Alfen N.V. (AMS:ALFEN): A Case for Undervaluation Through Intrinsic Value Analysis

Alfen N.V. (AMS:ALFEN), a Dutch energy transition company specializing in electric vehicle charging and smart grid solutions, has faced significant headwinds in 2024–2025, including revenue declines and margin pressures. However, a closer examination of its intrinsic value—derived from discounted cash flow (DCF) analysis and balance sheet fundamentals—suggests the stock may be undervalued relative to its long-term potential.

Revenue Declines and Margin Resilience

Alfen's H1 2025 revenue of €211.5 million reflects a 13.9% year-over-year decline, driven by weaker performance in its Energy Storage Systems and EV Charging segmentsAlfen N : reports H1 2025 revenue of €211.5m and tempers mid-term outlook, [https://www.marketscreener.com/news/alfen-n-reports-h1-2025-revenue-of-a-211-5m-and-tempers-mid-term-outlook-ce7c51d2d18bf224]^[2]. Despite this, the company has improved its gross margin to 29.1% of revenue in H1 2025, up from 22.3% in H1 2024, thanks to cost-cutting measuresAlfen N : reports H1 2025 revenue of €211.5m and tempers mid-term outlook, [https://www.marketscreener.com/news/alfen-n-reports-h1-2025-revenue-of-a-211-5m-and-tempers-mid-term-outlook-ce7c51d2d18bf224]^[2]. Adjusted EBITDA of €13.0 million in H1 2025 (6.1% margin) also outperforms the 5.5% margin in H1 2024Alfen N : reports H1 2025 revenue of €211.5m and tempers mid-term outlook, [https://www.marketscreener.com/news/alfen-n-reports-h1-2025-revenue-of-a-211-5m-and-tempers-mid-term-outlook-ce7c51d2d18bf224]^[2]. These improvements underscore Alfen's operational discipline amid challenging market conditions.

Free Cash Flow and DCF Analysis

Alfen's free cash flow (FCF) trajectory is pivotal to its valuation. While H1 2025 FCF is reported as -€19 millionAlfen reports H1 2025 revenue of €211.5m and tempers mid-term …, [https://alfen.com/en/investor-relations/investor-relations-news/alfen-reports-h1-2025-revenue-of-211-5m-and-tempers-mid-term-outlook]^[3], analyst projections indicate a turnaround: -€1 million in 2025 and €31 million in 2026Alfen (ENXTAM:ALFEN) Stock Forecast & Analyst Predictions, [https://simplywall.st/stocks/nl/capital-goods/ams-alfen/alfen-shares/future]^[4]. Assuming a 10% discount rate and a 2% terminal growth rate beyond 2026, the intrinsic value calculation yields:
- 2025 FCF: -€1 million discounted to -€0.91 million.
- 2026 FCF: €31 million discounted to €25.62 million.
- Terminal Value: €395.25 million (based on 2026 FCF growing at 2%) discounted to €326.65 million.

Summing these components results in an intrinsic value of approximately €351.36 million, significantly higher than Alfen's current market capitalization of €213.47 millionAlfen N : reports H1 2025 revenue of €211.5m and tempers mid-term outlook, [https://www.marketscreener.com/news/alfen-n-reports-h1-2025-revenue-of-a-211-5m-and-tempers-mid-term-outlook-ce7c51d2d18bf224]^[2]. This suggests a potential undervaluation of ~40%.

Balance Sheet Strength and Tangible Book Value

Alfen's balance sheet as of December 2024 shows total assets of €362.75 million and total liabilities of €210.52 million, yielding tangible book value of €125.31 millionAlfen N.V. (ALFEN.AS) Balance Sheet - Yahoo Finance, [https://finance.yahoo.com/quote/ALFEN.AS/balance-sheet/]^[1]. While this figure is lower than the current market cap, it represents a conservative baseline. The company's enterprise value of €245.26 millionAlfen N : reports H1 2025 revenue of €211.5m and tempers mid-term outlook, [https://www.marketscreener.com/news/alfen-n-reports-h1-2025-revenue-of-a-211-5m-and-tempers-mid-term-outlook-ce7c51d2d18bf224]^[2] includes debt, but its strategic focus on core markets (Netherlands, Belgium, Germany, France, and the Nordics) and cost-saving initiatives—such as a 15% workforce reduction and €13.1 million in annual savings—position it to enhance profitabilityAlfen reports H1 2025 revenue of €211.5m and tempers mid-term …, [https://alfen.com/en/investor-relations/investor-relations-news/alfen-reports-h1-2025-revenue-of-211-5m-and-tempers-mid-term-outlook]^[3].

Risks and Market Realities

Alfen's tempered guidance for 2026 (0–5% revenue growth) reflects ongoing challenges, including competitive pressures and permitting delaysAlfen N : reports H1 2025 revenue of €211.5m and tempers mid-term outlook, [https://www.marketscreener.com/news/alfen-n-reports-h1-2025-revenue-of-a-211-5m-and-tempers-mid-term-outlook-ce7c51d2d18bf224]^[2]. Additionally, the company's reliance on energy transition trends introduces macroeconomic risks. However, its revised strategy—prioritizing Smart Grid Solutions and EV Charging in high-margin regions—aligns with long-term industry tailwindsAlfen reports H1 2025 revenue of €211.5m and tempers mid-term …, [https://alfen.com/en/investor-relations/investor-relations-news/alfen-reports-h1-2025-revenue-of-211-5m-and-tempers-mid-term-outlook]^[3].

Conclusion: A Case for Value Investors

While Alfen's near-term revenue declines and FCF volatility warrant caution, its intrinsic value analysis reveals a compelling case for undervaluation. The company's margin improvements, cost discipline, and projected FCF recovery in 2026 suggest that the market is underappreciating its operational resilience. For value investors, Alfen's current valuation offers an opportunity to capitalize on its strategic repositioning and long-term energy transition growth.