What is FABG.ST's Intrinsic value?

Fabege AB (FABG.ST) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Fabege AB's estimated intrinsic value ranges from $11.24 to $123.85 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $123.85 +49.2%
Discounted Cash Flow (5Y) $90.33 +8.8%
Dividend Discount Model (Stable) $18.76 -77.4%
Earnings Power Value $11.24 -86.5%

Is Fabege AB (FABG.ST) undervalued or overvalued?

With the current market price at $83.00, the stock appears to be fairly valued.

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 Fabege AB'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 2.5% 3.0%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.49 0.52
Cost of equity 5.0% 6.7%
Cost of debt 4.0% 6.1%
Tax rate 20.5% 22.7%
Debt/Equity ratio 1.31 1.31
After-tax WACC 4.0% 5.6%

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: 4.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $3,671 (FY12-2024) to $5,324 (FY12-2034)
  • Net profit margin expansion from -6% to -2%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $90 $64,826M 83.9%
10-Year Growth $124 $75,915M 72.0%
5-Year EBITDA $57 $53,715M 80.6%
10-Year EBITDA $90 $64,711M 67.2%

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: 169.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 5.8%
  • Long-term growth rate: 1.0%
  • Fair value: $-4.52 (-105.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 6.7% (Low) to 5.0% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $12 to $26
  • Selected fair value: $18.76 (-77.4% 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 $1,792M
Discount Rate (WACC) 5.6% - 4.0%
Enterprise Value $32,186M - $45,144M
Net Debt $34,947M
Equity Value $(2,761)M - $10,197M
Outstanding Shares 331M
Fair Value $(8) - $31
Selected Fair Value $11.24

Key Financial Metrics

Metric Value
Market Capitalization $27455M
Enterprise Value $62402M
Trailing P/E 81.95
Forward P/E 81.95
Trailing EV/EBITDA 21.50
Current Dividend Yield 207.66%
Dividend Growth Rate (5Y) -12.59%
Debt-to-Equity Ratio 1.31

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) 37% $37.16
Discounted Cash Flow (5Y) 31% $22.58
Dividend Discount Model (Stable) 19% $2.81
Earnings Power Value 12% $1.12
Weighted Average 100% $79.59

Investment Conclusion

Based on our comprehensive valuation analysis, Fabege AB's weighted average intrinsic value is $79.59, which is approximately 4.1% below the current market price of $83.00.

Key investment considerations:

  • Strong projected earnings growth (-6% to -2% margin)
  • Consistent cash flow generation

Given these factors, we believe Fabege AB is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.