A Look at Cloetta (OM:CLA B) Valuation Following New EUR 240m Financing and Strategic Shift

Cloetta (OM:CLA B) has signed a new EUR 240 million financing agreement that replaces its previous, larger credit facilities. Investors are watching this move because it aligns closely with the company's updated strategic priorities and enhances financial flexibility.

See our latest analysis for Cloetta.

While Cloetta’s latest financing aligns with its new strategic roadmap, the stock’s momentum has been pretty steady. Its 1-year total shareholder return sits just above 0.4%, hinting at stable but modest long-term performance. Short-term moves have been slight, suggesting investors are weighing the impact of this capital structure shift for future growth potential.

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With solid but unspectacular returns and a significant boost to financial flexibility, the big question is whether Cloetta’s current share price reflects untapped value or if the market has already considered its growth prospects.

Price-to-Earnings of 14.8x: Is it justified?

Cloetta’s current price-to-earnings (P/E) ratio stands at 14.8x, suggesting the market places a relatively modest value on its profitability compared to similar companies. Given the last close price of SEK33.92, this figure positions Cloetta as an attractive option for value-oriented investors when compared to both domestic peers and the broader food sector.

The P/E ratio is a widely used measure for valuing established, profitable consumer brands like Cloetta, as it reflects how much investors are willing to pay for each unit of earnings. For companies with recurring revenues and stable cash flow, a reasonable P/E can indicate the market’s expectations for steady, but not rapid, performance going forward. In this instance, Cloetta’s consistent profit history aligns with this profile.

Looking more broadly, Cloetta’s P/E of 14.8x is well below both its peer group average of 29.8x and the European food industry average of 15.5x. It also trades below the estimated fair price-to-earnings of 15.2x, which underscores its appeal as a solid value choice in the sector, should these fundamentals continue.

Explore the SWS fair ratio for Cloetta

Result: Price-to-Earnings of 14.8x (UNDERVALUED)

However, slower revenue and net income growth could present challenges to continued undervaluation if market expectations shift or sector dynamics weaken.

Find out about the key risks to this Cloetta narrative.

Another View: Discounted Cash Flow Tells a Different Story

While the price-to-earnings metric paints Cloetta as undervalued, our DCF model offers a sharper perspective. According to this analysis, Cloetta’s current share price sits 51.4% below its estimated fair value, which underscores substantial upside potential if cash flows unfold as forecast. Does this make the current valuation more compelling, or does it introduce new questions about what the market may be missing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cloetta for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Cloetta Narrative

If you’d rather take a hands-on approach or want to test your own assumptions, you can build a narrative based on your own research in just minutes, and Do it your way.

A great starting point for your Cloetta research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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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.

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