Latest news with #dormakabaHoldingAG
Yahoo
23-05-2025
- Business
- Yahoo
Are Investors Undervaluing dormakaba Holding AG (VTX:DOKA) By 48%?
dormakaba Holding's estimated fair value is CHF1,402 based on 2 Stage Free Cash Flow to Equity Current share price of CHF735 suggests dormakaba Holding is potentially 48% undervalued The CHF710 analyst price target for DOKA is 49% less than our estimate of fair value In this article we are going to estimate the intrinsic value of dormakaba Holding AG (VTX:DOKA) by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. We've discovered 2 warning signs about dormakaba Holding. View them for free. 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. 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) CHF212.0m CHF245.2m CHF260.0m CHF298.1m CHF310.3m CHF318.7m CHF325.2m CHF330.2m CHF334.2m CHF337.4m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Analyst x1 Est @ 2.71% Est @ 2.02% Est @ 1.54% Est @ 1.21% Est @ 0.97% Present Value (CHF, Millions) Discounted @ 5.7% CHF201 CHF220 CHF220 CHF239 CHF235 CHF229 CHF221 CHF212 CHF203 CHF194 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = CHF2.2b 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 5.7%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = CHF337m× (1 + 0.4%) ÷ (5.7%– 0.4%) = CHF6.4b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CHF6.4b÷ ( 1 + 5.7%)10= CHF3.7b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is CHF5.9b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of CHF735, the company appears quite good value at a 48% 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. 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 dormakaba 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 5.7%, which is based on a levered beta of 1.216. 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. See our latest analysis for dormakaba Holding Strength Earnings growth over the past year exceeded the industry. Debt is well covered by earnings and cashflows. Weakness Dividend is low compared to the top 25% of dividend payers in the Building market. Opportunity Annual earnings are forecast to grow faster than the Swiss market. Trading below our estimate of fair value by more than 20%. Threat Annual revenue is forecast to grow slower than the Swiss market. Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize 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 dormakaba Holding, we've put together three further aspects you should look at: Risks: We feel that you should assess the 2 warning signs for dormakaba Holding we've flagged before making an investment in the company. Future Earnings: How does DOKA'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 while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
23-05-2025
- Business
- Yahoo
Are Investors Undervaluing dormakaba Holding AG (VTX:DOKA) By 48%?
dormakaba Holding's estimated fair value is CHF1,402 based on 2 Stage Free Cash Flow to Equity Current share price of CHF735 suggests dormakaba Holding is potentially 48% undervalued The CHF710 analyst price target for DOKA is 49% less than our estimate of fair value In this article we are going to estimate the intrinsic value of dormakaba Holding AG (VTX:DOKA) by taking the expected future cash flows and discounting them to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Don't get put off by the jargon, the math behind it is actually quite straightforward. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. Anyone interested in learning a bit more about intrinsic value should have a read of the Simply Wall St analysis model. We've discovered 2 warning signs about dormakaba Holding. View them for free. 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. 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) CHF212.0m CHF245.2m CHF260.0m CHF298.1m CHF310.3m CHF318.7m CHF325.2m CHF330.2m CHF334.2m CHF337.4m Growth Rate Estimate Source Analyst x4 Analyst x4 Analyst x4 Analyst x1 Analyst x1 Est @ 2.71% Est @ 2.02% Est @ 1.54% Est @ 1.21% Est @ 0.97% Present Value (CHF, Millions) Discounted @ 5.7% CHF201 CHF220 CHF220 CHF239 CHF235 CHF229 CHF221 CHF212 CHF203 CHF194 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = CHF2.2b 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 5.7%. Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = CHF337m× (1 + 0.4%) ÷ (5.7%– 0.4%) = CHF6.4b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= CHF6.4b÷ ( 1 + 5.7%)10= CHF3.7b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is CHF5.9b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of CHF735, the company appears quite good value at a 48% 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. 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 dormakaba 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 5.7%, which is based on a levered beta of 1.216. 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. See our latest analysis for dormakaba Holding Strength Earnings growth over the past year exceeded the industry. Debt is well covered by earnings and cashflows. Weakness Dividend is low compared to the top 25% of dividend payers in the Building market. Opportunity Annual earnings are forecast to grow faster than the Swiss market. Trading below our estimate of fair value by more than 20%. Threat Annual revenue is forecast to grow slower than the Swiss market. Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize 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 dormakaba Holding, we've put together three further aspects you should look at: Risks: We feel that you should assess the 2 warning signs for dormakaba Holding we've flagged before making an investment in the company. Future Earnings: How does DOKA'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
13-02-2025
- Business
- Yahoo
Despite the downward trend in earnings at dormakaba Holding (VTX:DOKA) the stock ascends 4.7%, bringing one-year gains to 56%
These days it's easy to simply buy an index fund, and your returns should (roughly) match the market. But investors can boost returns by picking market-beating companies to own shares in. To wit, the dormakaba Holding AG (VTX:DOKA) share price is 54% higher than it was a year ago, much better than the market return of around 11% (not including dividends) in the same period. That's a solid performance by our standards! However, the longer term returns haven't been so impressive, with the stock up just 30% in the last three years. After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals. Check out our latest analysis for dormakaba Holding There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). During the last year, dormakaba Holding actually saw its earnings per share drop 7.7%. Given the share price gain, we doubt the market is measuring progress with EPS. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics. We doubt the modest 1.2% dividend yield is doing much to support the share price. Revenue was pretty stable on last year, so deeper research might be needed to explain the share price rise. The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail). This free interactive report on dormakaba Holding's balance sheet strength is a great place to start, if you want to investigate the stock further. It's good to see that dormakaba Holding has rewarded shareholders with a total shareholder return of 56% in the last twelve months. And that does include the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 4% per year), it would seem that the stock's performance has improved in recent times. In the best case scenario, this may hint at some real business momentum, implying that now could be a great time to delve deeper. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 2 warning signs we've spotted with dormakaba Holding . Of course dormakaba Holding may not be the best stock to buy. So you may wish to see this free collection of growth stocks. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Swiss exchanges. 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.
