It’s only recently that I dug out my copy of Ben Graham’s Intelligent Investor. It’s certainly a blast from the past. In chapter 18 he presented “A Comparison of Eight Pairs of Companies”, which inspired me to write this post.
Graham selected pairs of companies which appeared next to, or close to, on the stock-exchange. With this idea in mind, I selected two UK companies: Bunzl (ticker BNZL) and Burberry (ticker BRBY).
BNZL is a multinational distribution and outsourcing company, formerly called Bunzl Pulp & Paper Limited (1940-1982). BRBY is in the fashion industry, making expensive clothes. It is most famous for its trenchcoats; and its caps much-favoured by British chavs. BRBY was founded in 1856.
The table below sets out a number of statistics in the style Graham presented them in.
BNZL BRBY
2023 2023
Price 21.4.24 2994p 1132p
Number of shares 337m 388m
Market cap £10.12b £4.06b
Net debt £1.66b £887m
Total capitalisation £11.78b £4.95b
Book value per share 878p 405p
Sales £11,797m £3,094m
Net Income £526m £490m
EPS normalised 160p 120p
.. 5yrs ago 103p 84.4p
.. 9yrs ago 69.3p 78.3p
Current dividend 68.3p 61.0p
Ratios:
PE 18.8 9.4
PBV 341% 280%
Div yield 2.3% 5.4%
Net/Sales 4.5% 15.8%
ROE 18.2% 29.9%
Interest Cover 8 40
Growth in per-share earnings
vs 5 years ago +55% +42%
vs 9 years ago +231% +53%Being a distributor, BNZL has low net/sales margins. BRBY, by contrast, has good ones, reflecting its branded luxury status. The returns on equity for both companies is superior to the general market; BRBY has the higher one. Interest Cover is high for both companies, suggesting that they are both safe investments, and that the returns on equity were not achived by overgearing. The net debt to market caps is low for both companies, suggesting that the market does not perceive financial problems for either of them.
Value-wise, BRBY is cheaper on a PE, PBV and dividend yield basis.
BNZL has shown a much superior EPS performance to BRBY over a 9-year period, although they are similar on a 5-year basis. BRBY has struggled to make headway over the years preceding the lat 5. BNZL seems to have slowed down over the last 5 years.
BNZL is twice the value of BRBY based on PE. BNZL has an EV/EBITDA of 10.4 and a FCFY (free cashflow yield) of 8.3%. The company appears to…
