What is ETTE.HE's Intrinsic value?

Etteplan Oyj (ETTE.HE) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Etteplan Oyj's estimated intrinsic value ranges from $11.47 to $50.67 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $17.05 +60.1%
Discounted Cash Flow (5Y) $14.73 +38.3%
Dividend Discount Model (Multi-Stage) $11.47 +7.7%
Dividend Discount Model (Stable) $16.46 +54.5%
Earnings Power Value $50.67 +375.8%

Is Etteplan Oyj (ETTE.HE) undervalued or overvalued?

With the current market price at $10.65, 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 Etteplan Oyj'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 2.7% 3.2%
Equity market risk premium 5.7% 6.7%
Adjusted beta 0.42 0.51
Cost of equity 5.1% 7.2%
Cost of debt 4.0% 7.0%
Tax rate 19.2% 19.6%
Debt/Equity ratio 0.36 0.36
After-tax WACC 4.6% 6.8%

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: 5.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $362 (FY12-2024) to $487 (FY12-2034)
  • Net profit margin expansion from 3% to 3%
  • Capital expenditures maintained at approximately 1% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $15 $459M 87.6%
10-Year Growth $17 $518M 77.6%
5-Year EBITDA $4 $196M 71.0%
10-Year EBITDA $6 $238M 51.2%

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: 6.1%
  • Long-term growth rate: 3.0%
  • Fair value: $11.47 (7.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.2% (Low) to 5.1% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $5 to $28
  • Selected fair value: $16.46 (54.5% 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) 6.8% - 4.6%
Enterprise Value $1,111M - $1,629M
Net Debt $85M
Equity Value $1,026M - $1,544M
Outstanding Shares 25M
Fair Value $40 - $61
Selected Fair Value $50.67

Key Financial Metrics

Metric Value
Market Capitalization $270M
Enterprise Value $355M
Trailing P/E 30.99
Forward P/E 25.22
Trailing EV/EBITDA 7.85
Current Dividend Yield 276.59%
Dividend Growth Rate (5Y) -3.50%
Debt-to-Equity Ratio 0.36

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% $5.12
Discounted Cash Flow (5Y) 25% $3.68
Dividend Discount Model (Multi-Stage) 20% $2.29
Dividend Discount Model (Stable) 15% $2.47
Earnings Power Value 10% $5.07
Weighted Average 100% $18.63

Investment Conclusion

Based on our comprehensive valuation analysis, Etteplan Oyj's weighted average intrinsic value is $18.63, which is approximately 74.9% above the current market price of $10.65.

Key investment considerations:

  • Strong projected earnings growth (3% to 3% margin)
  • Consistent cash flow generation

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