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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 1005 1067
Sales growth (%) 13,4 11,3 6,2
EBITDA 129 140 151
EBITDA margin (%) 14,3 13,9 14,2
EBIT adj 114 127 133
EBIT adj margin (%) 12,6 12,6 12,5
Pretax profit 106 123 132
EPS rep 8,27 9,67 10,29
EPS growth (%) -3,4 16,9 6,5
EPS adj 8,27 10,07 10,29
DPS 4 4,6 5,2
EV/EBITDA (x) 13,8 20,3 18,6
EV/EBIT adj (x) 15,6 22,5 21,1
P/E (x) 21 29,2 27,4
P/E adj (x) 21 28 27,4
EV/sales (x) 2 2,8 2,6
FCF yield (%) 2,9 2,1 3,1
Dividend yield (%) 2,3 1,6 1,8
Net IB debt/EBITDA 0,4 0,2 -0,1
SEKm 2018 2019e 2020e
Sales 902 1005 1067
COGS -457 -512 -542
Gross profit 445 493 525
Other operating items -316 -353 -374
EBITDA 129 140 151
Depreciation on tangibles -15 -17 -18
Depreciation on intangibles 0 0 0
EBITA 114 123 133
Goodwill impairment charges 0 0 0
Other impairment and amortisation 0 0 0
EBIT 114 123 133
Other financial items 0 0 0
Net financial items -8 0 -1
Associated income 0 0 0
Other EO items 0 0 0
Pretax profit 106 123 132
Tax -23 -26 -29
Net profit 83 97 103
Minority interest 0 0 0
Net profit discontinued 0 0 0
Net profit to shareholders 83 97 103
EPS 8,27 9,67 10,29
EPS Adj 8,27 10,07 10,29
Total extraordinary items after tax 0 -4 0
Tax rate (%) -21,8 -21,2 -22
Gross margin (%) 49,3 49 49,2
EBITDA margin (%) 14,3 13,9 14,2
EBITA margin (%) 12,6 12,2 12,5
EBIT margin (%) 12,6 12,2 12,5
Pretax margin (%) 11,7 12,2 12,4
Net margin (%) 9,2 9,6 9,6
Growth rates Y/Y 2018 2019 2020
Sales growth (%) 13,4 11,3 6,2
EBITDA growth (%) 16,9 8,7 8,1
EBIT growth (%) 16,1 7,8 8,3
Net profit growth (%) -3,4 16,9 6,5
EPS growth (%) -3,4 16,9 6,5
Profitability 2018 2019 2020
ROE (%) 30,1 29,7 26,9
ROE Adj (%) 30,1 31 26,9
ROCE (%) 33,1 32,5 30,6
ROCE Adj(%) 33,1 33,5 30,6
ROIC (%) 27 26,5 26,3
ROIC Adj (%) 27 27,3 26,3
Adj earnings numbers 2018 2019 2020
EBITDA Adj 129 144 151
EBITDA Adj margin (%) 14,3 14,3 14,2
EBITA Adj 114 127 133
EBITA Adj margin (%) 12,6 12,6 12,5
EBIT Adj 114 127 133
EBIT Adj margin (%) 12,6 12,6 12,5
Pretax profit Adj 106 127 132
Net profit Adj 83 101 103
Net profit to shareholders Adj 83 101 103
Net Adj margin (%) 9,2 10 9,6
SEKm 2018 2019e 2020e
EBITDA 129 140 151
Net financial items -8 0 -1
Paid tax -23 -26 -29
Non-cash items 0 0 0
Cash flow before change in WC 98 114 121
Change in WC -22 -25 -16
Operating cash flow 73 80 105
CAPEX tangible fixed assets -22 -22 -19
CAPEX intangible fixed assets 0 0 0
Acquisitions and disposals 0 0 0
Free cash flow 51 59 86
Dividend paid -40 -40 -46
Share issues and buybacks 0 0 0
Other non cash items 0 -2 0
Decrease in net IB debt 10 17 40
Balance Sheet (SEKm) 2018 2019 2020
Goodwill 0 0 0
Indefinite intangible assets 0 0 0
Definite intangible assets 55 57 55
Tangible fixed assets 100 114 117
Other fixed assets 10 10 10
Fixed assets 166 181 182
Inventories 162 182 187
Receivables 230 230 241
Other current assets 0 0 0
Cash and liquid assets 8 23 63
Total assets 566 616 674
Shareholders equity 296 354 411
Minority 0 0 0
Total equity 296 354 411
Long-term debt 54 52 52
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 212 207 207
Other current liabilities 0 0 0
Total liabilities and equity 374 534 566
Net IB debt 46 29 -11
Net IB debt excl. pension debt 46 29 -11
Capital invested 346 387 403
Working capital 180 205 221
EV breakdown 2018 2019 2020
Market cap. diluted (m) 1736 2820 2820
Net IB debt Adj 46 29 -11
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 2849 2809
Capital efficiency (%) 2018 2019 2020
Total assets turnover (%) 164,1 170 165,4
Capital invested turnover (%) 273,2 274,5 270,2
Capital employed turnover (%) 262,6 265,7 245,5
Inventories / sales (%) 16,9 17,1 17,3
Customer advances / sales (%) 0 0 0
Payables / sales (%) 22,3 20,8 19,4
Working capital / sales (%) 18,7 19,2 20
Financial risk and debt service 2018 2019 2020
Net debt / equity (%) 15,4 8,1 -2,8
Net debt / market cap (%) 2,7 1 -0,4
Equity ratio (%) 52,4 57,5 61
Net IB debt adj. / equity (%) 15,4 8,1 -2,8
Current ratio (%) 188,9 210,5 237,5
EBITDA / net interest (%) 1591,4 75197,1 15296,7
Net IB debt / EBITDA (%) 35,5 20,4 -7,6
Interest cover (%) 1406,2 65934,4 13435,4
SEKm 2018 2019e 2020e
Shares outstanding adj. 10 10 10
Fully diluted shares Adj 10 10 10
EPS 8,27 9,67 10,29
Dividend per share Adj 4 4,6 5,2
EPS Adj 8,27 10,07 10,29
BVPS 29,62 35,43 41,12
BVPS Adj 24,11 29,73 35,61
Net IB debt / share 4,6 2,9 -1,1
Share price 171,09 282 282
Market cap. (m) 1711 2820 2820
Valuation 2018 2019 2020
P/E 21 29,2 27,4
EV/sales 1,97 2,84 2,63
EV/EBITDA 13,8 20,3 18,6
EV/EBITA 15,6 23,2 21,1
EV/EBIT 15,6 23,2 21,1
Dividend yield (%) 2,3 1,6 1,8
FCF yield (%) 2,9 2,1 3,1
P/BVPS 5,86 7,96 6,86
P/BVPS Adj 7,2 9,49 7,92
P/E Adj 21 28 27,4
EV/EBITDA Adj 13,8 19,8 18,6
EV/EBITA Adj 15,6 22,5 21,1
EV/EBIT Adj 15,6 22,5 21,1
EV/cap. employed 5,1 7 6,1
Investment ratios 2018 2019 2020
Capex / sales 2,4 2,2 1,8
Capex / depreciation 146 125,6 104,3
Capex tangibles / tangible fixed assets 21,8 19 16,4
Capex intangibles / definite intangibles 0 0 0
Depreciation on intangibles / definite intangibles 0 0 0
Depreciation on tangibles / tangibles 14,9 15,1 15,8

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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