Assessing Tikehau Capital Shares After €500 Million Fund Launch and Recent Market Dip

If you're eyeing Tikehau Capital and wondering whether now is the moment to make a move, you're not alone. Investors are drawn to the stock after a period of relatively muted action, with the share price up just 0.7% in the last week and over the past month. Despite that, it's still down 8.4% this year and has slipped 15.2% over the past twelve months. Even with a longer lens, the story is mixed: down 12.7% over three years, but up 9.2% over five. That means recent market sentiment toward Tikehau Capital has been cautious, reflecting shifting perspectives on both growth potential and risk, especially as global macroeconomic news leaves capital markets in flux.

Of course, price performance alone doesn't tell the whole story. When you dig a little deeper, Tikehau Capital's valuation looks more appealing than these numbers might initially suggest. According to our analysis using six key checks to measure undervaluation, Tikehau Capital earns a value score of 4 out of 6. This puts the company firmly on the radar for value-minded investors looking for stocks that may be overlooked by the broader market.

So what are these valuation approaches, and how does Tikehau Capital stack up across them? Let’s take a closer look at each method. Later in the article, we will go beyond just the usual metrics to explore an even sharper way to make sense of Tikehau’s true worth.

Why Tikehau Capital is lagging behind its peers

Approach 1: Tikehau Capital Excess Returns Analysis

The Excess Returns valuation approach is designed to assess whether a company generates returns on its invested capital that exceed the required cost of equity. This model takes into account both the future earnings power of the company and its ability to create value above what shareholders could expect elsewhere. It focuses on key fundamentals such as return on equity, book value growth, and projected profitability.

For Tikehau Capital, the analysis shows:

• Book Value: €17.93 per share
• Stable Earnings Per Share: €2.08 per share (as projected by a weighted average of 5 analyst estimates)
• Cost of Equity: €1.90 per share
• Excess Return: €0.18 per share
• Average Return on Equity: 10.18%
• Stable Book Value: €20.43 per share (sourced from projections by 4 analysts)

This model projects the company’s ability to deliver sustained profits beyond its equity cost. The resulting intrinsic value for Tikehau Capital, as implied by the Excess Returns model, is €22.82 per share. With the current share price trading at a 15.9% discount to this value, the stock appears undervalued based on its ability to generate value above its equity costs.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Tikehau Capital.

Our Excess Returns analysis suggests Tikehau Capital is undervalued by 15.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Tikehau Capital Price vs Earnings

For companies like Tikehau Capital that are profitably operating, the Price-to-Earnings (PE) ratio is a widely trusted valuation metric. The PE ratio allows investors to compare how much they are paying for each euro of current earnings, making it particularly relevant for assessing established, profit-generating firms. However, it is important to remember that a “normal” or “fair” PE ratio is not a fixed number. It should account for expectations about future growth as well as the risks facing the company. Fast-growing or lower-risk companies typically justify a higher PE ratio, while the opposite is true for riskier or slower-growing ones.

At present, Tikehau Capital trades at a PE ratio of 17.9x. This is below both the Capital Markets industry average of 19.6x and the average of direct peers at 24.8x, suggesting a relative discount. While these benchmarks are helpful, they do not always capture the specific nuances of Tikehau Capital’s growth, risk profile, or profitability.

This is where Simply Wall St’s proprietary “Fair Ratio” comes in. The Fair Ratio is a more holistic benchmark, as it weighs earnings growth outlook, profit margins, market capitalization, and risks alongside industry factors. Rather than relying solely on peer or industry averages, the Fair Ratio provides a tailored valuation multiple that is meant to reflect Tikehau Capital’s unique circumstances.

For Tikehau Capital, the Fair Ratio stands at 25.2x, which is notably higher than its current PE ratio of 17.9x. This means that, when accounting for growth prospects and risks, the stock appears undervalued by this measure.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Tikehau Capital Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple story you create that connects your view of Tikehau Capital—how you see its future revenue, earnings, and margins—with what you think is a fair price for the shares. Rather than just relying on historical numbers or analyst figures, Narratives let you express your beliefs about why the company is undervalued or overvalued and see the impact those beliefs have on its calculated fair value.

Each Narrative links a company’s story to a financial forecast and then to a fair value, making the connection between business outlook and investment decision much more transparent. Narratives are designed to be approachable for all investors and are available on the Simply Wall St Community page, used by millions to share and compare perspectives.

They make it easier to decide if and when to buy or sell. You can simply compare the Fair Value your Narrative generates to today’s actual share price. Narratives automatically update as new information, such as earnings results or big news, becomes available, so your view can change as the facts do.

For example, some Tikehau Capital Narratives on Simply Wall St see a fair value as high as €28.0 or as low as €19.0, illustrating how different assumptions can lead to very different investment decisions.

Do you think there's more to the story for Tikehau Capital? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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