What is LUKN.SW's Intrinsic value?

Luzerner Kantonalbank AG (LUKN.SW) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Luzerner Kantonalbank AG's estimated intrinsic value ranges from $45.52 to $58.44 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $45.52 -36.5%
Dividend Discount Model (Stable) $58.44 -18.5%

Is Luzerner Kantonalbank AG (LUKN.SW) undervalued or overvalued?

With the current market price at $71.70, the stock appears to be significantly 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 Luzerner Kantonalbank AG's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 1.1% 1.6%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.93 1.42
Cost of equity 5.5% 10.3%
Cost of debt 5.0% 5.0%
Tax rate 14.2% 14.3%
Debt/Equity ratio 4.67 4.67
After-tax WACC 4.5% 5.3%

Valuation Methods

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: 7.9%
  • Long-term growth rate: 0.5%
  • Fair value: $45.52 (-36.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.3% (Low) to 5.5% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $174 to $509
  • Selected fair value: $58.44 (-18.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $3555M
Enterprise Value $3555M
Trailing P/E 0.00
Forward P/E 15.92
Trailing EV/EBITDA 0.00
Current Dividend Yield 304.14%
Dividend Growth Rate (5Y) 0.33%
Debt-to-Equity Ratio 4.67

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
Dividend Discount Model (Multi-Stage) 57% $9.10
Dividend Discount Model (Stable) 43% $8.77
Weighted Average 100% $51.06

Investment Conclusion

Based on our comprehensive valuation analysis, Luzerner Kantonalbank AG's weighted average intrinsic value is $51.06, which is approximately 28.8% below the current market price of $71.70.

Key investment considerations:

  • Historical dividend growth of 0.33%

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