Intro
Probably most people have used a product of this
company, which produces ballpoint pens, lighters and razors. In 2019, BIC sold
31 million products every day and is either number one (for lighters) or number
two (for shavers and stationery) in terms of market share. Total revenue was
hovering around €2 billion p.a. with a free cash flow generation of
approx. €200 million per year – as can be expected from a mature,
solid firm with a long history.
The founder’s family still holds 45% of the shares (voting rights 61%) which guarantees a long-term vision and strategy.
Valuation
BIC has withdrawn its guidance for 2020, as many other
companies as well, where it was initially guiding for a flat year. Historically,
BIC earned around €5 per share and we may expect similar numbers after
the current crisis will be over, which would result in a P/E of approx. 10x. Besides
the attractive dividend (was set at €3.45 per share in the last years and reduced
to €2.45 due to COVID-19), the company actively buys back shares for
significant amounts in normal times. Cash flow will primarily be invested in
either CAPEX or acquisitions, followed by paying dividends and share buy-backs.
The company shows a solid balance sheet (equity ratio above 60%) with a net cash position at the end of June.
What’s next?
Similar to other companies, a recovery should also be
underway for BIC. With ongoing free cash flow generation, growth coming mainly
from smaller acquisitions and fair shareholder remuneration, BIC’s current
valuation seems to be attractive – a steady and “boring” company coupled with a
strong market share and a long-term oriented owner structure, right up our
alley!
Current Price
€50.30 per share
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