Stern Groep (STRN): A strong H1, more emphasis on used/rental

London, UK, 26 August 2021

Stern Groep (STRN): A strong H1, more emphasis on used/rental

Stern's 2020 financial and operational restructuring has placed it in a good position to cope with the uncertain car market in 2021. Opportunities to create further shareholder value range from M&A to high dividend pay-outs. We are increasing our EPS forecasts by 10.5% and 9.9% in 2021 and 2022 respectively, driven by the restructured organisation, digitisation efforts and an improving market environment. The valuation is undemanding, at 6.7x 2022e P/E.

Stern is trading at an FY22e P/E of 6.7x based on an anticipated recovery in profitability in the coming years. Compared to the peer group average of 11.3x, this reflects a large discount. Applying the average peer multiple and adding the book value of the stake in insurer Bovemij (€3.47 per Stern share) results in an implied valuation of €27.31/share (versus €26.70/share in March 2021).  

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