The history of Geberit began in 1874 when Caspar Gebert opened a plumbing shop in Rapperswil. In 1905, Gebert developed the wooden toilet cistern (!), which was later patented. In 1952, a revolutionary invention brought him international fame: the plastic flush. In 1953, the company acquired the name Geberit.
True to its reputation as an innovator, the company would go on to multiply its inventions. In 1964, it launched its first hidden water tank, then, in 1972, the urinal partition for the public sector.
The Geberit Group is now active worldwide and holds the leading position in the European sanitary products market. The company has been listed on the stock exchange since 1999 and has been part of the SMI since 2012. Its turnover has more than doubled and its net profit has increased tenfold since 1999!
The Group's headquarters are located in Rapperswil-Jona in the canton of St. Gallen. With around 12,000 employees in over 50 countries, Geberit generates sales of around CHF 2.9 billion. The market capitalization is currently CHF 13.6 billion.
At the end of 2014, Geberit announced the acquisition of the Finnish company Sanitec, a manufacturer of high-end ceramic bathroom fittings, which was the largest acquisition in its history and allowed it to reach a new dimension.
Geberit is one of those rare Swiss companies that manage to match the quality of pearls such as EMS Chemie or LEM. The profitability is simply exceptional for the industrial sector: a net profit margin (NPM) of 20.8% and a return on equity (ROE) of 27.5%! (at the end of September 2018).
Growth is not far behind. From 2011 to 2017, turnover increased by 55.7% (largely thanks to the acquisition of Sanitec) and net profit by 37.3%.
At the same time, the dividend was increased by 65%! The current dividend yield is 2.8% (and is expected to be around 3% this year). The payout ratio stood at 72.5% at the end of 2017 (respectively 63.4% of the adjusted net profit). Geberit also regularly buys back shares.
At the end of September 2018, the company had 49.6% of equity, a correct value although significantly lower than the 74.8% posted in 2013 just before the acquisition of Sanitec.
Earnings per share are estimated at CHF 19 for 2019. At the current price of CHF 372.70, this represents a PER of 19.6, a very reasonable value for a company as healthy and profitable as Geberit and whose growth prospects are far from being exhausted.
The biggest risk for Geberit is its strong dependence on the European market, which accounts for more than 90% of its turnover.
My advice: buy and never sell again!
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Well… this isn’t crap you’re showing us… well yes it is 🙂
I didn't know they invented all these beautiful things!
Thank you for your very interesting presentation.
What immediately stands out to me about Geberit is that it has all the hallmarks of a franchise: excellent gross margin, low overhead, very good net margin, growing goodwill, prudent debt and reasonable capital expenditures.
No wonder it's so profitable!
This is truly a gem.
But every gem has its price and Geberit is no exception to this rule, quite the contrary. You knew I was going to say that 🙂
What bothers me the most is that the price/sales ratio is 4.68. We know that above three, it is rather a sell signal. Compared to the book value, we are at 7.41, which is still expensive, even for such a beautiful company.
The other thing that bothers me about Geberit is that, like many stocks at the moment, it's a falling knife.
From my point of view, I would wait for this decline to continue for a while longer, in order to return to more reasonable prices.
But it is true that it is certainly a very fine undertaking.
Indeed Jérôme, I knew that the valuation would displease you. 😉 But for companies of such quality, I am not so interested in today's price, because it is practically impossible to buy such pearls at a knockdown price.
What interests me is to become a co-owner of such quality companies and to remain so for life. I believe that Geberit will still exist in 20 or 40 years and will be x times bigger and more profitable, and that the share price and dividend will also be x times higher than today.
To quote a rather gifted investor: “Time is the friend of the wonderful business, the enemy of the mediocre”.
It is certain that given its quality Geberit is not the kind of title to end up in the sewers. If I dare the very bad metaphor…
Aha, you're also getting into crappy puns! Here's a little toilet joke to punish you! 🙂
Why do we say in France: “Aller aux toilettes” (Go to the toilet), while in Belgium we say: “Aller à la toilette” (Go to the toilet)?
Because in France, you have to do several before finding a clean one...
This is heavy 😉
UBS has once again been smart in downgrading Geberit's recommendation...
I would like to take this opportunity to thank you for your relevant work and above all thank you for sharing it with us @Jérôme & @Dividinde
And thank you for your loyalty!
This makes me think that it might be a good idea to look at another gem, IVF Hartmann. From a long-term investment perspective, it seems to me that there is now a good window to enter.
100% agree with you Laurent Martin, I took advantage of the low prices last week (154 fr) to strengthen my position in IVF Hartmann.
My analysis is still valid, only the price offered by Mr. Market has changed:
https://www.dividendes.ch/2018/01/analyse-de-ivf-hartmann-vbsnswx/