Discounted Cash Flow Calculation for LSE:0DP9 using Excess Returns Model Model
The calculations below outline how an intrinsic value for Banca Transilvania 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.
Banca Transilvania's share price is below the future cash flow value, and at a moderate discount (> 20%).
Banca Transilvania's share price is below the future cash flow value, and 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
Banca Transilvania's earnings available for a low price, and how does
this compare to other companies in the same industry?
Banca Transilvania's earnings are expected to grow by 2.1% yearly, however this is not considered high growth (20% yearly).
Banca Transilvania's revenue is expected to grow by 4.7% 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.
Banca Transilvania'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.
Fundamentally a bank's business is based upon borrowing and lending money, for
this reason they typically have high levels of debt and we analyse them
This treemap shows a more detailed breakdown of
Banca Transilvania'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.
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
• June 2013 - present Banca Transilvania S.A. - CEO
• December 2010 – May 2013 Credit Europe Bank (Romania) S.A., former Finansbank (Romania) S.A - President
• September 2009 -December 2010 Credit Europe Bank (Romania) S.A., former Finansbank (Romania) S.A., Banking - First Vice-President.
• September 2007 – September 2009 Credit Europe Bank (Romania) S.A., former Finansbank (Romania) S.A., - Banking - Vice-President (Retail Banking, Marketing, Sales, Alternative Sales Channels, Card Operations, Retail Loans, Business and Data Analyses)
• June 2005 – September 2007 Credit Europe Bank (Romania) S.A., former Finansbank (Romania) S.A., - Banking Vice-President (Treasury, Financial Institutions, Retail Banking)
• December 2004 – June 2005 Credit Europe Bank (Romania) S.A., former Finansbank (Romania) S.A., - Banking - Vice-president (Treasury, Financial Institutions)
• February 2000 – December 2004 Finansbank (Romania) S.A. - Banking - Deputy Vice-President (Treasury and Correspondent Banking)
• August 1997-January 2000 Finansbank (Moscow) LTD – Banking - Manager, Head of Treasury and Capital Markets.
• July 1996 – July 1997 Finansbank Istanbul AS - Banking Dealer, Foreign Exchange Department
• June 1995 – September 1995 Ata Securities AS, Izmir – Dealer.
-> Education and Training:
• 1991-1996 Middle East Technical University, Ankara, The Faculty of Economic Sciences, Honor Student.
• 1984-1991 Izmir Bornova Anatolian High School German and Mathematics.
Insufficient data for Ömer to compare compensation growth.
Insufficient data for Ömer to establish whether their remuneration is reasonable compared to companies of similar size in United Kingdom of Great Britain and Northern Ireland.
Management Team Tenure
Average tenure and age of the
management team in years:
The average tenure for the Banca Transilvania management team is over 5 years, this suggests they are a seasoned and experienced team.
Chief Executive Officer
Deputy CEO & CFO
Deputy CEO & COO
Head of Public Relations
Executive Manager of Corporate Governance & Legal Division
Executive Manager of Human Resources
Deputy Chief Executive Officer of Retail Banking
Deputy Chief Executive Officer of SME Banking
Deputy CEO & Chief Risk Officer
Deputy Chief Executive Officer of FI & Financial Markets
Board of Directors Tenure
Average tenure and age of the
board of directors in years:
The tenure for the Banca Transilvania board of directors is about average.
Banca Transilvania S.A. provides various banking products and services. The company’s Large Corporate Clients segment offers transaction banking, treasury, trade finance, and retail products; and leasing, asset management, merger and acquisition consultancy, and capital market advisory services to companies, legal and public entities, and financial institutions. The company’s Medium Corporate Customers segment provides lending, current, and treasury services; bonus, structured finance, and co-financing of EU funded projects; and bancassurance, and financial and operating leases. Its Small and Medium Enterprises Clients segment offers services to companies that have undergone the incipient growth stages and whose business activity requires further attention. The company’s Micro Business Clients segment offers loans for working capital or investments, letters of guarantee, EU project co-financing, credit cards, leasing, invoice discounting, or factoring services. It also provides general and FX services, incoming and outgoing payments, cheques, promissory notes, salary payment agreements, or bancassurance services. The company’s Retail Customers segment offers savings and deposit accounts; consumer, car purchase, personal need, and mortgage loans; and payment and securities trading services. Its Treasury segment provides various treasury services. The company’s Leasing and Consumer Loans Granted by Non-Banking Financial Institutions segment offers lease facilities, consumer loans, and microfinance services. Its Other segment provides asset management, brokerage, factoring, and real estate services. The company operates an office in Cluj-Napoca, 54 branches, 435 agencies, 20 bank units, and 7 healthcare division units in Romania; 2 private banking agencies in Romania and Italy; and 1 regional office in Bucharest. Banca Transilvania S.A. was founded in 1993 and is headquartered in Cluj-Napoca, Romania.
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