Latest news with #BurckhardtCompression
Yahoo
05-06-2025
- Business
- Yahoo
Burckhardt Compression continues to deliver strong growth and increased profitability
Ad hoc announcement pursuant to Art. 53 LR of June 5th, 2025 Winterthur, June 5th, 2025 Burckhardt Compression achieved the following record results in fiscal year 2024: Sales of CHF 1'095.6 mn, +12.6% year-on-year Operating income (EBIT) of CHF 140.8 mn, +23.2% year-on-year Earnings per share of CHF 31.20, +24.9% year-on-year Book-to-bill ratio above 1, with order intake of CHF 1'151.2 mn (+2.4% year-on-year) Profitability increased in both divisions Operating cash flow of CHF 212.8 mn Dividend of CHF 18.00 proposed, an increase of 16.1% year-on-year 40.0% reduction in the Group's greenhouse gas emission intensity (Scope 1 and 2) Upcoming changes in the Board of Directors Guidance for fiscal year 2025: sales and EBIT margin at a similar level as in fiscal year 2024; volatile markets and exchange rates expected in the near future In fiscal year 2024, Burckhardt Compression continued on its growth path and delivered strong financials in volatile markets with diverse trends across segments and regions. Fabrice Billard, CEO of Burckhardt Compression, says: "The company delivered record financials, surpassing CHF 1 bn sales and CHF 100 mn net income for the first time. Both divisions contributed to these results. This reflects our strong positioning and ongoing success in markets aligned with global megatrends." The company benefits from a strong order backlog, a solid balance sheet and strong customer relationships. Despite current uncertainty related to the geopolitical landscape and tariffs, it expects fiscal year 2025 to be at a similar level as 2024. Strong sales growth – Profitability increase in both divisions and at the Group levelOrder intake for the Group reached CHF 1'151.2 mn, an increase of 2.4%, respectively 3.5% net of currency translation effects. Starting in fiscal year 2024, the accounting policy for the recognition of revenue for large projects has been changed from "Completed Contract Method" to "Percentage of Completion" (PoC) to better reflect the value creation process and to increase stability in revenue recognition*. To enable comparison with the year under review, prior year numbers are restated for PoC accounting. Sales were up by 12.6%, at CHF 1'095.6 mn, driven by an 18.2% growth in the Systems Division. Gross profit margin reached 28.0%, up 1.8pp year-on-year, due to a more favorable product mix in both divisions, the higher capacity utilization in all manufacturing and assembly facilities and the closure of low-profit service locations in the US. Research & Development expenses increased by 12.8% to CHF 30.1 mn, to support the development of new applications. Selling, marketing, and general administrative expenses amounted to 11.9% of sales, a reduction of 0.4pp compared to the previous year. This highlights the leverage and effectiveness of SG&A spend, which is part of the Mid-Range Plan. Other operating income and expenses amounted to CHF -5.6 mn (net), mainly consisting of negative FX effects and bad debt provisions (prior year: CHF 5.4 mn, including the recovery of bad debt provisions). The consolidated operating income (EBIT) recorded a substantial increase of 23.2% to CHF 140.8 mn. Both the Systems and Services Divisions increased their EBIT margins, by 2.7 and 0.1 percentage points respectively, resulting in an overall Group EBIT margin of 12.9%, up from 11.7% in the previous year. Value creation further enhanced – Dividend of CHF 18.00 proposedFinancial expenses in line with the previous year and a similar tax rate of 23.2% (compared to 23.8% last year) resulted in a net income of CHF 105.6 mn, which exceeded the previous year's figure by 25.0%*. Accordingly, earnings per share attributable to Burckhardt Compression Group shareholders rose from CHF 24.98 to CHF 31.20. Value creation was further enhanced, with Return on Net Operating Assets (RONOA) increasing from 28.3% to 32.6%. Total equity increased to CHF 340.2 mn (CHF +43.8 mn), while the equity ratio increased to 29.1%. Based on these results, the Board of Directors will propose to the Annual General Meeting a dividend of CHF 18.00 per share, an increase of 16.1% compared with the previous year. This is within the Group's overall attractive dividend policy of a 50% to 70% payout ratio. Continued new equipment growth Following a peak in 2022, the global Systems market further normalized in 2024, with a decrease predominantly driven by policy shifts in the Hydrogen Mobility and Energy segment. Despite this, the Systems Division's leading position in growing sub-segments of the market resulted in a strong order intake of CHF 825.4 mn, representing a 5.8% increase over the previous year. Marine applications like LPG, ammonia and LNG tankers have been growing at a good pace, driven by the increasing global energy trade as well as new regulations promoting sustainable shipping fuels. Linked to the expected further