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GARO

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 1114
Sales growth (%) 13,4 12,8 9,5
EBITDA 129 135 149
EBITDA margin (%) 14,3 13,3 13,4
EBIT adj 114 118 126
EBIT adj margin (%) 12,6 11,6 11,3
Pretax profit 106 113 124
EPS rep 8,27 8,93 9,67
EPS growth (%) -3,4 8 8,2
EPS adj 8,27 9,33 9,67
DPS 4 4,6 5,2
EV/EBITDA (x) 13,8 21,9 19,3
EV/EBIT adj (x) 15,6 25,1 22,9
P/E (x) 21 32,5 30,1
P/E adj (x) 21 31,1 30,1
EV/sales (x) 2 2,9 2,6
FCF yield (%) 2,9 2,1 4,3
Dividend yield (%) 2,3 1,6 1,8
Net IB debt/EBITDA 0,4 0,4 -0,1
SEKm 2018 2019e 2020e
Sales 902 1017 1114
COGS -457 -528 -573
Gross profit 445 490 542
Other operating items -316 -354 -393
EBITDA 129 135 149
Depreciation on tangibles -15 -22 -23
Depreciation on intangibles 0 0 0
EBITA 114 114 126
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 114 114 126
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 106 113 124
Tax -23 -24 -27
Net profit 83 89 97
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 83 89 97
EPS 8,27 8,93 9,67
EPS Adj 8,27 9,33 9,67
Total extraordinary items after tax 0 -4 0
Tax rate (%) -21,8 -20,8 -22
Gross margin (%) 49,3 48,1 48,6
EBITDA margin (%) 14,3 13,3 13,4
EBITA margin (%) 12,6 11,2 11,3
EBIT margin (%) 12,6 11,2 11,3
Pretax margin (%) 11,7 11,1 11,1
Net margin (%) 9,2 8,8 8,7
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 13,4 12,8 9,5
EBITDA growth (%) 16,9 5,1 10,1
EBIT growth (%) 16,1 -0,1 10,6
Net profit growth (%) -3,4 8 8,2
EPS growth (%) -3,4 8 8,2
Profitability 2018 2019 2020
ROE (%) 30,1 27,7 25,9
ROE Adj (%) 30,1 29 25,9
ROCE (%) 33,1 28,4 26,5
ROCE Adj(%) 33,1 29,4 26,5
ROIC (%) 27 23,9 24,9
ROIC Adj (%) 27 24,7 24,9
Adj earnings numbers 2018 2019 2020
EBITDA Adj 129 139 149
EBITDA Adj margin (%) 14,3 13,7 13,4
EBITA Adj 114 118 126
EBITA Adj margin (%) 12,6 11,6 11,3
EBIT Adj 114 118 126
EBIT Adj margin (%) 12,6 11,6 11,3
Pretax profit Adj 106 117 124
Net profit Adj 83 93 97
Net profit to shareholders Adj 83 93 97
Net Adj margin (%) 9,2 9,2 8,7
SEKm 2018 2019e 2020e
EBITDA 129 135 149
Net financial items -8 -1 -2
Paid tax -23 -24 -27
Non-cash items 0 0 0
Cash flow before change in WC 98 111 120
Change in WC -22 -23 -29
Operating cash flow 73 78 91
CAPEX tangible fixed assets -22 -17 33
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 51 61 125
Dividend paid -40 -40 -46
Share issues and buybacks 0 0 0
Other non cash items 2 -32 0
Decrease in net IB debt 10 -11 79
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 55 62 60
Tangible fixed assets 100 135 80
Other fixed assets 10 9 9
Fixed assets 166 206 149
Inventories 162 179 196
Receivables 230 227 252
Other current assets 0 0 0
Cash and liquid assets 8 46 124
Total assets 566 658 721
Shareholders equity 296 348 399
Minority 0 0 0
Total equity 296 348 399
Long-term debt 54 102 102
