Latest news with #WackerChemieAG
Yahoo
30-05-2025
- Business
- Yahoo
Wacker Chemie AG's (ETR:WCH) Intrinsic Value Is Potentially 81% Above Its Share Price
The projected fair value for Wacker Chemie is €114 based on 2 Stage Free Cash Flow to Equity Current share price of €63.05 suggests Wacker Chemie is potentially 45% undervalued Analyst price target for WCH is €85.80 which is 25% below our fair value estimate Does the May share price for Wacker Chemie AG (ETR:WCH) reflect what it's really worth? Today, we will estimate the stock's intrinsic value by projecting its future cash flows and then discounting them to today's value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. 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 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. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate 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 (€, Millions) €219.3m €416.3m €382.3m €346.0m €325.1m €312.6m €305.4m €301.7m €300.2m €300.3m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x3 Analyst x1 Est @ -6.03% Est @ -3.84% Est @ -2.31% Est @ -1.23% Est @ -0.48% Est @ 0.04% Present Value (€, Millions) Discounted @ 6.3% €206 €369 €319 €271 €240 €217 €200 €186 €174 €164 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = €2.3b The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 1.3%. We discount the terminal cash flows to today's value at a cost of equity of 6.3%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = €300m× (1 + 1.3%) ÷ (6.3%– 1.3%) = €6.1b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €6.1b÷ ( 1 + 6.3%)10= €3.3b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €5.7b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of €63.1, the company appears quite undervalued at a 45% 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. Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. 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 Wacker Chemie 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 6.3%, which is based on a levered beta of 1.152. 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 Wacker Chemie Strength Debt is well covered by earnings. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the Chemicals market. Opportunity Annual earnings are forecast to grow faster than the German market. Good value based on P/E ratio and estimated fair value. Threat Debt is not well covered by operating cash flow. Paying a dividend but company has no free cash flows. Annual revenue is forecast to grow slower than the German market. Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Rather it should be seen as a guide to "what assumptions need to be true for this stock to be under/overvalued?" If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Wacker Chemie, we've compiled three fundamental factors you should assess: Risks: For example, we've discovered 1 warning sign for Wacker Chemie that you should be aware of before investing here. Future Earnings: How does WCH'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. 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. 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
01-05-2025
- Business
- Yahoo
Wacker Chemie AG (WKCMF) Q1 2025 Earnings Call Highlights: Navigating Challenges with Strategic ...
Revenue: EUR1.48 billion, slightly below last year's level but higher than the previous quarter. Group EBITDA: EUR127 million, down from EUR172 million last year. Cumulative EBITDA for Operating Segments: EUR197 million, 3% lower year over year. Chemicals EBITDA: EUR145 million, up 6% year over year. Net Income: Negative EUR3 million, equating to a loss of EUR0.16 per share. Liquidity: EUR923 million. Net Debt: EUR880 million. Silicons Sales: EUR745 million, up 5% year over year. Silicons EBITDA Margin: 14.5%, up from 11.4% a year ago. Polymers Sales: EUR360 million, 3% below last year. Biosolutions Sales: EUR91 million, up 27% year over year. Polysilicon Sales: EUR245 million, 18% lower year over year. Gross Cash Flow: EUR32 million. Warning! GuruFocus has detected 6 Warning Signs with WKCMF. Release Date: April 30, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Wacker Chemie AG (WKCMF) reported a strong start to the year with sales reaching EUR1.48 billion, substantially higher than the previous quarter due to typical seasonality. The chemicals segment saw a 6% year-over-year increase in EBITDA, driven by strong growth in specialty silicon costs. The company is ramping up its new etching line in Burghausen, which will support the next generation of chip production and strengthen its leadership position in the semiconductor industry. Wacker Chemie AG (WKCMF) has initiated nearly 1,000 efficiency projects, yielding net savings of about EUR160 million, demonstrating a strong focus on cost-cutting and efficiency improvements. The company is actively working on sustainability initiatives, including a new global safety initiative and products with a lower carbon footprint, such as renewable raw material-based sealants and low carbon cement binders. Group EBITDA for the first quarter was EUR127 million, significantly lower than last year's EUR172 million, primarily due to weak demand for solar grade polysilicon and construction-related polymers. The company faces considerable risks from international trade relations and potential customs conflicts, which have increased uncertainty and volatility in order intake. Lower utilization rates and weak demand in certain segments, such as construction-related polymers, have negatively impacted financial performance. The potential impacts of a trade war are not included in the company's forecast, adding uncertainty to future financial outcomes. The EBITDA margin for the silicons segment, although improved, remains below target and unsatisfactory, indicating room for further improvement. Q: Could you provide insights on demand trends in your chemical activities during Q1, and how has Q2 started in terms of demand? Also, regarding silicones, your guidance suggests slightly higher margins compared to 2024. Could you clarify what "slightly" means numerically? A: Demand for our specialties in silicon remains strong, but order entry has become more volatile, particularly for standard products. March was slightly weaker than expected, but we anticipate a moderate seasonal uptake in Q2. For silicones, a slight increase in margins could mean an improvement of 1-2 percentage points. We