What is EMMN.SW's Intrinsic value?

Emmi AG (EMMN.SW) Intrinsic Value Analysis

Executive Summary

As of June 6, 2025, Emmi AG's estimated intrinsic value ranges from $1190.16 to $1448.76 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1448.76 +75.4%
Discounted Cash Flow (5Y) $1190.16 +44.1%
Dividend Discount Model (Multi-Stage) $1251.08 +51.5%
Dividend Discount Model (Stable) $1414.22 +71.2%
Earnings Power Value $1242.64 +50.4%

Is Emmi AG (EMMN.SW) undervalued or overvalued?

With the current market price at $826.00, 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 Emmi AG'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 1.0% 1.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.42 0.63
Cost of equity 3.1% 5.8%
Cost of debt 4.0% 4.5%
Tax rate 15.9% 16.5%
Debt/Equity ratio 0.3 0.3
After-tax WACC 3.2% 5.3%

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: 4.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $4,349 (FY12-2024) to $7,229 (FY12-2034)
  • Net profit margin expansion from 5% to 5%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $1,190 $7,394M 85.3%
10-Year Growth $1,449 $8,778M 75.0%
5-Year EBITDA $526 $3,841M 71.6%
10-Year EBITDA $763 $5,109M 57.0%

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: 37.6%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 4.5%
  • Long-term growth rate: 1.0%
  • Fair value: $1251.08 (51.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 5.8% (Low) to 3.1% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $544 to $2,285
  • Selected fair value: $1414.22 (71.2% 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 $306M
Discount Rate (WACC) 5.3% - 3.2%
Enterprise Value $5,731M - $9,618M
Net Debt $1,027M
Equity Value $4,705M - $8,591M
Outstanding Shares 5M
Fair Value $879 - $1,606
Selected Fair Value $1242.64

Key Financial Metrics

Metric Value
Market Capitalization $4419M
Enterprise Value $5446M
Trailing P/E 20.06
Forward P/E 18.02
Trailing EV/EBITDA 6.25
Current Dividend Yield 185.40%
Dividend Growth Rate (5Y) 4.94%
Debt-to-Equity Ratio 0.30

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% $434.63
Discounted Cash Flow (5Y) 25% $297.54
Dividend Discount Model (Multi-Stage) 20% $250.22
Dividend Discount Model (Stable) 15% $212.13
Earnings Power Value 10% $124.26
Weighted Average 100% $1318.78

Investment Conclusion

Based on our comprehensive valuation analysis, Emmi AG's weighted average intrinsic value is $1318.78, which is approximately 59.7% above the current market price of $826.00.

Key investment considerations:

  • Strong projected earnings growth (5% to 5% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.30)
  • Historical dividend growth of 4.94%

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