What is ALPRO.PA's Intrinsic value?

Prodware SA (ALPRO.PA) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Prodware SA's estimated intrinsic value ranges from $18.35 to $98.58 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $51.24 +370.1%
Discounted Cash Flow (5Y) $26.79 +145.8%
Dividend Discount Model (Multi-Stage) $18.35 +68.4%
Earnings Power Value $98.58 +804.4%

Is Prodware SA (ALPRO.PA) undervalued or overvalued?

With the current market price at $10.90, 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 Prodware 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 1.61 1.91
Cost of equity 12.4% 17.0%
Cost of debt 5.2% 5.6%
Tax rate 12.4% 18.3%
Debt/Equity ratio 2.18 2.18
After-tax WACC 7.0% 8.5%

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: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $381 (FY12-2023) to $632 (FY12-2033)
  • Net profit margin expansion from -6% to 6%
  • Capital expenditures maintained at approximately 19% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $27 $423M 74.2%
10-Year Growth $51 $610M 58.3%
5-Year EBITDA $89 $900M 87.9%
10-Year EBITDA $101 $987M 74.3%

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: 14.7%
  • Long-term growth rate: 0.5%
  • Fair value: $18.35 (68.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 17.0% (Low) to 12.4% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $(4) to $(8)
  • Selected fair value: $-5.77 (-153.0% 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 $75M
Discount Rate (WACC) 8.5% - 7.0%
Enterprise Value $880M - $1,064M
Net Debt $218M
Equity Value $662M - $846M
Outstanding Shares 8M
Fair Value $87 - $111
Selected Fair Value $98.58

Key Financial Metrics

Metric Value
Market Capitalization $83M
Enterprise Value $301M
Trailing P/E 0.00
Forward P/E 3.16
Trailing EV/EBITDA 8.60
Current Dividend Yield 36.30%
Dividend Growth Rate (5Y) 5.62%
Debt-to-Equity Ratio 2.18

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) 35% $15.37
Discounted Cash Flow (5Y) 29% $6.70
Dividend Discount Model (Multi-Stage) 24% $3.67
Earnings Power Value 12% $9.86
Weighted Average 100% $41.88

Investment Conclusion

Based on our comprehensive valuation analysis, Prodware SA's weighted average intrinsic value is $41.88, which is approximately 284.2% above the current market price of $10.90.

Key investment considerations:

  • Strong projected earnings growth (-6% to 6% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 5.62%

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