Siegfried Holding AG (VTX:SFZN) Shares Could Be 24% Above Their Intrinsic Value Estimate
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Siegfried Holding’s estimated fair value is CHF797 based on 2 Stage Free Cash Flow to Equity
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Siegfried Holding is estimated to be 24% overvalued based on current share price of CHF986
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Analyst price target for SFZN is CHF1,188, which is 49% above our fair value estimate
How far off is Siegfried Holding AG (VTX:SFZN) from its intrinsic value? Using the most recent financial data, we’ll take a look at whether the stock is fairly priced by estimating the company’s future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. There’s really not all that much to it, even though it might appear quite complex.
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.
View our latest analysis for Siegfried Holding
We’re using the 2-stage growth model, which simply means we take in account two stages of company’s growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To begin with, we have to get estimates of the next ten years of cash flows. Where possible we use analyst estimates, but when these aren’t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today’s value:
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
2031 |
2032 |
2033 |
2034 |
|
Levered FCF (CHF, Millions) |
CHF83.0m |
CHF82.8m |
CHF72.3m |
CHF86.0m |
CHF116.0m |
CHF126.4m |
CHF134.5m |
CHF140.6m |
CHF145.2m |
CHF148.7m |
Growth Rate Estimate Source |
Analyst x6 |
Analyst x6 |
Analyst x3 |
Analyst x2 |
Analyst x1 |
Est @ 8.98% |
Est @ 6.38% |
Est @ 4.56% |
Est @ 3.28% |
Est @ 2.39% |
Present Value (CHF, Millions) Discounted @ 4.2% |
CHF79.7 |
CHF76.2 |
CHF63.9 |
CHF72.9 |
CHF94.4 |
CHF98.7 |
CHF101 |
CHF101 |
CHF100 |
CHF98.4 |
(“Est” = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = CHF886m
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