Discounted Cash Flow Calculation for WBAG:1COV using 2 Stage Free Cash Flow to Equity Model
The calculations below outline how an intrinsic value for
is arrived at by discounting future cash flows to their present value using the 2 stage method.
We try to start with analysts estimates of free cash flow, however if these are not available we use the most recent financial results. In the 1st stage we continue to grow the free cash flow over a 10 year period, with the growth rate trending towards the perpetual growth rate used in the 2nd stage. The 2nd stage assumes the company grows at a stable rate into perpetuity.
WBAG:1COV DCF 1st Stage: Next 10 year cash flow forecast
The current share price of
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
is considered below, and whether this is a fair price.
Price based on past earnings
Covestro's earnings available for a low price, and how does
this compare to other companies in the same industry?
Covestro's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Covestro's revenue is expected to grow by 0.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Covestro's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
has a total score of
4/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Dr. Markus Steilemann is Member of Management Board since August 20, 2015 of Covestro AG and serves its Chairman of Management Board. He serves as a Chief Executive Officer of Covestro AG since June 01, 2018 and also serves its Chief Commercial Officer. Dr. Steilemann is Chief Executive Officer of Covestro Aktiengesellschaft since May 2018. Dr. Steilemann was Chief Commercial Officer at Covestro Aktiengesellschaft from August 20, 2015 to June 2018. Dr. Steilemann served as Head of The Polyrethanes Segment at Covestro AG since 2016. Dr. Steilemann served as the Chief Innovation Officer Covestro AG, Leverkusen and served as its Head of Innovation. Dr. Steilemann served as the Head of Polycarbonates Business Unit at Covestro AG, Leverkusen(also known as Bayer MaterialScience AG) since April 1, 2013. He joined Bayer as an Internal Consultant within Bayer’s Corporate Organization and Planning function in 1999. Since then, he has held numerous positions with increasing responsibility and gained broad experience in business modeling, organizational development and supply chain. In January 2008 Dr. Steilemann joined the Polycarbonates business unit, heading a number of different regional business segments. In August 2011, he relocated to Shanghai and the global headquarters of the Polycarbonates business unit and served as Head of global Industrial Marketing since July 2012. Dr. Steilemann studied chemistry at the University of Aachen, Germany and the University of Zurich, Switzerland. He holds a PhD in technical chemistry from the University of Aachen and in addition, a Masters Degree in chemical economics.
Markus's compensation has increased by more than 20% in the past year.
Insufficient data for Markus to establish whether their remuneration is reasonable compared to companies of similar size in .
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Covestro management team is about average.
CEO, Chief Commercial Officer & Chairman of Management Board
CFO, Labor Director & Member of Management Board
CTO & Member of Management Board
Head of Investor Relations
Head of Polyurethanes Business Unit
Head of Polyurethanes (PU) Segment
Chief Sustainability Officer
Head of Polycarbonates Segment
Head of S Coatings
Head of MDI Site
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Covestro board of directors is about average.
Covestro AG develops, produces, and markets polymer materials for various industries worldwide. The company operates in three segments: Polyurethanes; Polycarbonates; and Coatings, Adhesives, Specialties. The Polyurethanes segment offers precursors, such as flexible polyurethane foam primarily used in the furniture and automotive industries; and rigid foam used as insulating material in the construction industry and in refrigeration chains. The Polycarbonates segment provides high-performance plastic polycarbonates in the form of granules, composite materials, and semi-finished products for use in the automotive, construction, electrical and electronic, medical technology, and lighting industries. The Coatings, Adhesives, Specialties segment offers precursors for coatings, adhesives, and sealants, as well as specialties. This segment also provides polymer materials and aqueous dispersions for use in automotive and transportation, infrastructure and construction, wood processing, and furniture applications. It markets its products through trading houses and distributors. The company has partnership with Genomatica, Inc. to research and develop high-performance materials based on renewable feed-stocks. Covestro AG was founded in 2005 and is headquartered in Leverkusen, Germany.
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