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Orkla A Buy On Dividend And Sum Of The Parts Valuation

Feb. 07, 2019 10:44 AM ETOrkla ASA (ORKLY)5 Comments
Holmes Osborne profile picture
Holmes Osborne


  • The dividend yield is 3.85%.
  • The stock is trading at about half of what my sum of the parts calculation.
  • Orkla is the largest foods company in Nordics.

Orkla (OTCPK:ORKLY) had a mediocre year but the stock is a buy. The dividend is 3.85% and the sum of the parts is worth way more than what the stock valuation is.

The stock trades for 67.56 krone, there are 1.02 billion shares, and the market cap is 68.9 billion krone ($8.08 billion). Earnings per share from continuing operations were 3.24 krone and the price to earnings ratio is 20.9. Earnings per share were 3.46 last year. The dividend is 2.6 krone and the dividend yield is 3.85%. That’s a nice valuation. You do have to cede back some of that dividend to the Norwegian tax man, even inside of IRAs.

Now for the hard part—I’m going to do a sum of the parts evaluation. The Foods division made 16 billion krone in revenue ($1.88 billion). Kraft/Heinz (KHC) trades at about two times sales so that would be 32 billion krone ($3.76 billion). Confectionary and Snacks made 6.2 billion krone in sales ($727 million). Hershey (HSY) trades at about three times sales so I’m going to put a valuation at 18.6 billion krone ($2.2 billion). Orkla Care made 8 billion krone in revenues ($939 million). I’m going to compare Care to Church & Dwight (CHD) which trades at about four times sales—32 billion krone ($3.7 billion). Food Ingredients made 9.65 billion krone ($1.13 billion). I’ll compare them to Hershey at three times so that comes to 29 billion ($3.4 billion). I’m going to compare Jotun to PPG (PPG) which trades at 14 times Ebit so that comes to 19.8 billion ($2.32 billion). Hydro, I guess I’ll compare to American Electric Power (AEP) which trades at 2.4 times so that puts us at 2.5 billion krone ($293 million).

My rough calculation of these businesses, cash, and receivables is 141.8 billion krone ($16.6 billion). Total liabilities

This article was written by

Holmes Osborne profile picture
Holmes Osborne is the principal of Osborne Global Investments. Holmes holds the Chartered Financial Analyst designation and a degree in finance from Syracuse University. He has been featured in the Wall Street Journal, Fortune Magazine, and Investors' Business Daily. Holmes has written financial columns for Seeking Alpha, the Motley Fool, theStreet.com, Gurufous, and several other publications.  Osborne Global focuses on fixed income, value investing, and international stocks.  Holmes is the father to two daughters, Adelaide and Emily.

Analyst’s Disclosure: I am/we are long ORKLY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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