Clariant AG's Fair Value Estimate Suggests Undervaluation by 31%

Clariant AG's (VTX:CLN) fair value estimate is CHF12.12, suggesting a potential undervaluation of 31% based on the current share price of CHF8.38. The analyst price target for CLN is CHF11.12, which is 8.2% less than the estimated fair value. The discounted cash flow model was used to estimate the company's value.

Clariant AG (VTX:CLN), a leading specialty chemicals company, has seen its share price fall to CHF8.38, which is significantly below its estimated fair value of CHF12.12. This discrepancy suggests a potential undervaluation of 31%, according to analysts [1]. The fair value estimate was derived using the discounted cash flow (DCF) model, which projects the company's future cash flows and discounts them to their present value.

Analysts have set a price target of CHF11.12 for CLN, which is 8.2% lower than the estimated fair value. This price target reflects the analysts' assessment of CLN's future performance and risks. The company's recent earnings have been disappointing, with first-half 2025 earnings released at CHF0.079 per share, down from CHF0.48 in the same period last year [2].

Clariant AG's financial health is a concern, with its debt-to-equity ratio at 89.9%, indicating high leverage. The company's earnings growth is forecast to be 31.85% per year, but this growth is not well covered by earnings, and dividend payments are also not well covered. Large one-off items have impacted the company's financial results in the past, making it challenging to assess its true financial health [3].

Despite these challenges, CLN's dividend yield remains attractive at 5.01%, and the company has a strong track record of dividend payments. However, investors should be cautious due to the company's high debt levels and the uncertainty surrounding its financial position [4].

In conclusion, while Clariant AG's recent performance has been disappointing, analysts' fair value estimate and price target suggest that the stock may be undervalued. Investors should carefully consider the company's risks and the potential for future earnings growth before making investment decisions.

References:
[1] https://simplywall.st/stocks/ch/materials/vtx-cln/clariant-shares
[2] https://simplywall.st/stocks/ch/materials/vtx-cln/clariant-shares
[3] https://simplywall.st/stocks/ch/materials/vtx-cln/clariant-shares
[4] https://simplywall.st/stocks/ch/materials/vtx-cln/clariant-shares