What is KER.PA's Intrinsic value?

Kering SA (KER.PA) Intrinsic Value Analysis

Executive Summary

As of April 24, 2026, Kering SA's estimated intrinsic value ranges from $14.35 to $782.55 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $142.14 -40.3%
Discounted Cash Flow (5Y) $158.93 -33.3%
Dividend Discount Model (Multi-Stage) $175.21 -26.4%
Dividend Discount Model (Stable) $14.35 -94.0%
Earnings Power Value $782.55 +228.6%

Is Kering SA (KER.PA) undervalued or overvalued?

With the current market price at $238.15, the stock appears to be moderately overvalued.

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 Kering 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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.65 0.85
Cost of equity 6.8% 9.8%
Cost of debt 4.0% 6.6%
Tax rate 28.0% 28.5%
Debt/Equity ratio 0.56 0.56
After-tax WACC 5.4% 8.0%

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: 6.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $14,675 (FY12-2025) to $19,466 (FY12-2035)
  • Net profit margin expansion from 1% to 4%
  • Capital expenditures maintained at approximately 10% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $159 $33,866M 84.0%
10-Year Growth $142 $31,794M 70.8%
5-Year EBITDA $44 $19,690M 72.4%
10-Year EBITDA $57 $21,308M 56.4%

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: 1022.2%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.3%
  • Long-term growth rate: 3.5%
  • Fair value: $175.21 (-26.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.8% (Low) to 6.8% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $6 to $23
  • Selected fair value: $14.35 (-94.0% 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 $7,119M
Discount Rate (WACC) 8.0% - 5.4%
Enterprise Value $89,126M - $132,541M
Net Debt $14,251M
Equity Value $74,875M - $118,290M
Outstanding Shares 123M
Fair Value $607 - $958
Selected Fair Value $782.55

Key Financial Metrics

Metric Value
Market Capitalization $29392M
Enterprise Value $43643M
Trailing P/E 408.23
Forward P/E 73.20
Trailing EV/EBITDA 6.35
Current Dividend Yield 224.82%
Dividend Growth Rate (5Y) -7.34%
Debt-to-Equity Ratio 0.56

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% $42.64
Discounted Cash Flow (5Y) 25% $39.73
Dividend Discount Model (Multi-Stage) 20% $35.04
Dividend Discount Model (Stable) 15% $2.15
Earnings Power Value 10% $78.26
Weighted Average 100% $197.82

Investment Conclusion

Based on our comprehensive valuation analysis, Kering SA's intrinsic value is $197.82, which is approximately 16.9% below the current market price of $238.15.

Key investment considerations:

  • Strong projected earnings growth (1% to 4% margin)
  • Consistent cash flow generation

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