Discounted Cash Flow Calculation for DB:XGJ using Excess Returns Model Model
The calculations below outline how an intrinsic value for Gjensidige Forsikring is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
Amount off the current price
is available for.
Share price is
vs Future cash flow value of
Current Discount Checks
to be considered undervalued it must be available for at least 20% below the
current price. Less than 40% is even better.
Gjensidige Forsikring's share price is below the future cash flow value, but not at a moderate discount (< 20%).
Gjensidige Forsikring's share price is below the future cash flow value, but not at a substantial discount (< 40%).
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
Gjensidige Forsikring's earnings available for a low price, and how does
this compare to other companies in the same industry?
Gjensidige Forsikring's earnings are expected to decrease over the next 1-3 years, this is not considered high growth.
Gjensidige Forsikring's revenue is expected to grow by 0.8% 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.
Gjensidige Forsikring'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
5/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
A company's financial position is much like your own financial position,
it includes everything you own
The boxes below represent the relative size of what makes up
Gjensidige Forsikring's finances.
The net worth of a company is the difference between its assets and liabilities.
Gjensidige Forsikring is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
Gjensidige Forsikring's cash and other short term assets cover its long term commitments.
This treemap shows a more detailed breakdown of
Gjensidige Forsikring's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Low level of unsold assets.
Debt is covered by short term assets, assets are 18.7x debt.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
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
Mr. Helge Leiro Baasted has been the Chief Executive Officer at Gjensidige Forsikring ASA since 2003. Mr. Baasted serves as Managing Director of Gjensidige Danmark. He serves as the Chairman of Supervisory Board of AAS Gjensidige Baltic. Mr. Baasted serves as Member of General Board at Gjensidige Bank Boligkreditt AS. He served as Chairman of the Board of Jordan AS and Borge AS. He served as the Chairman of Supervisory Board at Gjensidige Bank ASA until January 1, 2016. He serves as a Director of Nykredit Realkredit A/S. He has been a Director at Nykredit Holding A/S since March 16, 2016. He serves as a Member of Supervisory Board at SpareBank 1 SR-Bank (formerly, Sparebanken Rogaland). He served as a Member of the Board of Representatives at Storebrand ASA. Mr. Baasted served as a Director of Sparebanken Sogn Og Fjordane. He served as a Director of Gjensidige Forsikring ASA. He served as a Director of DNB ASA (also known as DNB Nor ASA) until June 24, 2005. Mr. Baasted is a Graduate of the Norwegian School of Economics and Business Administration in Bergen.
Helge's compensation has been consistent with company performance over the past year, both up more than 20%.
Helge's remuneration is lower than average for companies of similar size in Germany.
Management Team Tenure
Average tenure and age of the
management team in years:
The tenure for the Gjensidige Forsikring management team is about average.
Chief Executive Officer
Executive VP & CFO
Executive Vice President of Technology & Infrastructure
Executive Vice President of Organization
Executive Vice President of Analytics
Executive Vice President of Private
Executive Vice President of Communications & Shared Services
Executive Vice President of Denmark
Executive Vice President of Commercial
Executive Vice President of Sweden
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Gjensidige Forsikring board of directors is less than 3 years, this suggests a new board.
Gjensidige Forsikring ASA operates as a general insurance company in Norway, Denmark, Sweden, Lithuania, Latvia, and Estonia. It operates through General Insurance Private, General Insurance Commercial, General Insurance Denmark, General Insurance Sweden, and Pension segments. The company offers various insurance products, including motor vehicles, property, leisure, and accident and health insurance products, as well as insurance products in the areas of liability, agriculture, coastal and marine/transport, and defined contribution scheme; and life and pet insurance products. It also provides pension and savings products comprising occupational pensions, private pension savings, spouse/cohabitant pension, child’s pension, and individual disability pensions. The company distributes its products through its distribution network, as well as through agents, brokers, dealers, and telephony and Internet to private and commercial customers. Gjensidige Forsikring ASA is headquartered in Oslo, Norway. Gjensidige Forsikring ASA is a subsidiary of Gjensidigestiftelsen.
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