growth of solar panels and to geopolitics, the demand for Hyper Compressors used in the production of ethylene-vinyl acetate (EVA) remained high. Conversely, after rapid growth in the past years, the renewable hydrogen economy entered a period of recalibration. This shift is a direct response to higher-than-expected project costs, delays in finalizing regulations and subsidies, and the uncertainty created by elections in Europe and the US. Other new energy applications, like biogas and sustainable aviation fuels, continued to progress. Focus on high-margin services in a market showing regional disparities The Services markets have been strongly influenced by local economic conditions. The European market decreased due to economic and political uncertainty. On the positive side, Asia-Pacific and the regions of the Middle East, Central Asia, and Eastern Europe grew at a good pace, driven by the installed base and large upgrade projects. In the US, the market was stable with regional disparities, but order intake decreased due to the closure of three low-profit service centers, as announced in the first-half year report. On a global basis, the Services Division's presence in the marine market is further increasing, benefiting from a growing installed base, a strong service network, and new offerings. Against this backdrop, order intake for the Services Division fell by 5.4% (-4.5% net of currency translation effects) to CHF 325.8 mn. Further progress in the company's transformationThe fiscal year 2024 marks another successful step in the implementation of the company's Mid-Range Plan, which was communicated in November 2022, with an increase of the mid-range guidance in June 2024. It is based on four pillars: strengthening the core business, transforming and building new growth avenues, operational excellence, and further enhancing the business foundations. Burckhardt Compression made tangible progress across these pillars. For instance, with its focus on transforming and building new growth avenues, the company launched the new digital services UP! Insight and UP! Detect to help its customers optimize their compressor fleet's reliability and uptime. With regards to operational excellence, the company has further leveraged its asset base in all factories to increase sales by more than 18% in the Systems Division without significant capital investments. To further enhance its business foundations, Burckhardt Compression reduced its greenhouse gas emission intensity (Scope 1 and 2) by 40.0%, a giant step forward on its path towards reaching net zero (Scope 1 and 2) in 2035. Upcoming changes in the Board of DirectorsTon Büchner has decided to reduce his portfolio of mandates towards the end of 2025. As part of a planned and managed succession, Jacques Sanche will be proposed to the Annual General Meeting on July 5, 2025, as a new and additional member of the Board of Directors of Burckhardt Compression. The Board of Directors will additionally propose Jacques Sanche as its new Chair, effective December 15, 2025, following a transition period of over five months. At that time, Ton Büchner will step down from the Board of Directors, bringing the total number of Board Members back to six. Jacques Sanche is a recognized industrial leader who currently holds the CEO position at Bucher Industries AG and has been the CEO of Belimo Holding AG. The 59-year-old Swiss-Canadian has announced his retirement from his current position as CEO for April 2026, when he will hand over to an internal successor. Ton Büchner states, "We are very pleased to propose Jacques Sanche to our Board of Directors, and I look forward to working with him during the transition phase. Having been a public CEO for 17 years, he will add considerable value". Jacques Sanche states: "I have admired the key role that Burckhardt Compression is playing as the world diversifies its energy sources. With its strategic focus on a more sustainable future, the company has a strong momentum. It would be an honor to support the great team at Burckhardt Compression by joining the Board of Directors". Guidance for fiscal year 2025 – At a similar level as in fiscal year 2024Burckhardt Compression has entered the fiscal year 2025 amid a dynamic operating environment characterized by uncertainties surrounding global trade tariffs and currency exchange rates. While these developments have led to downward revisions in global GDP growth forecasts, the company remains confident in its strategy and ability to navigate evolving market conditions. The robust order backlog, coupled with a solid balance sheet and strong customer relationships, provides stability. Assuming there is no further escalation in trade disputes and macroeconomic conditions remain relatively stable, the company expects: Sales at around CHF 1.1 bn at the Group level EBIT margin similar to fiscal year 2024 Stronger profitability in the second half due to the product and service mix The Group will continue to actively monitor the macro environment