What is ALUMS.PA's Intrinsic value?

Umanis SA (ALUMS.PA) Intrinsic Value Analysis

Executive Summary

As of June 22, 2025, Umanis SA's estimated intrinsic value ranges from $15.15 to $29.53 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $29.53 +72.2%
Discounted Cash Flow (5Y) $23.41 +36.5%
Dividend Discount Model (Multi-Stage) $15.15 -11.6%
Dividend Discount Model (Stable) $18.81 +9.7%
Earnings Power Value $15.88 -7.4%

Is Umanis SA (ALUMS.PA) undervalued or overvalued?

With the current market price at $17.15, 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 Umanis 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 0.61 0.77
Cost of equity 6.6% 9.2%
Cost of debt 4.0% 4.5%
Tax rate 20.5% 22.7%
Debt/Equity ratio 0.21 0.21
After-tax WACC 6.0% 8.2%

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: 7.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $246 (FY12-2021) to $515 (FY12-2031)
  • Net profit margin expansion from 5% to 6%
  • Capital expenditures maintained at approximately 1% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $23 $469M 83.3%
10-Year Growth $30 $582M 72.7%
5-Year EBITDA $11 $243M 67.8%
10-Year EBITDA $16 $334M 52.5%

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: 7.9%
  • Long-term growth rate: 3.5%
  • Fair value: $15.15 (-11.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.2% (Low) to 6.6% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $7 to $30
  • Selected fair value: $18.81 (9.7% 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 $23M
Discount Rate (WACC) 8.2% - 6.0%
Enterprise Value $277M - $382M
Net Debt $35M
Equity Value $241M - $346M
Outstanding Shares 19M
Fair Value $13 - $19
Selected Fair Value $15.88

Key Financial Metrics

Metric Value
Market Capitalization $317M
Enterprise Value $353M
Trailing P/E 24.70
Forward P/E 21.21
Trailing EV/EBITDA 8.30
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.21

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% $8.86
Discounted Cash Flow (5Y) 25% $5.85
Dividend Discount Model (Multi-Stage) 20% $3.03
Dividend Discount Model (Stable) 15% $2.82
Earnings Power Value 10% $1.59
Weighted Average 100% $22.15

Investment Conclusion

Based on our comprehensive valuation analysis, Umanis SA's weighted average intrinsic value is $22.15, which is approximately 29.2% above the current market price of $17.15.

Key investment considerations:

  • Strong projected earnings growth (5% to 6% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.21)

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