Saturday, 23 June 2012


What is it?

SEGRO (SGRO.L) is Europe's largest industrial development/investment property company with a market capitalisation of GBP1.6bln. It has operations in Germany, France, Poland, Czech Rep and the UK. The company specialises in industrial property, logistics, suburban offices and datacentres.

Should I buy it?

At today's price of around 219p a share current yield is almost 6.8%. The dividend over the last 3 years has increased from 14p to 14.3p to 14.8p a share. Forecasts for the next 2 years put it at 15.51p a share giving an annualised growth rate of just under 2.4%. The 3 year average yield is currently 6.56%.

With FTSE250 shares (Mid Caps) we want to have a higher margin of safety. One way to do this is to reduce the analyst growth estimates by 67% (For FTSE100 companies we reduce it by 60%). For this share that gives a growth rate of about 0.8% a year.

As the share has a high dividend yield we don't need to use an adjustment rate. Using the above data we get an expected total return of just over 7.3% a year.

As you can see over the long term prices have fallen significantly from a high of 1600 to a low around 150 in 2009.

With a lot of the downside already taken out of this stock the price looks to be stabilising. In March it broke its 100 day high and has stayed above its 100 day low even in the weak market recently.

The main attraction could be the significant insider buying at the end of 2011 and the beginning of this year with buying prices ranging from 196p a share to just under 250p. The share is also cheap by other measures; the NAV per share is 345p giving a current Price to Book valuation of 0.6.

No comments:

Post a Comment