Analysis of Datacolor (DCN:SWX)

With a market capitalization of 140 million, Datacolor is closer to microplankton than to a dinosaur...

But if plant plankton produces oxygen, Datacolor is active in colorimetry (basically: the measurement and calibration of colors).

Founded in 1970, the American group is listed on the Swiss stock exchange and has its headquarters in Lucerne. The company manufactures, among other things, measuring instruments for the textile industry, paint mixers and computer monitor calibration.

Datacolor provides its customers with solutions that ensure the accurate rendering of colors of materials, products and images. Its customers come from the textile and apparel, paint and coatings, plastics, photography and other industries.

Datacolor's balance sheet is rock solid: With $621.3 billion in equity and a high level of liquidity (over $32 million), there are no money worries on the horizon.

From 2011 to 2017, sales increased by more than 40%, while profits almost doubled and the dividend earned 50% in the same period.

At Datacolor, growth has not come at the expense of profitability: Net profit margin (NPM) increased from 6.8% in 2011 to 9.4% in 2017, and return on equity (ROE) increased from 13.1 to 16.5%.

At the current rate of 840 francs, the PER is 19.9. This is rather expensive, even for a company of this quality.

The dividend yield is modest (1.8%), but the low payout ratio (35%) gives Datacolor free rein to increase it as it sees fit or make acquisitions.

Another black point: the trading volumes are very low and the spread generally high.

In conclusion, you can treat yourself to a pinch of this stock to spice up your portfolio, but I wouldn't overdo it either.

Let's end this article (and this year!) on a philosophical note: "We do not see colors as they really are," regretted Aristotle.

Poor Aristotle: at that time, Datacolor did not yet exist...