Uncomfortable Ideas
Long/short equity, special situations, contrarian, long-term horizon

Metro AG - Unloved, Undervalued, With A Limited Downside And A Lot Of Upside

(Editor's Note: Investors should be mindful of the risks of transacting in illiquid securities such as MTTRY. Metro AG's listing in Germany, MEO.DE, offers stronger liquidity.)

Overview of the business

Metro (OTCPK:MTTRY) is a diversified retail/cash & carry/wholesale group, ranked as the world's 7th largest and Europe's 3rd largest by sales1. It is headquartered in Germany and has four operating businesses:

  • METRO Cash & Carry: A self-service wholesaler.
  • Media-Saturn: Various chains of consumer electronics retailers.
  • Real: 308 hypermarkets in Germany and 16 in Eastern Europe.
  • Galeria Kaufhof: Market leading department stores in Germany and Belgium.

Contribution of each business to revenue and operating profits before extraordinary items can be seen below:

Geographical mix of sales and...

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