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GARO

Products and systems for the electrical installations industry

GARO develops and manufactures innovative and solution-oriented products and systems for the electrical installations industry under its own brand. The product areas consist of electrical distribution, project business, temporary power and EV charging. GARO has a broad product assortment and is a market leader within several product areas. The corporate culture strives for common sense and willingness to move ahead, which is translated to the success factors to offer truly user-friendly solutions and continuing innovation.

Continued product development and new launches have the potential to achieve organic growth exceeding market growth. Potential for geographical expansion and new business areas. Also, on the back of GARO's very solid balance sheet, there are opportunities to grow through value-added acquisitions.

Weaker construction market and lower industry growth. Unexpected competition in the EV charger segment.

SEKm 2018 2019e 2020e
Sales 902 1017 1100
Sales growth (%) 13,4 12,7 8,2
EBITDA 129 139 156
EBITDA margin (%) 14,3 13,6 14,2
EBIT adj 114 124 132
EBIT adj margin (%) 12,6 12,2 12
Pretax profit 106 119 130
EPS rep 8,27 9,37 10,15
EPS growth (%) -3,4 13,3 8,3
EPS adj 8,27 9,77 10,15
DPS 4 4,6 5,2
EV/EBITDA (x) 13,8 20,5 17,9
EV/EBIT adj (x) 15,6 22,9 21,2
P/E (x) 21 29,6 27,3
P/E adj (x) 21 28,3 27,3
EV/sales (x) 2 2,8 2,5
FCF yield (%) 2,9 2 2,9
Dividend yield (%) 2,3 1,7 1,9
Net IB debt/EBITDA 0,4 0,5 0,2
SEKm 2018 2019e 2020e
Sales 902 1017 1100
COGS -457 -518 -559
Gross profit 445 499 541
Other operating items -316 -360 -385
EBITDA 129 139 156
Depreciation on tangibles -15 -19 -24
Depreciation on intangibles 0 0 0
EBITA 114 120 132
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 114 120 132
Other financial items 0 0 0
Net financial items -8 -1 -2
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 106 119 130
Tax -23 -25 -29
Net profit 83 94 102
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 83 94 102
EPS 8,27 9,37 10,15
EPS Adj 8,27 9,77 10,15
Total extraordinary items after tax 0 -4 0
Tax rate (%) -21,8 -21 -22
Gross margin (%) 49,3 49 49,2
EBITDA margin (%) 14,3 13,6 14,2
EBITA margin (%) 12,6 11,8 12
EBIT margin (%) 12,6 11,8 12
Pretax margin (%) 11,7 11,7 11,8
Net margin (%) 9,2 9,2 9,2
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 13,4 12,7 8,2
EBITDA growth (%) 16,9 7,5 12,7
EBIT growth (%) 16,1 5,2 10,3
Net profit growth (%) -3,4 13,3 8,3
EPS growth (%) -3,4 13,3 8,3
Profitability 2018 2019 2020
ROE (%) 30,1 28,9 26,7
ROE Adj (%) 30,1 30,1 26,7
ROCE (%) 33,1 29,5 27
ROCE Adj(%) 33,1 30,5 27
ROIC (%) 27 24,7 23,9
ROIC Adj (%) 27 25,6 23,9
Adj earnings numbers 2018 2019 2020
EBITDA Adj 129 143 156
EBITDA Adj margin (%) 14,3 14 14,2
EBITA Adj 114 124 132
EBITA Adj margin (%) 12,6 12,2 12
EBIT Adj 114 124 132
EBIT Adj margin (%) 12,6 12,2 12
Pretax profit Adj 106 123 130
Net profit Adj 83 98 102
Net profit to shareholders Adj 83 98 102
Net Adj margin (%) 9,2 9,6 9,2
SEKm 2018 2019e 2020e
EBITDA 129 139 156
Net financial items -8 -1 -2
Paid tax -23 -25 -29
Non-cash items 0 0 0
Cash flow before change in WC 98 112 125
Change in WC -22 -24 -25
Operating cash flow 73 81 101
CAPEX tangible fixed assets -22 -25 -20
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 51 56 81
Dividend paid -40 -40 -46
Share issues and buybacks 0 0 0
Other non cash items 0 -35 0
Decrease in net IB debt 10 -18 35
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 55 60 58
Tangible fixed assets 100 147 146
Other fixed assets 10 9 9
Fixed assets 166 217 213
Inventories 162 180 193
Receivables 230 228 249
Other current assets 0 0 0
Cash and liquid assets 8 45 80
Total assets 566 671 735
Shareholders equity 296 353 408
Minority 0 0 0
Total equity 296 353 408
Long-term debt 54 109 109
Pension debt 0 0 0
Convertible debt 0 0 0
Deferred tax 0 0 0
Other long-term liabilities 4 4 4
Short-term debt 0 0 0
Accounts payable 212 205 213
Other current liabilities 0 0 0
Total liabilities and equity 374 534 566
Net IB debt 46 64 29
Net IB debt excl. pension debt 46 64 29
Capital invested 346 421 441
Working capital 180 203 228
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1736 2770 2770
Net IB debt Adj 46 64 29
Market value of minority 0 0 0
Reversal of shares and participations 0 0 0
Reversal of conv. debt assumed equity 0 0 0
EV 1782 2834 2799
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 164,1 164,5 156,6
Capital invested turnover (%) 273,2 265,5 255,4
Capital employed turnover (%) 262,6 250,3 224,6
Inventories / sales (%) 16,9 16,8 17
Customer advances / sales (%) 0 0 0
Payables / sales (%) 22,3 20,5 19
Working capital / sales (%) 18,7 18,8 19,6
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 15,4 18,2 7,2
Net debt / market cap (%) 2,7 2,3 1,1
Equity ratio (%) 52,4 52,6 55,6
Net IB debt adj. / equity (%) 15,4 18,2 7,2
Current ratio (%) 188,9 221,4 244,4
EBITDA / net interest (%) 1591,4 10999,4 7440,3
Net IB debt / EBITDA (%) 35,5 46,3 18,8
Interest cover (%) 1406,2 9519 6306,6
SEKm 2018 2019e 2020e
Shares outstanding adj. 10 10 10
Fully diluted shares Adj 10 10 10
EPS 8,27 9,37 10,15
Dividend per share Adj 4 4,6 5,2
EPS Adj 8,27 9,77 10,15
BVPS 29,62 35,28 40,84
BVPS Adj 24,11 29,24 35,03
Net IB debt / share 4,6 6,4 2,9
Share price 171,09 277 277
Market cap. (m) 1711 2770 2770
Valuation 2018 2019 2020
P/E 21 29,6 27,3
EV/sales 1,97 2,79 2,54
EV/EBITDA 13,8 20,5 17,9
EV/EBITA 15,6 23,6 21,2
EV/EBIT 15,6 23,6 21,2
Dividend yield (%) 2,3 1,7 1,9
FCF yield (%) 2,9 2 2,9
P/BVPS 5,86 7,85 6,78
P/BVPS Adj 7,2 9,47 7,91
P/E Adj 21 28,3 27,3
EV/EBITDA Adj 13,8 19,9 17,9
EV/EBITA Adj 15,6 22,9 21,2
EV/EBIT Adj 15,6 22,9 21,2
EV/cap. employed 5,1 6,1 5,4
Investment ratios 2018 2019 2020
Capex / sales 2,4 2,4 1,8
Capex / depreciation 146 132,9 83,3
Capex tangibles / tangible fixed assets 21,8 16,8 13,6
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 14,9 12,6 16,3

