What is TOHN.SW's Intrinsic value?

Tornos Holding AG (TOHN.SW) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Tornos Holding AG's estimated intrinsic value ranges from $10.77 to $14.74 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $14.74 +187.8%
Discounted Cash Flow (5Y) $12.07 +135.8%
Dividend Discount Model (Multi-Stage) $14.72 +187.4%
Dividend Discount Model (Stable) $10.77 +110.4%

Is Tornos Holding AG (TOHN.SW) undervalued or overvalued?

With the current market price at $5.12, 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 Tornos Holding 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

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 1.0% 1.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.71 0.73
Cost of equity 4.6% 6.4%
Cost of debt 4.0% 34.9%
Tax rate 2.1% 3.5%
Debt/Equity ratio 0.05 0.05
After-tax WACC 4.6% 7.7%

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: 6.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $181 (FY12-2022) to $233 (FY12-2032)
  • Net profit margin expansion from 8% to 8%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $12 $239M 76.4%
10-Year Growth $15 $292M 61.4%
5-Year EBITDA $10 $197M 71.3%
10-Year EBITDA $12 $229M 50.8%

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: 91.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 5.5%
  • Long-term growth rate: 0.5%
  • Fair value: $14.72 (187.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 6.4% (Low) to 4.6% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $7 to $15
  • Selected fair value: $10.77 (110.4% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $102M
Enterprise Value $101M
Trailing P/E 8.56
Forward P/E 7.08
Trailing EV/EBITDA 7.85
Current Dividend Yield 1067.16%
Dividend Growth Rate (5Y) 14.04%
Debt-to-Equity Ratio 0.05

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% $4.42
Discounted Cash Flow (5Y) 28% $3.02
Dividend Discount Model (Multi-Stage) 22% $2.94
Dividend Discount Model (Stable) 17% $1.62
Weighted Average 100% $13.33

Investment Conclusion

Based on our comprehensive valuation analysis, Tornos Holding AG's weighted average intrinsic value is $13.33, which is approximately 160.4% above the current market price of $5.12.

Key investment considerations:

  • Strong projected earnings growth (8% to 8% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.05)
  • Historical dividend growth of 14.04%

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