What is FBEL.PA's Intrinsic value?

BEL SA (FBEL.PA) Intrinsic Value Analysis

Executive Summary

As of July 18, 2025, BEL SA's estimated intrinsic value ranges from $334.45 to $1378.02 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $778.67 +41.6%
Discounted Cash Flow (5Y) $776.76 +41.2%
Dividend Discount Model (Multi-Stage) $468.06 -14.9%
Dividend Discount Model (Stable) $1378.02 +150.5%
Earnings Power Value $334.45 -39.2%

Is BEL SA (FBEL.PA) undervalued or overvalued?

With the current market price at $550.00, 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 BEL SA'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 2.6% 3.1%
Equity market risk premium 5.2% 6.2%
Adjusted beta 0.56 0.7
Cost of equity 5.5% 7.9%
Cost of debt 4.0% 4.5%
Tax rate 25.7% 28.5%
Debt/Equity ratio 0.31 0.31
After-tax WACC 4.9% 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: 5.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $3,456 (FY12-2020) to $4,229 (FY12-2030)
  • Net profit margin expansion from 4% to 5%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $777 $5,522M 87.7%
10-Year Growth $779 $5,535M 75.9%
5-Year EBITDA $347 $2,603M 73.8%
10-Year EBITDA $406 $3,006M 55.6%

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: 6.7%
  • Long-term growth rate: 3.0%
  • Fair value: $468.06 (-14.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.9% (Low) to 5.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $456 to $2,300
  • Selected fair value: $1378.02 (150.5% 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 $144M
Discount Rate (WACC) 6.8% - 4.9%
Enterprise Value $2,109M - $2,929M
Net Debt $248M
Equity Value $1,861M - $2,680M
Outstanding Shares 7M
Fair Value $274 - $395
Selected Fair Value $334.45

Key Financial Metrics

Metric Value
Market Capitalization $3734M
Enterprise Value $3982M
Trailing P/E 14.84
Forward P/E 24.39
Trailing EV/EBITDA 6.20
Current Dividend Yield 76.30%
Dividend Growth Rate (5Y) -20.30%
Debt-to-Equity Ratio 0.31

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) 30% $233.60
Discounted Cash Flow (5Y) 25% $194.19
Dividend Discount Model (Multi-Stage) 20% $93.61
Dividend Discount Model (Stable) 15% $206.70
Earnings Power Value 10% $33.44
Weighted Average 100% $761.55

Investment Conclusion

Based on our comprehensive valuation analysis, BEL SA's intrinsic value is $761.55, which is approximately 38.5% above the current market price of $550.00.

Key investment considerations:

  • Strong projected earnings growth (4% to 5% margin)
  • Consistent cash flow generation

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