David Herro (Trades, Portfolio) of Oakmark Funds acquired a new holding in the second quarter. It is with Continental AG (XTER:CON, Financial).
Herro manages the Oakmark International Fund, the Oakmark International Small Cap Fund and the Oakmark Global Select Fund. Herro seeks businesses that are trading at a discount to the company’s intrinsic value, are expected to grow shareholder value over time and have management teams that think and act as owners.
Herro purchased 915 thousand shares in Continental for an average price of 187.21 euros ($208.95) per share. The transaction had an impact of 0.78% on his portfolio.
Continental is a German automotive manufacturing company that produces tires, brake systems, powertrain and chassis components, tachographs and other auto parts.
The company has a market cap of 37.9 billion euros with an enterprise value of 41.4 billion euros. It has a price-earnings (P/E) ratio of 13.01 with a forward P/E of 11.6. It has a price-book (P/B) ratio of 2.9, and a price-sales (P/S) ratio of 0.9.
GuruFocus ranked Continental’s financial strength 6 of 10. Its Piotroski F-Score is 7, indicating a healthy financial condition. Its Altman Z-Score is 3.06, placing it in the safe zone. The company’s cash to debt ratio is 0.43, below the industry median of 0.73.
GuruFocus ranked the company’s profitability and strength 8 of 10. Its operating margin is 10.8%, and its net margin is 7.4%. It has a return on equity (ROE) of 23.2% and a return on assets (ROA) of 8.7%, which are ranked above 86% and 79% of other companies in the industry, respectively.
The DCF Calculator gives the stock a fair value of 156.14 euros. On Friday, it was trading at 189.95 euros.
Herro previously sold out of Continental in the first quarter of 2015. He is the largest shareholder among the gurus, followed by Signature Select Canadian Fund (Trades, Portfolio).
Disclosure: I do not own stock in any companies mentioned in the article.
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