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Strategies & Market Trends : Value Investing
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To: tonto who wrote (45601)11/20/2011 10:09:45 PM
From: Spekulatius3 Recommendations  Read Replies (1) of 78702
 
Michelin - specialty business, which includes tires for earth moving equipment, motorcycles and aircrafts are about 20% of the revenues in 2010. it's profit margins are probably higher than that is the standard business lines.

There is no question that tire manufacturing is a tough business but it's better than it used to be - apparently the competitors are more rational with their pricing and roll over input cost increases to their customers. This is probably a result of the consolidations that have been playing out in this sector for 20+ years. The emerging market exposure is another plus.

But the main attraction is the very cheap valuation - ML.PA has a market cap of ~8B Euro right now, but generated earnings of 670M Euro in the first 6 month alone. That in combination with the low gearing (<2B Euro in net debt), 8.7B Euro in book (~8B Euro is tangible) it's very cheap by almost any value metric.
There are ancillary business like the Michelin guides and Michelin maps which may be worth something too, I suspect
It's a volatile stock to, so there is quite some opportunity to trade this with the ebbs and flow, which is what I have been doing lately. At current prices, I don't mind holding either if the shares just sit there.
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