RENK Group AG develops, produces, and sells mission-critical drive solutions across diverse civil and military end markets. Its product portfolio includes gear units, transmissions, power-packs, hybrid propulsion systems, suspension systems, slide bearings, couplings and clutches, and test systems. The company was founded by Johann Julius Renk in 1873 and is headquartered in Augsburg, Germany.

Germany

RENK Group AG

Industrials

The company pays dividends irregularly. There have only been a few years with dividend payments in the past ten years. Dividend per share (DPS) has grown yearly, but the dynamics are somewhat mixed. In the past 12 months, the dividend yield has been low and below its peers. 

R3NK.BE reported revenue of EUR 1 141mn in the last 12 months, up 23% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 66% from FY23 to EUR 0.53. Market expects EPS to reach EUR 1.03 in FY25.

Over the past six months, the stock has consistently climbed, resulting in 216% total increase. The stock's price trend wasn't definitive when matched against its global counterparts from the same sector and industry (as depicted above). Over the past six months the stock has exceeded the performance of this peer group by 182ppts and its growth decelerated by 1ppts in the past month. There is a distinction between the stock's performance and that of its peers from the same country and industry. Over six months it exceeded the performance of this peer group by 184ppts and accelerated its growth by 0ppts in the recent month. Given the stock's valuation versus its peers, its total price movement is mildly favourable.

The company has reported average EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 16.5% in the last 12 months, a decline from 17.8% in FY23. 

Historically, R3NK.BE has reported modest net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 4.7%, a growth from 3.5% in FY23. 

RENK Group AG reported a return on equity (RoE) of 12.6% in the last 12 months, up from 8.9% in FY23. The market consensus projects an RoE of 10.1% in FY24, again behind its peers. 

Another important profitability metric, return on assets (RoA), amounted to 3.4% in the last 12 months, an increase from 2.1% in FY23. The market analysts predict that RoA will be 2.7% in FY24, again weaker than its peers. 

In the last 12 months, the return on capital employed (RoCE) grew to 4.8%, below the peers. The consensus estimate for FY24 for RoCE is 10.1%, again behind the peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.3 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

R3NK.BE has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity may be unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, poor working capital management, and an unfavourable capital structure. 

In highly turbulent market conditions, R3NK.BE is as volatile as an index. In other words, the stock will move with the index in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be limited. 

In normal market circumstances, R3NK.BE is volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will move much wider than the index. The stock's losses on its worst days (less than 1-5% of the time) will range from significant to immense. 

Based on key historical and expected multiples, the stock is greatly overvalued relative to its peers. In particular, the stock is overpriced on P/E, 'expensive' on EV/EBITDA, overvalued on P/FCF. 

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RENK Group AG

€ 72.18

3

RENK Group AG

€ 72.18

3

Risk factor

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Risk / Profitability

About

About

Risk factor

Profitability factor

€ 72.18

About

About

RENK Group AG

€ 72.18

3

RENK Group AG

€ 72.18

3

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

€ 72.18

About

About

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