What is ARTE.PA's Intrinsic value?

Artea SA (ARTE.PA) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Artea SA's estimated intrinsic value ranges from $9.27 to $44.77 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $44.77 +299.8%
Earnings Power Value $9.27 -17.3%

Is Artea SA (ARTE.PA) undervalued or overvalued?

With the current market price at $11.20, 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 Artea SA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 0.64 1.28
Cost of equity 6.7% 12.7%
Cost of debt 4.0% 7.0%
Tax rate 11.6% 17.5%
Debt/Equity ratio 3.75 3.75
After-tax WACC 4.2% 7.2%

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: 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 $111 (FY12-2023) to $356 (FY12-2033)
  • Net profit margin expansion from -25% to -19%
  • Capital expenditures maintained at approximately 33% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(20)M 20.3%
10-Year Growth $45 $416M 90.2%
5-Year EBITDA $14 $260M 109.1%
10-Year EBITDA $50 $444M 90.8%

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 $13M
Discount Rate (WACC) 7.2% - 4.2%
Enterprise Value $175M - $301M
Net Debt $192M
Equity Value $(17)M - $109M
Outstanding Shares 5M
Fair Value $(3) - $22
Selected Fair Value $9.27

Key Financial Metrics

Metric Value
Market Capitalization $56M
Enterprise Value $248M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.45
Current Dividend Yield 309.43%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 3.75

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) 75% $13.43
Earnings Power Value 25% $0.93
Weighted Average 100% $35.90

Investment Conclusion

Based on our comprehensive valuation analysis, Artea SA's weighted average intrinsic value is $35.90, which is approximately 220.5% above the current market price of $11.20.

Key investment considerations:

  • Strong projected earnings growth (-25% to -19% margin)
  • Consistent cash flow generation

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