Edison Investment Research Limited 
Stern Groep (STRN): Lower profitability in Q3 
 
19-Nov-2020 / 08:00 GMT/BST 
 
                                                London, UK, 19 November 2020 
 
               Stern Groep (STRN): Lower profitability in Q3 
 
Stern reported a 5% reduction in revenues in its Q3 trading update. 
Profitability lagged, especially because of COVID-19 related effects in 
workshop utilisation and car repair. Stern did not use the Dutch government 
support package NOW2 in Q3, but is considering making use of NOW3, which 
could have an impact on the performance for the rest of the year. We have 
made small downward changes to our FY20 estimates on the back of the Q3 
results, but maintain our 2021 estimates as we continue to expect a recovery 
post COVID-19. At an FY21e P/E of 9.4x that implies a 27% discount to peers, 
Stern still looks undervalued 
 
Despite the weaker Q320 and lower FY20e estimates, we still believe that 
Stern's profitability could recover towards 1.3% EBIT margins in FY21e as 
COVID-19 effects become less pronounced and the 2020 investments in 
restructuring and the online repositioning of One Stern bear fruit. Trading 
at a P/E multiple of 9.4x on our unchanged FY21 estimates compared to the 
peer group average of 12.8x, the stock continues to look undervalued. On top 
of this, Stern has a participation in car insurer Bovemij that has a market 
value of &euro3.17 per Stern share. 
 
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(END) Dow Jones Newswires

November 19, 2020 03:00 ET (08:00 GMT)