What is ALLEI.ST's Intrinsic value?

Alleima AB (ALLEI.ST) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Alleima AB's estimated intrinsic value ranges from $58.20 to $106.66 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $58.76 -26.7%
Discounted Cash Flow (5Y) $58.20 -27.4%
Dividend Discount Model (Multi-Stage) $66.89 -16.5%
Dividend Discount Model (Stable) $106.66 +33.1%
Earnings Power Value $76.52 -4.5%

Is Alleima AB (ALLEI.ST) undervalued or overvalued?

With the current market price at $80.15, the stock appears to be moderately overvalued.

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 Alleima AB'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 2.5% 3.0%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.97 1.16
Cost of equity 7.5% 10.6%
Cost of debt 4.0% 4.5%
Tax rate 23.0% 23.7%
Debt/Equity ratio 0.02 0.02
After-tax WACC 7.4% 10.4%

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: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 8.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $19,691 (FY12-2024) to $26,822 (FY12-2034)
  • Net profit margin expansion from 6% to 6%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $58 $14,233M 76.4%
10-Year Growth $59 $14,375M 57.0%
5-Year EBITDA $58 $14,239M 76.4%
10-Year EBITDA $58 $14,195M 56.4%

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: 32.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.0%
  • Long-term growth rate: 3.0%
  • Fair value: $66.89 (-16.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.6% (Low) to 7.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $51 to $162
  • Selected fair value: $106.66 (33.1% 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 $1,623M
Discount Rate (WACC) 10.4% - 7.4%
Enterprise Value $15,582M - $22,079M
Net Debt $(368)M
Equity Value $15,950M - $22,447M
Outstanding Shares 251M
Fair Value $64 - $89
Selected Fair Value $76.52

Key Financial Metrics

Metric Value
Market Capitalization $20108M
Enterprise Value $19740M
Trailing P/E 12.86
Forward P/E 16.33
Trailing EV/EBITDA 6.20
Current Dividend Yield 259.18%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.02

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) 30% $17.63
Discounted Cash Flow (5Y) 25% $14.55
Dividend Discount Model (Multi-Stage) 20% $13.38
Dividend Discount Model (Stable) 15% $16.00
Earnings Power Value 10% $7.65
Weighted Average 100% $69.21

Investment Conclusion

Based on our comprehensive valuation analysis, Alleima AB's weighted average intrinsic value is $69.21, which is approximately 13.7% below the current market price of $80.15.

Key investment considerations:

  • Strong projected earnings growth (6% to 6% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.02)

Given these factors, we believe Alleima AB is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.