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 212 204 216
Other current liabilities 0 0 0
Total liabilities and equity 374 534 566
Net IB debt 46 57 -22
Net IB debt excl. pension debt 46 57 -22
Capital invested 346 408 380
Working capital 180 202 231
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1736 2905 2905
Net IB debt Adj 46 57 -22
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 2962 2883
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 164,1 166,3 161,7
Capital invested turnover (%) 273,2 270 282,8
Capital employed turnover (%) 262,6 254,2 234,3
Inventories / sales (%) 16,9 16,8 16,8
Customer advances / sales (%) 0 0 0
Payables / sales (%) 22,3 20,4 18,8
Working capital / sales (%) 18,7 18,8 19,5
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 15,4 16,3 -5,5
Net debt / market cap (%) 2,7 2 -0,8
Equity ratio (%) 52,4 52,9 55,3
Net IB debt adj. / equity (%) 15,4 16,3 -5,5
Current ratio (%) 188,9 221,7 264,4
EBITDA / net interest (%) 1591,4 14803,3 7621
Net IB debt / EBITDA (%) 35,5 41,8 -14,7
Interest cover (%) 1406,2 12437,3 6433,6
SEKm 2018 2019e 2020e
Shares outstanding adj. 10 10 10
Fully diluted shares Adj 10 10 10
EPS 8,27 8,93 9,67
Dividend per share Adj 4 4,6 5,2
EPS Adj 8,27 9,33 9,67
BVPS 29,62 34,78 39,85
BVPS Adj 24,11 28,59 33,89
Net IB debt / share 4,6 5,7 -2,2
Share price 171,09 290,5 290,5
Market cap. (m) 1711 2905 2905
Valuation 2018 2019 2020
P/E 21 32,5 30,1
EV/sales 1,97 2,91 2,59
EV/EBITDA 13,8 21,9 19,3
EV/EBITA 15,6 26 22,9
EV/EBIT 15,6 26 22,9
Dividend yield (%) 2,3 1,6 1,8
FCF yield (%) 2,9 2,1 4,3
P/BVPS 5,86 8,35 7,29
P/BVPS Adj 7,2 10,16 8,57
P/E Adj 21 31,1 30,1
EV/EBITDA Adj 13,8 21,2 19,3
EV/EBITA Adj 15,6 25,1 22,9
EV/EBIT Adj 15,6 25,1 22,9
EV/cap. employed 5,1 6,6 5,8
Investment ratios 2018 2019 2020
Capex / sales 2,4 1,6 -3
Capex / depreciation 146 76,6 -143,9
Capex tangibles / tangible fixed assets 21,8 12,3 -41,6
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 14,9 16,1 28,9

Equity research

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Media

GARO - Interview with CEO Patrik Andersson (in Swedish)
GARO - Company presentation with CEO Patrik Andersson & CFO Helena Claesson

Main shareholders - GARO

Main shareholders Share capital % Voting shares % Verified
Lars Svensson 35.7 % 35.7 % 30 Sep 2019
Svolder 14.8 % 14.8 % 30 Nov 2019
Nordea Fonder 10.4 % 10.4 % 31 Oct 2019
Stefan Jonsson 5.9 % 5.9 % 30 Sep 2019
Spiltan Fonder 3.5 % 3.5 % 31 Oct 2019
Tredje AP-fonden 3.2 % 3.2 % 30 Sep 2019
SEB Fonder 3.0 % 3.0 % 30 Nov 2019
Rickard Blomqvist 2.2 % 2.2 % 31 Dec 2018
Cliens Fonder 1.7 % 1.7 % 30 Sep 2019
Carnegie Investment Fund - Nordic Equity Fund 1.2 % 1.2 % 31 Oct 2019
Source: Holdings by Modular Finance AB

Insider list - GARO

Name Quantity Code Date
Per Holmstedt + 20 BUY 26 Aug 2019
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

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