What is ALGEN.PA's Intrinsic value?

Genoway SA (ALGEN.PA) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Genoway SA's estimated intrinsic value ranges from $0.66 to $15.11 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $10.30 +216.9%
Dividend Discount Model (Multi-Stage) $11.55 +255.4%
Dividend Discount Model (Stable) $15.11 +365.1%
Earnings Power Value $0.66 -79.7%

Is Genoway SA (ALGEN.PA) undervalued or overvalued?

With the current market price at $3.25, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Genoway SA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.35 0.47
Cost of equity 5.1% 7.2%
Cost of debt 5.0% 5.0%
Tax rate 17.0% 23.1%
Debt/Equity ratio 0.24 0.24
After-tax WACC 4.9% 6.5%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 5.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $20 (FY12-2023) to $67 (FY12-2033)
  • Net profit margin expansion from 8% to 9%
  • Capital expenditures maintained at approximately 18% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(11)M 72.1%
10-Year Growth $10 $99M 94.9%
5-Year EBITDA $6 $55M 105.8%
10-Year EBITDA $8 $81M 93.8%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.1%
  • Long-term growth rate: 3.8%
  • Fair value: $11.55 (255.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.2% (Low) to 5.1% (High)
  • Long-term growth rate: 3.0% (Low) to 4.6% (High)
  • Fair value range: $2 to $28
  • Selected fair value: $15.11 (365.1% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $0M
Discount Rate (WACC) 6.5% - 4.9%
Enterprise Value $7M - $9M
Net Debt $2M
Equity Value $5M - $7M
Outstanding Shares 9M
Fair Value $1 - $1
Selected Fair Value $0.66

Key Financial Metrics

Metric Value
Market Capitalization $31M
Enterprise Value $32M
Trailing P/E 24.53
Forward P/E 15.95
Trailing EV/EBITDA 7.75
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.24

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 40% $3.09
Dividend Discount Model (Multi-Stage) 27% $2.31
Dividend Discount Model (Stable) 20% $2.27
Earnings Power Value 13% $0.07
Weighted Average 100% $10.31

Investment Conclusion

Based on our comprehensive valuation analysis, Genoway SA's weighted average intrinsic value is $10.31, which is approximately 217.3% above the current market price of $3.25.

Key investment considerations:

  • Strong projected earnings growth (8% to 9% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.24)

Given these factors, we believe Genoway SA is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.