had a strong start in Q1, but we do not expect the same level of performance to continue throughout the year. Q: How is Wacker Chemie adjusting its polysilicon business in response to anti-dumping duties, and what are the dynamics in the silicons business regarding input costs? A: With the final ruling on anti-dumping duties, supply chains are adjusting, with shifts towards countries like Laos and India. We sell at international prices, not at lower domestic prices. In silicons, while a softer upstream market isn't supportive due to high utilization needs, we are focusing on differentiated products. Lower silicon metal and energy costs are positives, but methanol prices are rising. Q: Can you update us on your market share and potential for sales increases in semi-grade polysilicon? Also, how confident are you about demand improvement in the second half of the year? A: We estimate our market share in semi-grade polysilicon at around 50%. Our new etching line in Burghausen will support further growth and potentially increase market share. We expect demand to improve in the second half as the US market remains a premium market for solar applications, driving demand for US-compliant polysilicon. Q: Regarding your silicones business, how is your trade position in North America, and what impact do tariffs have on your operations? A: Most chemicals, including silicones, are exempt from tariffs, minimizing the impact on our operations. We source silicon metal domestically for our US polysilicon production, so tariffs do not significantly affect us. Order entry in silicones has been volatile but not drastically declining, indicating a muted seasonal recovery in Q2. Q: How does the underutilization of infrastructure affect your financials, and is there a disadvantage in having Europe-only production for biosolutions? A: Underutilization in polysilicon affects infrastructure utilization, but other factors like lower equity income and hedging costs also contribute. In biosolutions, we have assets in the US, such as our cyclodextrin business, and regional setup is not a primary concern for project wins, so there's no significant disadvantage. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
Business Insider
01-05-2025
- Business
- Business Insider
Analysts' Top Materials Picks: FireFly Metals (MNXMF), Wacker Chemie AG (WKCMF)
There's a lot to be optimistic about in the Materials sector as 2 analysts just weighed in on FireFly Metals (MNXMF – Research Report) and Wacker Chemie AG (WKCMF – Research Report) with bullish sentiments. Protect Your Portfolio Against Market Uncertainty Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter. Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox. FireFly Metals (MNXMF) In a report released yesterday, Peter Kormendy from Shaw and Partners maintained a Buy rating on FireFly Metals, with a price target of A$1.90. The company's shares closed last Wednesday at $0.51, close to its 52-week high of $0.56. Kormendy has an average return of 99.0% when recommending FireFly Metals. According to Kormendy is ranked #6649 out of 9437 analysts. The word on The Street in general, suggests a Strong Buy analyst consensus rating for FireFly Metals with a $1.12 average price target, an 112.0% upside from current levels. In a report issued on April 28, Macquarie also maintained a Buy rating on the stock with a A$1.60 price target. DZ BANK AG analyst Peter Spengler maintained a Buy rating on Wacker Chemie AG yesterday. The company's shares closed last Monday at $73.93. Spengler has an average return of 7.5% when recommending Wacker Chemie AG. According to Spengler is ranked #2186 out of 9437 analysts. Wacker Chemie AG has an analyst consensus of Strong Buy, with a price target consensus of $106.75, which is a 44.4% upside from current levels. In a report issued on April 22, Jefferies also maintained a Buy rating on the stock with a EUR100.00 price target.
Yahoo
25-04-2025
- Business
- Yahoo
Is Wacker Chemie AG (ETR:WCH) Potentially Undervalued?
Wacker Chemie AG (ETR:WCH), is not the largest company out there, but it saw a double-digit share price rise of over 10% in the past couple of months on the XTRA. Shareholders may appreciate the recent price jump, but the company still has a way to go before reaching its yearly highs again. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. But what if there is still an opportunity to buy? Let's take a look at Wacker Chemie's outlook and value based on the most recent financial data to see if the opportunity still exists. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. According to our price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. We've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 13.87x is currently trading slightly below its industry peers' ratio of 16.33x, which means if you buy Wacker Chemie today, you'd be paying a decent price for it. And if you believe that Wacker Chemie should be trading at this level in the long run, then there's not much of an upside to gain over and above other industry peers. Although, there may be an opportunity to buy in the future. This is because Wacker Chemie's beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity. View our latest analysis for Wacker Chemie Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. Wacker Chemie's earnings over the next few years are expected to increase by 49%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value. Are you a shareholder? It seems like the market has already priced in WCH's positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at WCH? Will you have enough confidence to invest in the company should the price drop below the industry PE ratio? Are you a potential investor? If you've been keeping tabs on WCH, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the optimistic forecast is encouraging for WCH, which means it's worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop. With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Case in point: We've spotted 1 warning sign for Wacker Chemie you should be aware of. If you are no longer interested in Wacker Chemie, you can use our free platform to see our list of over 50 other stocks with a high growth potential. 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. Sign in to access your portfolio
Yahoo
21-04-2025
- Business
- Yahoo
Wacker Chemie AG (WKCMF) Q4 2024 Earnings Call Highlights: Navigating Challenges with Strategic ...
