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Compania CIC Stock – Investment Analysis

Common Stock: Compania CIC

Current Market Price: $24 CLP

Market Capitalization: $28.4 Billion CLP

*All values in this article are expressed in Chilean Pesos (CLP) unless otherwise noted.

**The bulk of this analysis is based on the company’s most recent audited financial report, which can be found by following this link.

Compania CIC - Stock Chart
Compania CIC – Stock Chart

Compania CIC Stock – Summary of the Company

Compania CIC is a Chilean furniture company. The company’s main product line is focused on the production, sale, and distribution of beds and mattresses. They also produce couches, tables, pillows, as well as bed linens. Compania CIC was founded in 1912 and is headquartered in Santiago, Chile. They employ over 1,500 people.

Revenue and Cost Analysis

Compania CIC had revenue of $79.3 billion in 2020, a significant increase from $68.1 billion in 2019. Their COGS in 2020 was $47.5 billion representing a gross margin of 40%, an improvement compared to 38% the previous year.

The company was profitable in each of the last two years. In 2020 CIC had net income of $8 billion representing a profit margin of 10.1%, a significant increase compared to 3.7% in 2019.

Balance Sheet Analysis

Compania CIC has a decent balance sheet. They have a solid base of long term assets and sufficient liquidity in the near term. However, the company is leveraged with relevant liabilities including debt.

Compania CIC – Debt Analysis

As of year-end 2020 the company has $7 billion in total debt outstanding, $3.5 billion of which is classified as current.

Compania CIC Stock – Share Dynamics and Capital Structure

As of year-end 2020 the company has 1.18 billion common shares outstanding. Their 18 largest shareholders own a combined 98.8% of the company.

Compania CIC Stock - Ownership Structure
Compania CIC Stock – Ownership Structure

Compania CIC Stock – Dividends

The company did not pay a dividend in 2020.

Compania CIC Stock – 3 Metrics to Consider

Debt to Equity Ratio

Total Liabilities/Total Share Holder Equity

$40 billion / $32.6 billion = 1.2

A debt to equity ratio of 1.2 indicates that CIC uses a mix of debt and equity in its capital structure, but is leveraged, relying more heavily on debt financing for funding.

Working Capital Ratio

Current Assets/Current Liabilities

$44.5 billion / $31 billion = 1.4

A working capital ratio of 1.4 indicates a sufficient liquidity position. CIC should not have problems meeting its near term obligations.

Price to Book Ratio

Current Share Price/Book Value per Share.

$24 / $27.5 = .87

Compania CIC has a book value per share of $27.5. At the current market price this implies a price to book ratio of .87, meaning the company’s stock currently trades at a discount to the book value of the company.

Compania CIC Stock – Summary and Conclusions

Compania CIC is an interesting company. They have a long history and are relevant in the Chilean furniture market. The company is in decent financial health with a profit and sufficient liquidity. However, they are leveraged.

Although I like CIC and I don’t see any glaring red flags, I also don’t see anything exceptional about the company that would compel me to invest. For now I will leave CIC stock on my long term watch list, and revisit the company when its 2021 results are available.

Investors can compare Compania CIC stock to Brazilian tile company Portobello.

Disclaimer

This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.

This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.

Patrick Flood, CFA

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