Equity research

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Media

GARO - Interview with CEO Carl-Johan Dalin (in Swedish)
GARO - Company presentation with CEO Carl-Johan Dalin (in Swedish)

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Main shareholders

GARO

Main shareholders Share capital % Voting shares % Verified
Lars Svensson 35.7 % 35.7 % 30 Jun 2019
Svolder 14.8 % 14.8 % 30 Jun 2019
Nordea Fonder 9.0 % 9.0 % 30 Jun 2019
Stefan Jonsson 5.9 % 5.9 % 30 Jun 2019
SEB Fonder 4.3 % 4.3 % 30 Jun 2019
Tredje AP-fonden 3.9 % 3.9 % 30 Jun 2019
Spiltan Fonder 3.6 % 3.6 % 31 Jul 2019
Rickard Blomqvist 2.2 % 2.2 % 31 Dec 2018
Cliens Fonder 1.7 % 1.7 % 30 Jun 2019
Lannebo Fonder 1.1 % 1.1 % 31 Jul 2019
Source: Holdings by Modular Finance AB

Insider list

GARO

Name Quantity Code Date
Jan Larsgaard - 2 551 SELL 11 Jun 2019
Jan Larsgaard - 1 500 SELL 7 Jun 2019
Jan Larsgaard - 880 SELL 5 Jun 2019
Jan Larsgaard - 2 176 SELL 4 Jun 2019
Jan Larsgaard - 758 SELL 3 Jun 2019
Per John Christer Holmstedt - 170 SELL 22 May 2019
Per Holmstedt - 375 SELL 22 May 2019
Per John Christer Holmstedt + 45 BUY 10 Apr 2019
Per Holmstedt + 25 BUY 3 Apr 2019
Per John Christer Holmstedt + 40 BUY 2 Apr 2019

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