Revenue: EUR5.72 billion for 2024, down 11% year over year. EBITDA: EUR763 million, 7% lower year over year. Chemicals EBITDA: EUR542 million, up 11% year over year. Silicones EBITDA: EUR347 million, up 47% year over year. Polymers EBITDA: EUR194 million, down 23% year over year. Biosolutions EBITDA: EUR35 million, up from EUR7 million in 2023. Polysilicon EBITDA: EUR193 million, down 40% year over year. Net Income: EUR261 million, equating to an EPS of EUR4.85. Dividend Proposal: EUR2.50 per share, payout ratio of 52% of EPS. Net Cash Flow: EUR310 million. Net Debt: EUR691 million at year-end 2024. CapEx: EUR666 million in 2024, expected to be slightly above depreciation in 2025. 2025 Revenue Guidance: EUR6.1 billion to EUR6.4 billion. 2025 EBITDA Guidance: EUR700 million to EUR900 million. Warning! GuruFocus has detected 6 Warning Signs with WKCMF. Release Date: March 12, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Wacker Chemie AG (WKCMF) increased specialty volumes in silicones and polymers despite challenging market conditions. The company set up Europe's latest biotech facility to support German pandemic preparedness programs, indicating a strategic focus on biosolutions. Wacker Chemie AG (WKCMF) reported a strong performance in its Chemicals business, with an 11% year-over-year increase in EBITDA driven by specialty silicones. The company achieved a top A score from the CDP for its sustainability efforts, highlighting its commitment to reducing CO2 emissions. Wacker Chemie AG (WKCMF) maintained its dividend policy, proposing a EUR2.50 per share dividend, equating to a payout ratio of 52% of EPS. Group EBITDA was 7% lower year-over-year, primarily due to challenges in the polysilicon segment. Polysilicon sales were significantly impacted by overcapacities in China and US tariff uncertainties, leading to a 40% year-over-year decline in EBITDA. The company faced a challenging market environment in the construction sector, affecting polymer sales and earnings. Wacker Chemie AG (WKCMF) anticipates a challenging market environment in 2025 with higher risks for trade disputes. The company reported a decline in sales during 2024, primarily due to lower prices and volumes sold in polysilicon. Q: Can you elaborate on the demand increase in silicon specialties and the regions and end markets driving this growth? A: Christian Hartel, CEO: We see demand increase across various segments and regions. Our recent investments in downstream specialty capabilities are now allowing us to leverage and grow the business. Demand is picking up, and we expect additional volumes in 2025. Q: Regarding polysilicon, are there any initiatives by US authorities to address gray imports, and what are your plans if demand recovers? A: Christian Hartel, CEO: US authorities are checking imports, but not at a 100% rate. If demand recovers, our priority is to sell inventory before increasing production. Tobias Ohler, CFO: We would first work down inventory and then increase production once demand picks up. Q: Why is the margin outlook for silicones relatively muted despite a forecasted 10% growth in specialties? A: Tobias Ohler, CFO: We are not seeing a significant turn in pricing yet, and we need to compensate for base cost inflation. Although we are growing in specialties, the standard business remains at low profitability levels. We expect a slight improvement in margins as we are not yet at mid-cycle. Q: Can you provide insights into the semiconductor business growth mentioned in your annual report? A: Christian Hartel, CEO: Our semiconductor growth is based on long-term contractual volumes. We see higher demand from customers this year, supported by our new hedging line coming on stream mid-year. We have contracted customers for this new plant, which contributes to the growth. Q: How much inventory do you have in polysilicon, and is there pressure from auditors to reevaluate it? A: Tobias Ohler, CFO: We are running at demand rate from firm contracts and have inventory in our hubs. We sell inventory at attractive economic rates, and there is no pressure from auditors to reevaluate it. The shelf life of polysilicon is years, allowing us flexibility. Q: What is the outlook for the polymers market, and have there been any changes in the competitive landscape? A: Christian Hartel, CEO: The construction market remains challenging, but we see slightly higher volumes in dispersions and powders with slightly lower prices. Some competitors are more aggressive on pricing, trying to fill capacities, which adds pressure. Q: Can you explain the mix improvement in silicones and its impact on margins? A: Christian Hartel, CEO: We see an improvement in specialty volumes and margins, but we are not yet at mid-cycle margins. Pricing has not turned substantially, and the drag from standard pricing is still visible. There is potential for silicon prices to improve going forward. Q: What are the expectations for the Biosolutions segment, given its current EBIT loss? A: Christian Hartel, CEO: The focus is on filling capacities acquired through past acquisitions. Acquiring projects takes time, and financing challenges for smaller biotechs have slowed the pipeline. The priority is to fill projects and improve profitability. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
