The market will teach you things if you pay attention, and one of the big messages to take away from Kone's (OTCPK:KNYJY) (KNEBV.HE) ("KONE") performance over the last year and a half is not to underestimate a great company's ability to exceed your expectations, nor the market's willingness to bid up those exceptional companies to eye-watering multiples. Sticking to my value guns cost me on Kone, as the shares have risen more than 60% since my last update on the company, where I thought the valuation for this excellent elevator company was already pretty robust.
Given my increasing caution about the global non-residential market, I'm not going to chase the shares here either. Kone is executing well in China, but I'm not sold on the idea that the second quarter's performance is a sure sign of things to come, and I believe weaker results in North American and Europe (which is still more than half of the business) can and will weigh on the financials. Investors who believe in buying and holding quality irrespective of price may still find something to like here, but paying about 20x 2021 EBITDA seems steep to me.
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