What is DECB.BR's Intrinsic value?

Deceuninck NV (DECB.BR) Intrinsic Value Analysis

Executive Summary

As of June 15, 2025, Deceuninck NV's estimated intrinsic value ranges from $0.90 to $4.73 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $4.73 +122.8%
Discounted Cash Flow (5Y) $4.38 +106.2%
Dividend Discount Model (Multi-Stage) $2.00 -6.0%
Dividend Discount Model (Stable) $0.90 -57.7%
Earnings Power Value $4.06 +90.8%

Is Deceuninck NV (DECB.BR) undervalued or overvalued?

With the current market price at $2.12, 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 Deceuninck NV'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 2.9% 3.4%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.98 1.03
Cost of equity 8.8% 11.1%
Cost of debt 4.1% 6.7%
Tax rate 19.2% 32.5%
Debt/Equity ratio 0.41 0.41
After-tax WACC 7.2% 9.2%

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: 8.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $827 (FY12-2024) to $1,057 (FY12-2034)
  • Net profit margin expansion from 2% to 3%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $4 $692M 66.8%
10-Year Growth $5 $741M 47.3%
5-Year EBITDA $5 $769M 70.1%
10-Year EBITDA $5 $794M 50.8%

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: 79.7%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.9%
  • Long-term growth rate: 0.5%
  • Fair value: $2.00 (-6.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.1% (Low) to 8.8% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $1 to $1
  • Selected fair value: $0.90 (-57.7% 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 $52M
Discount Rate (WACC) 9.2% - 7.2%
Enterprise Value $567M - $726M
Net Debt $85M
Equity Value $482M - $641M
Outstanding Shares 139M
Fair Value $3 - $5
Selected Fair Value $4.06

Key Financial Metrics

Metric Value
Market Capitalization $294M
Enterprise Value $380M
Trailing P/E 21.18
Forward P/E 10.72
Trailing EV/EBITDA 7.25
Current Dividend Yield 376.23%
Dividend Growth Rate (5Y) 196.67%
Debt-to-Equity Ratio 0.41

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% $1.42
Discounted Cash Flow (5Y) 25% $1.10
Dividend Discount Model (Multi-Stage) 20% $0.40
Dividend Discount Model (Stable) 15% $0.13
Earnings Power Value 10% $0.41
Weighted Average 100% $3.46

Investment Conclusion

Based on our comprehensive valuation analysis, Deceuninck NV's weighted average intrinsic value is $3.46, which is approximately 62.6% above the current market price of $2.12.

Key investment considerations:

  • Strong projected earnings growth (2% to 3% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 196.67%

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