What is SANT.DE's Intrinsic value?

S&T AG (SANT.DE) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, S&T AG's estimated intrinsic value ranges from $13.43 to $26.39 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $26.39 +88.0%
Discounted Cash Flow (5Y) $13.43 -4.3%
Dividend Discount Model (Multi-Stage) $18.07 +28.7%
Dividend Discount Model (Stable) $18.23 +29.8%
Earnings Power Value $25.62 +82.5%

Is S&T AG (SANT.DE) undervalued or overvalued?

With the current market price at $14.04, 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 S&T 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 2.0% 2.5%
Equity market risk premium 4.7% 5.7%
Adjusted beta 1.05 1.17
Cost of equity 7.0% 9.7%
Cost of debt 4.0% 4.5%
Tax rate 9.9% 11.6%
Debt/Equity ratio 0.42 0.42
After-tax WACC 6.0% 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: 7.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,342 (FY12-2021) to $3,327 (FY12-2031)
  • Net profit margin expansion from 4% to 4%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $13 $1,028M 85.4%
10-Year Growth $26 $1,853M 77.5%
5-Year EBITDA $12 $963M 84.4%
10-Year EBITDA $17 $1,254M 66.7%

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: 8.3%
  • Long-term growth rate: 3.5%
  • Fair value: $18.07 (28.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.7% (Low) to 7.0% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $8 to $29
  • Selected fair value: $18.23 (29.8% 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 $124M
Discount Rate (WACC) 8.0% - 6.0%
Enterprise Value $1,542M - $2,066M
Net Debt $173M
Equity Value $1,368M - $1,893M
Outstanding Shares 64M
Fair Value $22 - $30
Selected Fair Value $25.62

Key Financial Metrics

Metric Value
Market Capitalization $893M
Enterprise Value $1067M
Trailing P/E 17.96
Forward P/E 15.67
Trailing EV/EBITDA 7.45
Current Dividend Yield 216.58%
Dividend Growth Rate (5Y) 41.36%
Debt-to-Equity Ratio 0.42

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% $7.92
Discounted Cash Flow (5Y) 25% $3.36
Dividend Discount Model (Multi-Stage) 20% $3.61
Dividend Discount Model (Stable) 15% $2.73
Earnings Power Value 10% $2.56
Weighted Average 100% $20.19

Investment Conclusion

Based on our comprehensive valuation analysis, S&T AG's weighted average intrinsic value is $20.19, which is approximately 43.8% above the current market price of $14.04.

Key investment considerations:

  • Strong projected earnings growth (4% to 4% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 41.36%

Given these factors, we believe S&T AG is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.