| dc.description.abstract | The objective of this thesis is to determine the fair stock price value of Kongsberg Gruppen ASA as per May 30th, 2023.
The research commences with an introductory section that provides an overview of the company’s industry and history, offering a foundational understanding before delving into deeper analysis. The qualitative aspects of the firm are examined through a strategic analysis encompassing Porter’s five forces & PESTLE analysis for external conditions, followed by a VRIO analysis focusing on internal resources. These findings are consolidated in a SWOT table, summarizing the key points. Additionally, the substantial and quantitative aspects are investigated through balance sheet analysis, evaluating key financial metrics of Kongsberg Gruppen ASA. These factors serve as the basis for the subsequent valuation process.
Various valuation methods are utilized with the common objective of determining the fair value. The free cash flow to the firm model considers future cash flows and simultaneously serves as a basis and transition for our fundamental valuation. These future values are discounted to their present value using a cost of capital and equity. Furthermore, a relative valuation model is utilized, comparing different multiples, and provide support for the fundamental valuation. In the next part of the thesis, a sensitivity analysis is conducted to assess the impact of changes in variables on the estimated share value. Residual and relative valuation were both performed to compare estimates.
Weighted average cost of capital (WACC) was utilized to find the required rate of return on capital. The required return on capital was 6,79 percent. Then discount future cash flows from year 2023 to 2028. Estimating a terminal growth equal to 1,75 percent, of which year 2028 served as basis for the terminal year.
As of 30.05.2023, the market value per share is NOK 448,80. After weighing the results from all selected valuation methods, the valuation concludes with a per-share value of NOK 450,73 indicating that the company is slightly undervalued. Therefore, a hold recommendation is advised, given the stock price (30.05.2023) is only marginal lower than calculated value. | |
