Discounted Cash Flow Calculation for DB:TTEB 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.
DB:TTEB 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
Tieto Oyj's earnings available for a low price, and how does
this compare to other companies in the same industry?
Tieto Oyj's earnings are expected to grow by 4.8% yearly, however this is not considered high growth (20% yearly).
Tieto Oyj's revenue is expected to grow by 2.6% 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.
Tieto Oyj'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
2/6, 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
Mr. Kimmo Alkio, BBA, MBA has been the Chief Executive Officer and President of Tieto Oyj since November 1, 2011. Mr. Alkio has been the President and Chief Executive Officer of Tieto Corporation since July 2011. He served as a Vice President of Systems Integration and Networks at Nokia Corporation. He served as the President and Chief Executive Officer of F-secure Oyj from November 6, 2006 to October 31, 2011. Mr. Alkio served as the Chief Operating Officer of F-secure Oyj from June 2001 to April 1, 2005. He served as Vice President of Nokia Networks Corporation from 2005 to 2006. He served in Various management positions in F-Secure Corporation from 2000 to 2005 and Compaq Computer from 1995 to 2000. He also served as the Chief Executive Officer of F-Secure On-Line Solutions. He had been an Independent Director of Cargotec Czech Republic s.r.o since March 22, 2016 until March 2019. He served as Independent Director of Cargotec Corporation until March 2019. Mr. Alkio served as Director of the European Service Provider business unit at Compaq Computer Corporation. He held various management positions at Digital Equipment Corporation, in Finland and in the American and European headquarters. He served as Vice Chairman of Aldata Solution Oyj since September 2005. He served as a Director of Tieto Oyj (also known as TietoEnator AB) from 2009 to November 1, 2011 and Aldata Solution Oyj from April 14, 2005 to 2007. He served as a Member of Executive Council of F-secure Oyj until April 1, 2005. Mr. Alkio holds a BBA from the Texas A&M University and has studied an Executive MBA at the Helsinki University of Technology.
Kimmo's compensation has increased by more than 20% in the past year whilst earnings fell less than 20%.
Kimmo's remuneration is about 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 Tieto Oyj management team is about average.
CEO & President
Chief Financial Officer
Chief Technology Officer
Head of Investor Relations
Head of Global Communications
Head of Human Resource Public & Healthcare & Welfare
Executive Vice President of Human Resources
Executive VP of Data-Driven Businesses and Head of Business Consulting & Implementation Service
Executive Vice President of Industrial & Consumer Services
Head of Stakeholder Relations
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The average tenure for the Tieto Oyj board of directors is less than 3 years, this suggests a new board.
Tieto Oyj operates as a software and services company. The company operates through Technology Services and Modernization, Business Consulting and Implementation, Industry Solutions, and Product Development Services segments. The Technology Services and Modernization segment provides life cycle management services of customer application and IT infrastructure, including cloud and other emerging services, and security services, as well as software application development and management services for enterprises. The Business Consulting and Implementation segment offers IT architecture consulting, customer experience management, business process and change management, and transformation and system integration services. The Industry Solutions segment provides industry solutions for oil and gas, payments, and forest sectors. The Product Development Services segment offers product development services for telecom and communications infrastructure companies, consumer electronics, and semiconductor companies, as well as automotive industry. The company also serves financial services, healthcare and welfare, public sector, media, energy, pulp and paper, industrial services, and retail and consumer services industries. It operates in Finland, Sweden, Norway, Austria, the Baltic countries, Russia, and internationally. Tieto Oyj was founded in 1968 and is headquartered in Espoo, Finland.
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