and any potential impact it may have on the business. Global megatrends underpin Mid-Range Plan trajectoryBeyond short-term uncertainties, Burckhardt Compression's strategy is supported by global megatrends. A growing global population, especially the middle class, creates increased demand for essential products like fertilizers and polymers and for investment in energy infrastructure. Ensuring a stable and secure energy supply in a rapidly evolving geopolitical landscape with growing intermittent energy sources requires significant investment in energy storage, gas pipelines and transportation infrastructure, e.g. for LNG or LPG. In addition, the energy transition increases the share of natural gas in the energy mix and requires significant investments in renewable energy infrastructure, which includes solar panels and low-carbon fuels. All these applications require compressors. With its increased R&D activities and the ability to develop innovative solutions in partnership with its customers, Burckhardt Compression stands at the forefront of these developments. * The accounting policy for the recognition of revenue for projects above CHF 7 mn and lasting more than 1 year has been changed from "Completed Contract Method" to "Percentage of Completion" (PoC) to better reflect the value creation process and to increase stability in revenue recognition. The annual report 2024 and further information on the fiscal year 2024 are available on the website on: Attachments burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-DE burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-EN burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-FR burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-ITError in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
05-06-2025
- Business
- Yahoo
Burckhardt Compression continues to deliver strong growth and increased profitability
Ad hoc announcement pursuant to Art. 53 LR of June 5th, 2025 Winterthur, June 5th, 2025 Burckhardt Compression achieved the following record results in fiscal year 2024: Sales of CHF 1'095.6 mn, +12.6% year-on-year Operating income (EBIT) of CHF 140.8 mn, +23.2% year-on-year Earnings per share of CHF 31.20, +24.9% year-on-year Book-to-bill ratio above 1, with order intake of CHF 1'151.2 mn (+2.4% year-on-year) Profitability increased in both divisions Operating cash flow of CHF 212.8 mn Dividend of CHF 18.00 proposed, an increase of 16.1% year-on-year 40.0% reduction in the Group's greenhouse gas emission intensity (Scope 1 and 2) Upcoming changes in the Board of Directors Guidance for fiscal year 2025: sales and EBIT margin at a similar level as in fiscal year 2024; volatile markets and exchange rates expected in the near future In fiscal year 2024, Burckhardt Compression continued on its growth path and delivered strong financials in volatile markets with diverse trends across segments and regions. Fabrice Billard, CEO of Burckhardt Compression, says: "The company delivered record financials, surpassing CHF 1 bn sales and CHF 100 mn net income for the first time. Both divisions contributed to these results. This reflects our strong positioning and ongoing success in markets aligned with global megatrends." The company benefits from a strong order backlog, a solid balance sheet and strong customer relationships. Despite current uncertainty related to the geopolitical landscape and tariffs, it expects fiscal year 2025 to be at a similar level as 2024. Strong sales growth – Profitability increase in both divisions and at the Group levelOrder intake for the Group reached CHF 1'151.2 mn, an increase of 2.4%, respectively 3.5% net of currency translation effects. Starting in fiscal year 2024, the accounting policy for the recognition of revenue for large projects has been changed from "Completed Contract Method" to "Percentage of Completion" (PoC) to better reflect the value creation process and to increase stability in revenue recognition*. To enable comparison with the year under review, prior year numbers are restated for PoC accounting. Sales were up by 12.6%, at CHF 1'095.6 mn, driven by an 18.2% growth in the Systems Division. Gross profit margin reached 28.0%, up 1.8pp year-on-year, due to a more favorable product mix in both divisions, the higher capacity utilization in all manufacturing and assembly facilities and the closure of low-profit service locations in the US. Research & Development expenses increased by 12.8% to CHF 30.1 mn, to support the development of new applications. Selling, marketing, and general administrative expenses amounted to 11.9% of sales, a reduction of 0.4pp compared to the previous year. This highlights the leverage and effectiveness of SG&A spend, which is part of the Mid-Range Plan. Other operating income and expenses amounted to CHF -5.6 mn (net), mainly consisting of negative FX effects and bad debt provisions (prior year: CHF 5.4 mn, including the recovery of bad debt provisions). The consolidated operating income (EBIT) recorded a substantial