One of the most widely used multiples is the P/E ratio and it is interesting that only rarely we see analysts who take into the account the excess cash which companies have on their balance sheet. Therefore, we have decided to compute the P/E ratios for some CROBEX components which hold a significant cash position using cash adjusted equity and earnings in order to present the impact on the P/E ratios.

Ex-Cash P/E is meant to reveal the value of a company’s operating business when the value is distorted by a sizable net cash position. Namely, for the purposes of this overview, we used only Croatian blue-chips that hold a positive net cash position (cash – long-term & short-term interest-bearing debt).

Among the observed companies Adris’ cash position clearly makes the largest impact out of all the observed companies with P/E decreasing from 114.8x to 104.4x after the adjustment.  In Second place comes HT who has by far the largest cash position among the observed companies, followed closely by Koncar. Finally, the least impacted P/E was Ericsson NT’s which decreased from 14.2x to 12x P/E.

Comparison of Selected Companies P/E and Cash Adjusted P/E