Shelly Group does 63% per year… | Value Analysis

Been looking at Shelly Group, a European IoT company focused on smart energy and building automation. Not a classic value stock, but the fundamentals are strong enough that it’s worth discussing here. They sell smart relays, plugs, meters, dimmers, and similar devices. Hardware is tied together through their own app and works with systems like Home Assistant. Products are sold in 100+ countries. Manufacturing is mostly outsourced, so the business stays asset-light. What stands out is capital efficiency. Over the last several years they’ve consistently posted high returns: ROIC around 30% ROE low 30s ROA high 20s That’s not common for a small hardware-focused company. Growth has been strong but not reckless. Revenue per share went from about €1.3 to €5.9 in four years. Earnings followed. They reinvest most profits back into the business and only pay a small dividend (~12% payout). Balance sheet is very clean — low debt (single-digit debt/equity) and a high current ratio, so no obvious financial stress. On valuation: it’s not cheap. P/E is above its long-term average and P/S is around 6. That said, growth is still running ~30% and returns on capital remain high, so the valuation doesn’t look unreasonable if that holds. Moat is the weakest part of the story. Products are replaceable and competition is real, especially at the low end. The counterpoint is ecosystem stickiness — once users install a few Shelly devices, they tend to add more. Market cap is just under €1B, founders still own over 50%, and dilution has been minimal since 2020. For value investors, this isn’t a bargain bin stock. It’s more of a “good business at a fair price” situation. I’m watching it for a better entry rather than chasing it here. Not financial advice.