What is MAG.ST's Intrinsic value?

Magnolia Bostad AB (MAG.ST) Intrinsic Value Analysis

Executive Summary

As of June 12, 2025, Magnolia Bostad AB's estimated intrinsic value ranges from $84.32 to $164.60 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $118.00 +55.9%
Discounted Cash Flow (5Y) $84.32 +11.4%
Dividend Discount Model (Multi-Stage) $164.60 +117.4%
Dividend Discount Model (Stable) $153.82 +103.2%

Is Magnolia Bostad AB (MAG.ST) undervalued or overvalued?

With the current market price at $75.70, 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 Magnolia Bostad 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

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 0.6% 1.1%
Equity market risk premium 5.2% 6.2%
Adjusted beta 0.7 0.93
Cost of equity 4.8% 7.9%
Cost of debt 5.0% 5.0%
Tax rate 3.1% 10.7%
Debt/Equity ratio 0.7 0.7
After-tax WACC 4.8% 6.5%

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: 5.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2,358 (FY12-2020) to $2,119 (FY12-2030)
  • Net profit margin expansion from 29% to 25%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $84 $5,592M 83.6%
10-Year Growth $118 $6,866M 72.5%
5-Year EBITDA $3 $2,516M 63.6%
10-Year EBITDA $31 $3,585M 47.3%

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: 6.4%
  • Long-term growth rate: 2.0%
  • Fair value: $164.60 (117.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.9% (Low) to 4.8% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $52 to $256
  • Selected fair value: $153.82 (103.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $2863M
Enterprise Value $5266M
Trailing P/E 14.76
Forward P/E 7.48
Trailing EV/EBITDA 6.75
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 18.92%
Debt-to-Equity Ratio 0.70

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) 33% $35.40
Discounted Cash Flow (5Y) 28% $21.08
Dividend Discount Model (Multi-Stage) 22% $32.92
Dividend Discount Model (Stable) 17% $23.07
Weighted Average 100% $124.97

Investment Conclusion

Based on our comprehensive valuation analysis, Magnolia Bostad AB's weighted average intrinsic value is $124.97, which is approximately 65.1% above the current market price of $75.70.

Key investment considerations:

  • Strong projected earnings growth (29% to 25% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 18.92%

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