increase of 23.2% to CHF 140.8 mn. Both the Systems and Services Divisions increased their EBIT margins, by 2.7 and 0.1 percentage points respectively, resulting in an overall Group EBIT margin of 12.9%, up from 11.7% in the previous year. Value creation further enhanced – Dividend of CHF 18.00 proposedFinancial expenses in line with the previous year and a similar tax rate of 23.2% (compared to 23.8% last year) resulted in a net income of CHF 105.6 mn, which exceeded the previous year's figure by 25.0%*. Accordingly, earnings per share attributable to Burckhardt Compression Group shareholders rose from CHF 24.98 to CHF 31.20. Value creation was further enhanced, with Return on Net Operating Assets (RONOA) increasing from 28.3% to 32.6%. Total equity increased to CHF 340.2 mn (CHF +43.8 mn), while the equity ratio increased to 29.1%. Based on these results, the Board of Directors will propose to the Annual General Meeting a dividend of CHF 18.00 per share, an increase of 16.1% compared with the previous year. This is within the Group's overall attractive dividend policy of a 50% to 70% payout ratio. Continued new equipment growth Following a peak in 2022, the global Systems market further normalized in 2024, with a decrease predominantly driven by policy shifts in the Hydrogen Mobility and Energy segment. Despite this, the Systems Division's leading position in growing sub-segments of the market resulted in a strong order intake of CHF 825.4 mn, representing a 5.8% increase over the previous year. Marine applications like LPG, ammonia and LNG tankers have been growing at a good pace, driven by the increasing global energy trade as well as new regulations promoting sustainable shipping fuels. Linked to the expected further growth of solar panels and to geopolitics, the demand for Hyper Compressors used in the production of ethylene-vinyl acetate (EVA) remained high. Conversely, after rapid growth in the past years, the renewable hydrogen economy entered a period of recalibration. This shift is a direct response to higher-than-expected project costs, delays in finalizing regulations and subsidies, and the uncertainty created by elections in Europe and the US. Other new energy applications, like biogas and sustainable aviation fuels, continued to progress. Focus on high-margin services in a market showing regional disparities The Services markets have been strongly influenced by local economic conditions. The European market decreased due to economic and political uncertainty. On the positive side, Asia-Pacific and the regions of the Middle East, Central Asia, and Eastern Europe grew at a good pace, driven by the installed base and large upgrade projects. In the US, the market was stable with regional disparities, but order intake decreased due to the closure of three low-profit service centers, as announced in the first-half year report. On a global basis, the Services Division's presence in the marine market is further increasing, benefiting from a growing installed base, a strong service network, and new offerings. Against this backdrop, order intake for the Services Division fell by 5.4% (-4.5% net of currency translation effects) to CHF 325.8 mn. Further progress in the company's transformationThe fiscal year 2024 marks another successful step in the implementation of the company's Mid-Range Plan, which was communicated in November 2022, with an increase of the mid-range guidance in June 2024. It is based on four pillars: strengthening the core business, transforming and building new growth avenues, operational excellence, and further enhancing the business foundations. Burckhardt Compression made tangible progress across these pillars. For instance, with its focus on transforming and building new growth avenues, the company launched the new digital services UP! Insight and UP! Detect to help its customers optimize their compressor fleet's reliability and uptime. With regards to operational excellence, the company has further leveraged its asset base in all factories to increase sales by more than 18% in the Systems Division without significant capital investments. To further enhance its business foundations, Burckhardt Compression reduced its greenhouse gas emission intensity (Scope 1 and 2) by 40.0%, a giant step forward on its path towards reaching net zero (Scope 1 and 2) in 2035. Upcoming changes in the Board of DirectorsTon Büchner has decided to reduce his portfolio of mandates towards the end of 2025. As part of a planned and managed succession, Jacques Sanche will be proposed to the Annual General Meeting on July 5, 2025, as a new and additional member of the Board of Directors of Burckhardt Compression. The Board of Directors will additionally propose Jacques Sanche as its new Chair, effective December 15, 2025, following a transition period of over five months. At that time, Ton Büchner will step down from the Board of Directors, bringing the total number of Board Members back to six. Jacques Sanche is a recognized industrial leader who currently