Leoni, a moderately valued European cable group.

(CercleFinance.com) - Although the share of the German cable manufacturer Leoni has risen by almost 12% since the beginning of the year, the group's earnings outlook appears to be solid, and its valuation seems fairly moderate relative to its peers.


Indeed, over the first quarter of 2014, organic growth at the group's major competitors, the French group Nexans and the Italian Prysmian, respectively reached 3.8% and 3.2%. However, these groups' published figures are down 2% and 5.4% due to FX factors.

This is not the case for Leoni, which reported a 6.4% rise in sales to over one billion euros. The German group actually seems more heavily exposed than others to the automotive sector, which is currently undergoing a restart phase, while demand for electrical equipment remains in a difficult situation.

Leoni is also targeting 2014 sales that are up 5% at 4.1 billion euros, with operating profit rising 23% to over 200 million euros. This suggests that its margin will be up almost one percentage point at close to 5%.

According to the consensus, in 2014 Leoni's underlying EPS is expected to rebound 33%. Meanwhile, growth is expected to reach 27% in 2015, which is less optimistic than expectations for Prysmian (+37%) and Nexans (+83%). However, at present, Leoni has a better track record.

In addition, the German share's 2015 P/E of 11x falls short of those of Prysmian (11.3x) and Nexans (15.4x).

The next major news on Leoni's agenda will be its interim results, due out on 12 August.


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