The heat pump company Nibe is valued lower now than in a very long time. At the same time, this is a stock that has really performed and given its shareholders 25% annually. How much is it worth to buy Nibe today and how uncertain is such a deal?
Less important, but still interesting, is that Nibe is in 5th place among most owned LargeCap companies. Only obvious companies such as Investor and Volvo come first.
When you think of Nibe, you automatically think of their heat pumps. However, there is so much more here and Nibe has a range of different products for heating and energy efficiency. Other examples are water heaters, ventilation products and wood-burning stoves. The customers are private homeowners but also property owners for, for example, rental housing.
The goal for Nibe is to grow 20% annually, where half of this is organic and half then via acquisition of other companies.
Strong last year
Nibe had a very strong 2022 where it grew by a whopping 26.5% organically. The reason is the high electricity price, which has made many homeowners want to invest in more efficient heating. Nibe’s pumps have never been so hot.
If we look back 3 years, the share is largely unchanged. Despite that, Nibe has shown a strong growth trend in 2023. The first 9 months organic growth was 17.4%, which is clearly above their target of 10% organic growth.
Not too long ago, Nibe’s CEO was out in the media and said:
The reason the rate is down in Nibe is because the market is forward-looking. As you know, new construction has hit a wall at the same time as electricity prices have come down considerably. It is not difficult to imagine that fewer people want to invest in a new boiler now than during the pandemic, when many used the travel money for this very purpose.
However, Nibe’s CEO announced that it has a strong product range aimed at both renovation and sustainable energy solutions, which provides a more defensive operation when the economy weakens.
I have chosen to buy quality when the market is generally worried. So I bought Nibe again, after I sold it sometime ago.
Nibe is valued lower today than in a long time. Over the past five years, Nibe has been valued at just under 31 times forward-looking EV/Ebit on average. Looking back 10 years, the average was 24. Based on the profit forecast for next year, this is 20.
Much can of course get worse before it gets better. For us who have a time horizon of at least 5 years, this feels like a very good location.
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