holds the CEO position at Bucher Industries AG and has been the CEO of Belimo Holding AG. The 59-year-old Swiss-Canadian has announced his retirement from his current position as CEO for April 2026, when he will hand over to an internal successor. Ton Büchner states, "We are very pleased to propose Jacques Sanche to our Board of Directors, and I look forward to working with him during the transition phase. Having been a public CEO for 17 years, he will add considerable value". Jacques Sanche states: "I have admired the key role that Burckhardt Compression is playing as the world diversifies its energy sources. With its strategic focus on a more sustainable future, the company has a strong momentum. It would be an honor to support the great team at Burckhardt Compression by joining the Board of Directors". Guidance for fiscal year 2025 – At a similar level as in fiscal year 2024Burckhardt Compression has entered the fiscal year 2025 amid a dynamic operating environment characterized by uncertainties surrounding global trade tariffs and currency exchange rates. While these developments have led to downward revisions in global GDP growth forecasts, the company remains confident in its strategy and ability to navigate evolving market conditions. The robust order backlog, coupled with a solid balance sheet and strong customer relationships, provides stability. Assuming there is no further escalation in trade disputes and macroeconomic conditions remain relatively stable, the company expects: Sales at around CHF 1.1 bn at the Group level EBIT margin similar to fiscal year 2024 Stronger profitability in the second half due to the product and service mix The Group will continue to actively monitor the macro environment and any potential impact it may have on the business. Global megatrends underpin Mid-Range Plan trajectoryBeyond short-term uncertainties, Burckhardt Compression's strategy is supported by global megatrends. A growing global population, especially the middle class, creates increased demand for essential products like fertilizers and polymers and for investment in energy infrastructure. Ensuring a stable and secure energy supply in a rapidly evolving geopolitical landscape with growing intermittent energy sources requires significant investment in energy storage, gas pipelines and transportation infrastructure, e.g. for LNG or LPG. In addition, the energy transition increases the share of natural gas in the energy mix and requires significant investments in renewable energy infrastructure, which includes solar panels and low-carbon fuels. All these applications require compressors. With its increased R&D activities and the ability to develop innovative solutions in partnership with its customers, Burckhardt Compression stands at the forefront of these developments. * The accounting policy for the recognition of revenue for projects above CHF 7 mn and lasting more than 1 year has been changed from "Completed Contract Method" to "Percentage of Completion" (PoC) to better reflect the value creation process and to increase stability in revenue recognition. The annual report 2024 and further information on the fiscal year 2024 are available on the website on: Attachments burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-DE burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-EN burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-FR burckhardt-compression-continues-deliver-strong-growth-increased-profitability-fy24-IT
Yahoo
01-06-2025
- Business
- Yahoo
Estimating The Fair Value Of Burckhardt Compression Holding AG (VTX:BCHN)
Burckhardt Compression Holding's estimated fair value is CHF739 based on 2 Stage Free Cash Flow to Equity With CHF610 share price, Burckhardt Compression Holding appears to be trading close to its estimated fair value The CHF716 analyst price target for BCHN is 3.1% less than our estimate of fair value How far off is Burckhardt Compression Holding AG (VTX:BCHN) 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. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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. 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. Generally we assume that a dollar today is more valuable than a dollar in the future, 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) CHF33.8m CHF82.8m CHF96.0m CHF105.3m CHF112.5m CHF118.0m CHF122.3m CHF125.5m CHF128.0m CHF129.9m Growth Rate Estimate Source Analyst x2 Analyst x2 Analyst x2 Est @ 9.64% Est @ 6.87% Est @ 4.94% Est @ 3.58% Est @ 2.63% Est @ 1.97% Est @ 1.50% Present Value (CHF, Millions) Discounted @ 5.1% CHF32.2 CHF75.0 CHF82.8 CHF86.4 CHF87.9 CHF87.8 CHF86.6 CHF84.6 CHF82.1 CHF79.3 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = CHF785m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. 