henkel stock analysis

Henkel Stock Analysis – Old Brands Die Hard, But Slowly They Eventually do

Henkel stock analysis is part of a series of analyses I made on growth stocks that compound over time. The best stock out of the list to invest in was Visa. You can check my Visa stock article and also the tool best used to analyze the risk and reward when it comes to growth stocks, the delta of the delta.

Henkel stock is in a similar situation as Reckitt Benckiser, another stock analysis I recently did. On the business side, it is unknown from where will sales growth come from as the market, despite the well-known brands, is pretty competitive.

Henkel stock analysis

Henkel’s famous brands – Source: Henkel

Sales have been slowing down, most metrics are negative and the company needs to invest more to keep up while the valuations are high.

Henkel stock analysis
Henkel stock overview

Henkel’s summary on the situation Source: Henkel Investor Relations

Henkel Stock Analysis

The market capitalization is 40 billion while the average free cash flows fall in the range between 1.5 and 2 billion. Thus, the return we can expect from them is around 5%. Not bad, but the valuations are high due to the overflow of money in Europe chasing any kind of yield. It is better to hold stocks like Henkel offering a dividend yield of 2% than any kind of government bond or saving account. In fact, from that perspective, a stock like Henkel might even be fairly valued as it gives protection against inflation and a weak Euro.

However, from an absolute investment perspective, one that we focus on here, Henkel is not an attractive investment as you can find better. It is possible to find stocks that offer a 10% business yield, not a 5% like Henkel, are growing and also offer protection against a currency issue in Europe. Let’s continue with our list to find such investments.

Henkel stock had a great run but it is unlikely it will repeat what it did in the past.

Henkel stock price
Henkel stock price

This is what I do, I am looking for great businesses, that offer both value and growth and can also do good over cycles. If you wish to check my portfolio, check my Stock Market Research Platform.

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