The purpose of this paper has been to document and discuss the value of ThyssenKrupp AG corporate according to figures from the annual report of the fiscal year 2014/2015 and popular financial websites using three methods DCF Method (WACC), DCF Method (Equity) and Multiples Method to come out with a fair value of the company. This value represents the price at which the holders of the company can sell or the buyers can buy it.
The valuation results will be compared to the Peer Group Companies in order to figure out whether the Company is overvalued or undervalued. This paper also discusses the Advantages and the Disadvantages of each method where one method is not sufficient to give a fair value of the company.
Business valuation is a process aimed at estimating the fair economic value of a business by analysts or investors to determine the price at which the owner can sell or the investors can buy a specific business. Valuation is also used to determine the share´s value by the investors in order to decide whether to buy or sell, to take strategic decisions by the owners regarding existence of a business to sell, merge, milk or buy another business, and to measure the company´s policies and strategies impact on value creation and destruction.
The complication in valuing a business comes from the variety of methods such as DCF Method (WACC), DCF Method (Equity) and which are not created equal and thus, they come out with different values which measure different components of capital structure. DCF methods are based of forecasting date for years forward and that requires lots of predictions and assumptions of the business performance in the future so that any change will lead to different company´s value.
But in the other side, DCF methods are the most important and powerful used by professionals and investors over the world and employed for a wide range of tasks. While the Multiples are based on the comparison with other similar companies in order to determine whether the company or the share overvalued or undervalued.
Table of Contents
1. Introduction
1.2. Scope of Work
2. ThyssenKrupp
2.1. History and Overview
2.2. Financial Situation
2.3. Peer Group Companies
3. Valuation Methods
3.1. Valuing the Company via DCF-Entity
3.2. Valuing the Company via DCF-Equity
3.3. Valuing the Company via Multiples
4. Critical Assessment
5. Outlook and Conclusion
Objectives and Topics
The primary objective of this paper is to determine the fair economic value of ThyssenKrupp AG by applying three distinct valuation methodologies: DCF-Entity (WACC), DCF-Equity, and the Multiples Method. By synthesizing financial data from the 2014/2015 annual report and current market information, the study aims to assess whether the company's share is currently overvalued or undervalued relative to its peer group.
- Application of Discounted Cash Flow (DCF) methods to estimate intrinsic corporate value.
- Comparative analysis using market-based multiples (EV/EBITDA, EV/S, P/E, P/S).
- Integration of financial performance metrics from the fiscal year 2014/2015.
- Benchmarking against a defined peer group of international steel and industrial companies.
- Evaluation of methodological limitations and sensitivity in corporate valuation.
Extract from the Book
1.1. Description of Valuating a Corporate and Complication
Business valuation is a process aimed at estimating the fair economic value of a business by analysts or investors to determine the price at which the owner can sell or the investors can buy a specific business (Wolf R. et al, 2015: 163). Valuation is also used to determine the share´s value by the investors in order to decide whether to buy or sell, to take strategic decisions by the owners regarding existence of a business to sell, merge, milk or buy another business, and to measure the company´s policies and strategies impact on value creation and destruction (Fernandez P., 2013: 3). The complication in valuing a business comes from the variety of methods such as DCF Method (WACC), DCF Method (Equity) and which are not created equal and thus, they come out with different values which measure different components of capital structure. DCF methods are based of forecasting date for years forward and that requires lots of predictions and assumptions of the business performance in the future so that any change will lead to different company´s value (Steiger F., 2008: 1). But in the other side, DCF methods are the most important and powerful used by professionals and investors over the world and employed for a wide range of tasks (Luehrman T. A., 1998: 51). While the Multiples are based on the comparison with other similar companies in order to determine whether the company or the share overvalued or undervalued.
Summary of Chapters
1. Introduction: This chapter defines the purpose of business valuation and outlines the scope of the study regarding ThyssenKrupp AG.
2. ThyssenKrupp: This section provides a historical overview of the corporation and analyzes its financial situation for the fiscal year 2014/2015.
3. Valuation Methods: This core chapter details the application of DCF-Entity, DCF-Equity, and Multiples methods to calculate the company's value.
4. Critical Assessment: This chapter examines the limitations of the chosen valuation models, focusing on assumptions and sensitivity to input parameters.
5. Outlook and Conclusion: The final section summarizes the results of the valuation and provides a concluding perspective on the company's future performance.
Keywords
Corporate Valuation, ThyssenKrupp, DCF, WACC, FCF, Multiples, Enterprise Value, Equity Value, Market Capitalization, Financial Analysis, Share Price, Peer Group, Investment, Forecasting, Capital Structure.
Frequently Asked Questions
What is the primary focus of this work?
The paper focuses on the professional valuation of ThyssenKrupp AG, analyzing its intrinsic worth using financial modeling techniques as of the 2014/2015 fiscal year.
What are the central themes of the analysis?
The central themes include corporate finance principles, the application of discounted cash flow methods, comparative peer group benchmarking, and critical reflection on valuation accuracy.
What is the core research objective?
The objective is to estimate a fair share price for ThyssenKrupp AG and determine whether, based on the models applied, the stock is currently undervalued or overvalued in the market.
Which scientific methods are utilized?
The research employs three primary quantitative methods: DCF-Entity (WACC), DCF-Equity, and various market-based multiples (EV/EBITDA, EV/S, P/E, P/S).
What does the main body of the work cover?
The main body details the step-by-step calculation of free cash flows, the determination of WACC, the comparative peer group analysis, and the synthesis of these results into a valuation estimate.
Which keywords characterize this paper?
The paper is characterized by terms such as Corporate Valuation, DCF, WACC, FCF, Peer Group, and Enterprise Value.
How does the author handle negative earnings in the Multiples method?
In cases where multiples were negative or non-representative, the author opted to use median values to ensure a more logical and robust estimation of the share price.
What is the significance of the "Impact" program for the valuation?
The Impact program is significant as it represents the strategic actions taken by ThyssenKrupp to ensure long-term financial stability, which directly informs the performance assumptions within the DCF forecast.
- Arbeit zitieren
- Anonym (Autor:in), 2017, Corporate valuation of the ThyssenKrupp AG. Estimating the economic value using the DCF Method (WACC), DCF Method (Equity) and Multiples Method, München, GRIN Verlag, https://www.hausarbeiten.de/document/514858
