Stock Analysis

A Look At The Intrinsic Value Of ENENSYS Technologies SA (EPA:ALNN6)

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Key Insights

  • The projected fair value for ENENSYS Technologies is €1.00 based on 2 Stage Free Cash Flow to Equity
  • ENENSYS Technologies' €0.96 share price indicates it is trading at similar levels as its fair value estimate
  • When compared to theindustry average discount to fair value of 38%, ENENSYS Technologies' competitors seem to be trading at a greater discount

How far off is ENENSYS Technologies SA (EPA:ALNN6) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. Our analysis will employ the Discounted Cash Flow (DCF) model. Believe it or not, it's not too difficult to follow, as you'll see from our example!

Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.

Step By Step Through The Calculation

We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value:

10-year free cash flow (FCF) forecast

2026202720282029203020312032203320342035
Levered FCF (€, Millions) €400.0k€800.0k€764.5k€745.2k€736.2k€734.2k€737.0k€743.1k€751.7k€762.1k
Growth Rate Estimate SourceAnalyst x1Analyst x1Est @ -4.43%Est @ -2.53%Est @ -1.20%Est @ -0.27%Est @ 0.38%Est @ 0.84%Est @ 1.15%Est @ 1.38%
Present Value (€, Millions) Discounted @ 12% €0.4€0.6€0.5€0.5€0.4€0.4€0.3€0.3€0.3€0.2

("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = €4.0m

The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (1.9%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 12%.

Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = €762k× (1 + 1.9%) ÷ (12%– 1.9%) = €7.7m

Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €7.7m÷ ( 1 + 12%)10= €2.5m

The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €6.5m. The last step is to then divide the equity value by the number of shares outstanding. Compared to the current share price of €1.0, the company appears about fair value at a 3.5% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.

dcf
ENXTPA:ALNN6 Discounted Cash Flow October 7th 2025

Important Assumptions

The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at ENENSYS Technologies as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 12%, which is based on a levered beta of 1.970. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.

See our latest analysis for ENENSYS Technologies

SWOT Analysis for ENENSYS Technologies

Strength
  • Debt is well covered by earnings.
Weakness
  • Dividend is low compared to the top 25% of dividend payers in the Communications market.
Opportunity
  • Expected to breakeven next year.
  • Good value based on P/S ratio and estimated fair value.
Threat
  • Debt is not well covered by operating cash flow.

Next Steps:

Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For ENENSYS Technologies, there are three additional factors you should explore:

  1. Risks: Be aware that ENENSYS Technologies is showing 2 warning signs in our investment analysis , you should know about...
  2. Future Earnings: How does ALNN6's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!

PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the ENXTPA every day. If you want to find the calculation for other stocks just search here.

Valuation is complex, but we're here to simplify it.

Discover if ENENSYS Technologies might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.

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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.