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 (0.4%) 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 5.1%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = CHF130m× (1 + 0.4%) ÷ (5.1%– 0.4%) = CHF2.8b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CHF2.8b÷ ( 1 + 5.1%)10= CHF1.7b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is CHF2.5b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of CHF610, the company appears about fair value at a 17% 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. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own 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 Burckhardt Compression Holding 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 5.1%, which is based on a levered beta of 1.071. 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. View our latest analysis for Burckhardt Compression Holding Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Weakness Earnings growth over the past year is below its 5-year average. Dividend is low compared to the top 25% of dividend payers in the Machinery market. Opportunity Annual revenue is forecast to grow faster than the Swiss market. Current share price is below our estimate of fair value. Threat Dividends are not covered by cash flow. Annual earnings are forecast to grow slower than the Swiss market. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Burckhardt Compression Holding, there are three important aspects you should consider: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Burckhardt Compression Holding , and understanding this should be part of your investment process. Future Earnings: How does BCHN'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. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every Swiss stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
01-06-2025
- Business
- Yahoo
Estimating The Fair Value Of Burckhardt Compression Holding AG (VTX:BCHN)
Burckhardt Compression Holding's estimated fair value is CHF739 based on 2 Stage Free Cash Flow to Equity With CHF610 share price, Burckhardt Compression Holding appears to be trading close to its estimated fair value The CHF716 analyst price target for BCHN is 3.1% less than our estimate of fair value How far off is Burckhardt Compression Holding AG (VTX:BCHN) 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. We will use the Discounted Cash Flow (DCF) model on this occasion. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. 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. 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. Generally we assume that a dollar today is more valuable than a dollar in the future, 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) CHF33.8m CHF82.8m CHF96.0m CHF105.3m CHF112.5m CHF118.0m CHF122.3m CHF125.5m CHF128.0m CHF129.9m Growth Rate Estimate Source Analyst x2 Analyst x2 Analyst x2 Est @ 9.64% Est @ 6.87% Est @ 4.94% Est @ 3.58% Est @ 2.63% Est @ 1.97% Est @ 1.50% Present Value (CHF, Millions) Discounted @ 5.1% CHF32.2 CHF75.0 CHF82.8 CHF86.4 CHF87.9 CHF87.8 CHF86.6 CHF84.6 CHF82.1 CHF79.3 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = CHF785m We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. 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 (0.4%) 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 5.1%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = CHF130m× (1 + 0.4%) ÷ (5.1%– 0.4%) = CHF2.8b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CHF2.8b÷ ( 1 + 5.1%)10= CHF1.7b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is CHF2.5b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of CHF610, the company appears about fair value at a 17% 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. We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own 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 Burckhardt Compression Holding 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 5.1%, which is based on a levered beta of 1.071. 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. View our latest analysis for Burckhardt Compression Holding Strength Earnings growth over the past year exceeded the industry. Debt is not viewed as a risk. Weakness Earnings growth over the past year is below its 5-year average. Dividend is low compared to the top 25% of dividend payers in the Machinery market. Opportunity Annual revenue is forecast to grow faster than the Swiss market. Current share price is below our estimate of fair value. Threat Dividends are not covered by cash flow. Annual earnings are forecast to grow slower than the Swiss market. Whilst important, the DCF calculation ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Burckhardt Compression Holding, there are three important aspects you should consider: Risks: Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Burckhardt Compression Holding , and understanding this should be part of your investment process. Future Earnings: How does BCHN'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. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every Swiss stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) 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. Simply Wall St has no position in any stocks mentioned.
