Common Stock: Grupo Orbis
Current Market Price: $ 49,160 COP
Market Capitalization: $ 793 trillion COP
*All values in this article are expressed in Colombian Pesos (COP) 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.
Grupo Orbis Stock – Summary of the Company
Grupo Orbis is a Colombian chemical manufacturing company. They produce paints, decorative, and high performance coatings. Their paints business is present in 11 countries in South and Central America. Their chemicals business has production facilities in 5 countries; Colombia, Brazil, Venezuela, Mexico, and Ecuador. And their commerce business, which sells home improvement and maintenance products, is focused entirely on Colombia. It has 16 different brands and over 16,000 clients. Grupo Orbis was founded in 1945 and is headquartered in Medellin, Colombia.
Revenue and Cost Analysis
In 2019 Grupo Orbis had revenue of $1.54 trillion, an increase compared to $ 1.46 trillion in 2018. Their COGS in 2019 was $ 1 trillion, representing a gross margin of 32%, an improvement compared to 29% the previous year.
Grupo Orbis had net income of $ 47.5 billion in 2019, representing a profit margin of 3%. This is a significant improvement compared to a loss of $ 16.6 billion in 2018.
Balance Sheet Analysis
Grupo Orbis has a decent balance sheet. They have a base of long term assets, mainly property, plant, and equipment, as well as a sufficient near term liquidity position. However they have significant liability levels, including a relevant amount of debt outstanding.
Grupo Orbis – Debt Analysis
As of year-end 2019 the company has $350.2 billion in total debt outstanding, $ 139.4 billion of which is classified as current. A small portion of the company’s total debt is denominated in foreign currency, exposing the company to the negative effects of a depreciating Colombian Peso.
Grupo Orbis Stock – Share Dynamics and Capital Structure
As of year end 2019 Grupo Orbis has 16.1 million common shares outstanding. Insiders and institutional investors own around 89% of the company’s outstanding shares. The remaining 11% are owned by smaller shareholders.
Grupo Orbis Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
$ 826 billion / $ 811 billion = 1.02
A debt to equity ratio of 1.02 indicates that Grupo Orbis uses nearly equal parts debt and equity in its capital structure, and is not overly reliant on either form of financing.
Working Capital Ratio
Current Assets/Current Liabilities
$ 824 billion / $ 499 billion = 1.6
A working capital ratio of 1.6 indicates a sufficient but not strong liquidity position. Grupo Orbis should not have problems meeting its near term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
$ 49,160 / $ 50,273 = .98
Grupo Orbis has a book value per share of $ 50,273. At the current market price this implies a price to book ratio of .98, meaning Grupo Orbis stock currently trades at a slight discount to the book value of the company.
Grupo Orbis Stock – Summary and Conclusions
Grupo Orbis is a solid company. They have a long history of operations and a strong regional presence in South and Central America. The company is in decent financial health having returned to profitability in 2019 and with sufficient liquidity in the near term. However they do have a relevant amount of debt outstanding.
Since 2020 was an abnormal year with the coronavirus shutdowns and since Grupo Orbis just returned to profitability in 2019, I would prefer to wait to see the company’s 2020 financials before making any investment decisions.
Investors can compare Grupo Orbis stock to other Colombian manufacturers, such as Enka de Colombia.
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.
