The 2 Stage Free Cash Flow to Equity model has determined that SMA Solar Technology AG is undervalued by 25% based on its current share price of €20.84, with a fair value estimate of €27.89. This estimate is 55% higher than the analyst price target for the company. The Discounted Cash Flow model used in the valuation process takes into account future cash flows and discounts them to their present value.
The two-stage DCF model considers two growth stages: a higher growth period followed by a steady growth period. Estimates for the company’s future cash flows over the next ten years, along with a terminal value, are used to determine the equity value. The DCF calculation is based on assumptions such as discount rate and cash flows, and may not provide a foolproof valuation.
Investors should consider various factors beyond the DCF model when evaluating a company, including risks, future earnings growth, and alternative investment opportunities. Simply Wall St updates its DCF calculations regularly for German stocks, providing investors with an unbiased analysis based on historical data and analyst forecasts. Readers are advised to conduct their own research and not solely rely on the information provided in the article.
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