October 9, 2017

LIN:DEU – Market expectations are for record-high Uniform ROA, but management’s concerns about margins and cost savings imply this may be unwarranted


  • Linde Aktiengesellschaft (LIN:DEU)currently trades near historical highs relative to UAFRS-based (Uniform) Assets, with a 1.7x Uniform P/B, suggesting fairly bullish expectations for the firm. However, given management’s concerns about margins and cost savings, this may be unwarranted.
  • Specifically, management may lack confidence in their ability to derive further cost savings, and in their ability to improve Americas margins. Should the firm fail to drive Uniform ROA to record-highs, as management sentiment suggests, multiple compression and equity downside would be warranted

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