An Intrinsic Calculation For Stabilus SE (ETR:STM) Suggests It's 46% Undervalued

Simply Wall St.11-14 12:35

Key Insights Using the 2 Stage Free Cash Flow to Equity, Stabilus fair value estimate is €65.10 Current share price of €35.30 suggests Stabilus is potentially 46% undervalued Our fair value ...

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overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAn Intrinsic Calculation For Stabilus SE (ETR:STM) Suggests It's 46% Undervalued\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-14 12:35 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/intrinsic-calculation-stabilus-se-etr-043520961.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Stabilus fair value estimate is €65.10 \n Current share price of €35.30 suggests Stabilus is potentially 46% undervalued \n Our fair value ...</p>\n\n<a href=\"https://finance.yahoo.com/news/intrinsic-calculation-stabilus-se-etr-043520961.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"STM","symbol_name":"意法半导体","start_time":0,"source_url":"https://finance.yahoo.com/news/intrinsic-calculation-stabilus-se-etr-043520961.html","article_id":"2483813128","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/9jcUzKYfUwYqkVFuGwhkDQ--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/4020998fe5d069537fb917fd739e4047"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2483813128","pubTimestamp":1731558920,"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Using the 2 Stage Free Cash Flow to Equity, Stabilus fair value estimate is 65.10. Current share price of 35.30 suggests Stabilus is potentially 46% undervalued. Our fair value estimate is 12% higher than Stabilus' analyst price target of 58.25. In this article we are going to estimate the intrinsic value of Stabilus SE  by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow  model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow.Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you.Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate:. Present Valu","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"STM":"意法半导体","IE00BD4GTV84.USD":"LEGG MASON CLEARBRIDGEINFRASTRUCTURE VALUE \"A\" (USDHDG) ACC","IE00BMG7P587.USD":"LEGG MASON CLEARBRIDGE GLOBAL INFRASTRUCTURE INCOM \"A\" (USD) INC","TV":"墨西哥电视","FCF":"第一联邦金融","BK4161":"工业机械","IE00BMG7P702.HKD":"FTGF CLEARBRIDGE GLOBAL INFRASTRUCTURE INCOME \"A\" (HKD) INC","IE00BD4GTT62.SGD":"Legg Mason ClearBridge Infrastructure Value A SGD-H (mdis) plus","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","ETR":"安特吉","BK4585":"ETF&股票定投概念","BK4100":"有线和卫星","BK4211":"区域性银行","SIUAF":"Stabilus SE","IE00BMG7P819.SGD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis SGD-H Plus","IE00BMG7P926.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Acc USD","BK4081":"电力公用事业","BK4588":"碎股","IE00BMG7P694.USD":"Legg Mason ClearBridge - Global Infrastructure Income A Mdis USD Plus","IE00BD4GTW91.USD":"LEGG MASON CLEARBRIDGEINFRASTRUCTURE VALUE \"A\" (USDHDG) INC"},"translate_title":"Stabilus SE(ETR：STM)的内在计算表明其价值被低估了46%","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TV":1,"STM":1,"SIUAF":1,"DCF":1,"ETR":1,"FCF":1},"content_text":"Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Stabilus fair value estimate is €65.10 \n Current share price of €35.30 suggests Stabilus is potentially 46% undervalued \n Our fair value estimate is 12% higher than Stabilus' analyst price target of €58.25 \n\n In this article we are going to estimate the intrinsic value of Stabilus SE (ETR:STM) by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Models like these may appear beyond the comprehension of a lay person, but they're fairly easy to follow. \n Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. For those who are keen learners of equity analysis, the Simply Wall St analysis model here may be something of interest to you. \n Check out our latest analysis for Stabilus \n Is Stabilus Fairly Valued? \n We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. 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. \n Generally we assume that a dollar today is more valuable than a dollar in the future, so we need to discount the sum of these future cash flows to arrive at a present value estimate: \n 10-year free cash flow (FCF) forecast \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF (€, Millions) \n€124.5m\n€140.7m\n€102.0m\n€98.6m\n€96.6m\n€95.5m\n€95.0m\n€94.9m\n€95.1m\n€95.6m\n\n\nGrowth Rate Estimate Source\nAnalyst x2\nAnalyst x4\nAnalyst x1\nEst @ -3.34%\nEst @ -2.05%\nEst @ -1.14%\nEst @ -0.51%\nEst @ -0.07%\nEst @ 0.24%\nEst @ 0.45%\n\n\n Present Value (€, Millions) Discounted @ 6.8% \n€117\n€123\n€83.7\n€75.8\n€69.5\n€64.3\n€59.9\n€56.1\n€52.6\n€49.5\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = €752m\n The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (1.0%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 6.8%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = €96m× (1 + 1.0%) ÷ (6.8%– 1.0%) = €1.7b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= €1.7b÷ ( 1 + 6.8%)10= €856m\n The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €1.6b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of €35.3, the company appears quite undervalued at a 46% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. \n\n\n\n  XTRA:STM Discounted Cash Flow November 14th 2024\n \n\n The Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Stabilus as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.8%, which is based on a levered beta of 1.417. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Stabilus\n\n\nStrength\n\nDebt is well covered by earnings and cashflows.\n\n\nDividends are covered by earnings and cash flows.\n\n\nDividend is in the top 25% of dividend payers in the market.\n\n\nDividend information for STM.\n\n\n\nWeakness\n\nEarnings declined over the past year.\n\n\n\nOpportunity\n\nAnnual revenue is forecast to grow faster than the German market.\n\n\nGood value based on P/E ratio and estimated fair value.\n\n\n\nThreat\n\n Annual earnings are forecast to grow slower than the German market.\n\n\nWhat else are analysts forecasting for STM?\n\n\n\n Moving On: \n Although the valuation of a company is important, it is only one of many factors that you need to assess for a company. The DCF model is not a perfect stock valuation tool. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. Can we work out why the company is trading at a discount to intrinsic value? For Stabilus, there are three important aspects you should explore: \n\n Risks: For example, we've discovered 3 warning signs for Stabilus that you should be aware of before investing here. \nFuture Earnings: How does STM's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.\n Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! \n\n PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the XTRA every day. If you want to find the calculation for other stocks just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. 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