based on P/E ratio compared to estimated Fair P/E ratio. Threat Dividends are not covered by earnings. Annual revenue is forecast to grow slower than the German market. Looking Ahead: Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For CompuGroup Medical SE KGaA, we've compiled three additional elements you should further research: Risks: We feel that you should assess the 3 warning signs for CompuGroup Medical SE KGaA we've flagged before making an investment in the company. Future Earnings: How does COP's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the XTRA every day. If you want to find the calculation for other stocks just search here. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. View comments |
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| 20.03.24 06:36:25 | Read This Before Judging CompuGroup Medical SE & Co. KGaA's (ETR:COP) ROE | |
| Many investors are still learning about the various metrics that can be useful when analysing a stock. This article is for those who would like to learn about Return On Equity (ROE). By way of learning-by-doing, we'll look at ROE to gain a better understanding of CompuGroup Medical SE & Co. KGaA (ETR:COP). Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In simpler terms, it measures the profitability of a company in relation to shareholder's equity. View our latest analysis for CompuGroup Medical SE KGaA How Is ROE Calculated? Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for CompuGroup Medical SE KGaA is: 7.0% = €47m ÷ €669m (Based on the trailing twelve months to December 2023). The 'return' is the profit over the last twelve months. One way to conceptualize this is that for each €1 of shareholders' capital it has, the company made €0.07 in profit. Does CompuGroup Medical SE KGaA Have A Good Return On Equity? Arguably the easiest way to assess company's ROE is to compare it with the average in its industry. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. As is clear from the image below, CompuGroup Medical SE KGaA has a lower ROE than the average (9.2%) in the Healthcare Services industry. roe Unfortunately, that's sub-optimal. Although, we think that a lower ROE could still mean that a company has the opportunity to better its returns with the use of leverage, provided its existing debt levels are low. A company with high debt levels and low ROE is a combination we like to avoid given the risk involved. You can see the 2 risks we have identified for CompuGroup Medical SE KGaA by visiting our risks dashboard for free on our platform here. Story continues The Importance Of Debt To Return On Equity Companies usually need to invest money to grow their profits. That cash can come from issuing shares, retained earnings, or debt. In the case of the first and second options, the ROE will reflect this use of cash, for growth. In the latter case, the debt used for growth will improve returns, but won't affect the total equity. That will make the ROE look better than if no debt was used. CompuGroup Medical SE KGaA's Debt And Its 7.0% ROE CompuGroup Medical SE KGaA clearly uses a high amount of debt to boost returns, as it has a debt to equity ratio of 1.06. Its ROE is quite low, even with the use of significant debt; that's not a good result, in our opinion. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it. Summary Return on equity is one way we can compare its business quality of different companies. A company that can achieve a high return on equity without debt could be considered a high quality business. All else being equal, a higher ROE is better. Having said that, while ROE is a useful indicator of business quality, you'll have to look at a whole range of factors to determine the right price to buy a stock. Profit growth rates, versus the expectations reflected in the price of the stock, are a particularly important to consider. So you might want to check this FREE visualization of analyst forecasts for the company. If you would prefer check out another company -- one with potentially superior financials -- then do not miss this free list of interesting companies, that have HIGH return on equity and low debt. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. |
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