What is MDN.DE's Intrinsic value?

Medion AG (MDN.DE) Intrinsic Value Analysis

Executive Summary

As of June 10, 2025, Medion AG's estimated intrinsic value ranges from $3.36 to $61.11 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $47.29 +223.9%
Discounted Cash Flow (5Y) $37.19 +154.7%
Dividend Discount Model (Multi-Stage) $41.97 +187.5%
Dividend Discount Model (Stable) $61.11 +318.6%
Earnings Power Value $3.36 -77.0%

Is Medion AG (MDN.DE) undervalued or overvalued?

With the current market price at $14.60, 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 Medion AG'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 2.8% 3.3%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.35 0.44
Cost of equity 4.6% 6.5%
Cost of debt 4.0% 4.5%
Tax rate 29.1% 30.8%
Debt/Equity ratio 0.02 0.02
After-tax WACC 4.5% 6.4%

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: 5.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $748 (FY03-2024) to $1,421 (FY03-2034)
  • Net profit margin expansion from 2% to 7%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $37 $1,692M 93.0%
10-Year Growth $47 $2,181M 85.7%
5-Year EBITDA $12 $465M 74.4%
10-Year EBITDA $18 $746M 58.1%

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: 5.5%
  • Long-term growth rate: 3.4%
  • Fair value: $41.97 (187.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 6.5% (Low) to 4.6% (High)
  • Long-term growth rate: 2.5% (Low) to 4.3% (High)
  • Fair value range: $6 to $116
  • Selected fair value: $61.11 (318.6% 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 $3M
Discount Rate (WACC) 6.4% - 4.5%
Enterprise Value $44M - $62M
Net Debt $(109)M
Equity Value $153M - $172M
Outstanding Shares 48M
Fair Value $3 - $4
Selected Fair Value $3.36

Key Financial Metrics

Metric Value
Market Capitalization $707M
Enterprise Value $598M
Trailing P/E 39.64
Forward P/E 26.89
Trailing EV/EBITDA 5.65
Current Dividend Yield 231.86%
Dividend Growth Rate (5Y) 12.68%
Debt-to-Equity Ratio 0.02

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% $14.19
Discounted Cash Flow (5Y) 25% $9.30
Dividend Discount Model (Multi-Stage) 20% $8.39
Dividend Discount Model (Stable) 15% $9.17
Earnings Power Value 10% $0.34
Weighted Average 100% $41.38

Investment Conclusion

Based on our comprehensive valuation analysis, Medion AG's weighted average intrinsic value is $41.38, which is approximately 183.4% above the current market price of $14.60.

Key investment considerations:

  • Strong projected earnings growth (2% to 7% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.02)
  • Historical dividend growth of 12.68%

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