Bpost: Don't shoot the messenger

Published on 14 December 2018 at 22:10

At € 7,59 Bpost is priced low: the P/E is at less than 8, the P/S is at less than 0,5 and the price to cashflow is at less than 4.

Bpost delivers 7,7 million letters and 235 thousand parcels per day. Since 2015, turnover has increased every year, from € 2,408M in 2015 to € 3,850M in 2018. Net profit has been a problem, taking a dive in 2018 to € 262M (from € 304M in 2015). Nevertheless, Bpost is still making a nice net profit of around 7%.

We think Bpost is in a very challenging business context, but we think the current price is very low and takes into account a very pessimistic view on the future.

Let us not forget that Bpost is a monopolist for some of its services. This advantageous position is illustrated by the fact that in November of this year, Bpost announced a price increase of its stamps with 15% for 2019 (which adds up to a 27% price increase compared to what stamps cost in 2017). Not many companies that operate in a competitive environment could increase their prices with 14% two years in a row (see graph below for long-term price evolution). Warren Buffett would probably call that a business moat.


The dividend was € 1,34 per share in 2018. At the current price, that is a dividend return of 18%. As the Belgian government is the majority shareholder (with 51% of shares), Bpost will probably keep the dividend high. Even when the dividend is halved, there is still a dividend return of 9%.

Price evolution of stamps, charged by Bpost.


Disclaimer: as unintelligent investors we are only certain of one thing and that is that we cannot predict the future of stock prices. Under no circumstances this analysis should be seen as an advice or recommendation to buy, hold or sell.


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