GICS Sector : Financial Services
Grenke AG, together with its subsidiaries, provides a range of banking and financial services to small and medium-sized (SME) enterprises in Germany, France, Italy, and internationally.It operates through three segments: Leasing, Banking, and Factoring.The company is involved in the leasing activities, such as financing to commercial lessees, leasing, service, protection, and maintenance offerings, as well as disposal of used equipment; and small-ticket leasing of IT products, such as PCs, notebooks, servers, monitors, peripheral equipment, software, telecommunication and copying and medical technology, as well as other IT products.
Grenke delivered a mixed performance in 2024, marked by operational strengths and lingering macroeconomic headwinds. The company reported group earnings of €70.2 million, in line with adjusted guidance, reflecting its ability to navigate a challenging environment. Key highlights include exceeding the €3 billion target for leasing new business, achieving a 17% contribution margin, and maintaining a cost-income ratio of 59.2%. However, the year also saw increased risk provisions due to higher insolvencies, which weighed on overall profitability. The company's cash flow improved to €394 million, driven by refinancing efforts and deposit growth, underscoring its liquidity position despite broader economic uncertainties.
Publication Date: Mar -15
Sebastian Hirsch, CEO of Grenke, emphasized the company's strategic focus on simplifying operations, enhancing efficiency, and prioritizing sustainable growth. The 17% contribution margin and improved cost management, with operating costs per new business dropping to 11.2%, highlight the effectiveness of these initiatives. The company's ability to maintain a strong funding mix, including senior unsecured bonds and deposits, reflects its prudent capital management. Hirsch noted, "Our focus on new business as a driver of future earnings remains unchanged, with a strategic emphasis on digitalization and customer-centric services." This aligns with the company's goal of achieving double-digit growth in new business, targeting €3.2–€3.4 billion for 2025.
Grenke's financial metrics suggest a company balancing growth with risk management. The price-to-book ratio of 0.47 indicates a discount to peers, potentially reflecting market skepticism about near-term profitability. However, the company's strong cash flow yield of 68.64% underscores its ability to generate cash, while the return on equity (ROE) of 6.92% highlights moderate profitability relative to equity. The net debt-to-EBITDA ratio of 25.67% suggests manageable leverage, supporting its growth initiatives without overextending its balance sheet.
Grenke faces headwinds from rising insolvencies, which increased risk provisions by €40 million in 2024. However, the company remains optimistic about 2025, with a target of €3.2–€3.4 billion for leasing new business and group earnings of €71–€81 million. The planned expansion into international markets, particularly through partnerships and new branches, offers long-term growth potential. Additionally, the company's digitalization program, expected to cost €12–13 million annually, aims to enhance operational efficiency and customer experience. While macroeconomic risks persist, Grenke's focus on small and medium-sized enterprises (SMEs) positions it to capitalize on strong demand for leasing solutions in this segment.
Grenke's valuation metrics suggest a company undervalued relative to its peers, with a price-to-sales ratio of 0.82 and a price-to-earnings ratio of 7.48. The dividend yield of 3.38% provides downside protection, while the equity ratio of 16% for 2025 underscores its capital strength. Analysts project a 14.3% revenue growth for 2025, reflecting confidence in the company's ability to rebound from 2024's challenges. With a focus on cost management, digitalization, and strategic partnerships, Grenke is well-positioned to achieve its long-term goal of double-digit return on equity (ROE), despite near-term headwinds.
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Grenke AG's 8.5% leasing growth driven by increasing demand for flexible financing solutions, expansion into new markets, and strategic partnerships. Additionally, the company's diversified product portfolio, efficient risk management, and strong brand reputation contribute to its growth momentum.
Grenke AG's 7.3% growth is driven by its diversified leasing portfolio, strong demand for IT and industrial equipment, and expansion into new markets. Additionally, the bank's focus on small and medium-sized enterprises (SMEs) and its efficient cost structure contribute to its growth momentum.
Grenke AG's 9.33% growth in factoring is driven by increasing demand for working capital solutions, expansion into new markets, and strategic partnerships. Additionally, the company's digitalization efforts and efficient risk management have contributed to its growth. Furthermore, the rise of e-invoicing and automation in the industry has also fueled the growth of Grenke AG's factoring business.
Grenke AG offers leasing services for businesses, allowing them to acquire equipment, vehicles, and other assets without having to purchase them outright.
Grenke AG's factoring service enables businesses to receive immediate payment for outstanding invoices, improving cash flow and reducing the risk of bad debt.
Grenke AG offers a range of banking services, including accounts, credit cards, and loans, designed to meet the financial needs of businesses and individuals.
Grenke AG's digital platforms provide businesses with a range of tools and services, including e-commerce solutions, online marketplaces, and digital payment systems.
Grenke AG operates in the leasing and factoring industry, which has a moderate threat of substitutes. While there are alternative financing options available, Grenke's diversified product portfolio and strong market presence mitigate the threat of substitutes.
Grenke AG's customers are primarily small and medium-sized enterprises, which have limited bargaining power. The company's strong market position and diversified customer base reduce the bargaining power of customers.
Grenke AG relies on a network of suppliers for its leasing and factoring services. While suppliers have some bargaining power, the company's strong relationships and diversified supplier base mitigate this threat.
The leasing and factoring industry has high barriers to entry, including regulatory requirements and the need for significant capital investments. This limits the threat of new entrants and provides a competitive advantage to established players like Grenke AG.
The leasing and factoring industry is highly competitive, with several established players competing for market share. Grenke AG's strong market position and diversified product portfolio help the company to maintain its competitive edge.
| Value | |
|---|---|
| Debt Weight | 82.81% |
| Debt Cost | 3.95% |
| Equity Weight | 17.19% |
| Equity Cost | 11.52% |
| WACC | 5.25% |
| Leverage | 481.66% |
Value: 5.5
Growth: 5.2
Quality: 3.9
Yield: 5.0
Momentum: 9.0
Volatility: 4.0
1-Year Total Return ->
Value: 3.5
Growth: 8.3
Quality: 5.8
Yield: 0.6
Momentum: 6.5
Volatility: 4.0
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Value: 9.1
Growth: 2.1
Quality: 2.8
Yield: 5.0
Momentum: 7.5
Volatility: 0.0
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Value: 7.1
Growth: 5.7
Quality: 3.5
Yield: 3.8
Momentum: 1.0
Volatility: 2.7
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Value: 4.8
Growth: 2.1
Quality: 6.7
Yield: 0.0
Momentum: 2.5
Volatility: 1.3
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Value: 2.3
Growth: 4.4
Quality: 4.2
Yield: 0.0
Momentum: 1.0
Volatility: 1.7
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