| dc.description.abstract | The purpose of this master thesis is to find the intrinsic value of the Nordic IT company Tietoevry as of 02.03.2022. A share value is estimated and compared against the current market value. A recommended plan of action will be presented on this basis.
The thesis starts presenting the firm, giving insight into company's history, business area and organisational structure. Further, an industry description to get a better understanding of the industry is conducted. A method section follows next where an introduction to the different valuation techniques is given. In the section, it is argued and described why Fundamental analysis is the best technique getting the most accurate value estimation of Tietoevry. Also, why discounted cash flow and the residual income method is the best valuation methods to use in the valuation, where value estimate will be found using both the equity and firm value method.
The first step in the fundamental analysis, we used a strategic analysis to better understand Tietoevry’s current macro environment and current position in the market. After the strategic analysis, an accounting analysis is conducted to get a better overall picture of Tietoevry’s historical performance. The company’s balance sheet and income statement are reformulated to get insights into the company’s historical profitability, growth potential and risk. The findings in the strategic and accounting analysis will help to prepare a future financial statement which will be used to find a fair market price for Tietoevry.
The final value estimate was found to be 317 Norwegian kroner as of 02.03.2022. The share was trading at 233 Norwegian kroner at the time, indicating Tietoevry was trading below market value. Due to potential uncertainties and errors in the valuation, a sensitivity analysis was conducted to get more insights into the company upside potential and downside risk. The findings conclude that the company currently have limited downside risk and considerably more upside potential at its current market value. A buy recommendation is therefore recommended. | |