What is GRNG.ST's Intrinsic value?

Granges AB (GRNG.ST) Intrinsic Value Analysis

Executive Summary

As of June 12, 2025, Granges AB's estimated intrinsic value ranges from $153.72 to $596.64 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $246.38 +93.8%
Discounted Cash Flow (5Y) $178.14 +40.2%
Dividend Discount Model (Multi-Stage) $172.00 +35.3%
Dividend Discount Model (Stable) $153.72 +20.9%
Earnings Power Value $596.64 +369.4%

Is Granges AB (GRNG.ST) undervalued or overvalued?

With the current market price at $127.10, 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 Granges 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 0.6 0.67
Cost of equity 5.6% 7.6%
Cost of debt 4.0% 6.0%
Tax rate 19.9% 20.0%
Debt/Equity ratio 0.4 0.4
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 $23,506 (FY12-2024) to $43,323 (FY12-2034)
  • Net profit margin expansion from 4% to 4%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $178 $23,425M 79.1%
10-Year Growth $246 $30,680M 67.1%
5-Year EBITDA $165 $22,064M 77.8%
10-Year EBITDA $211 $26,959M 62.5%

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: 6.6%
  • Long-term growth rate: 1.0%
  • Fair value: $172.00 (35.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.6% (Low) to 5.6% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $95 to $213
  • Selected fair value: $153.72 (20.9% 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 $3,877M
Discount Rate (WACC) 6.8% - 4.9%
Enterprise Value $56,832M - $78,999M
Net Debt $4,487M
Equity Value $52,345M - $74,512M
Outstanding Shares 106M
Fair Value $492 - $701
Selected Fair Value $596.64

Key Financial Metrics

Metric Value
Market Capitalization $13512M
Enterprise Value $17999M
Trailing P/E 13.16
Forward P/E 11.69
Trailing EV/EBITDA 6.45
Current Dividend Yield 235.35%
Dividend Growth Rate (5Y) 1.10%
Debt-to-Equity Ratio 0.40

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% $73.91
Discounted Cash Flow (5Y) 25% $44.53
Dividend Discount Model (Multi-Stage) 20% $34.40
Dividend Discount Model (Stable) 15% $23.06
Earnings Power Value 10% $59.66
Weighted Average 100% $235.57

Investment Conclusion

Based on our comprehensive valuation analysis, Granges AB's weighted average intrinsic value is $235.57, which is approximately 85.3% above the current market price of $127.10.

Key investment considerations:

  • Strong projected earnings growth (4% to 4% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 1.10%

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