Evaluating PAL Next AG's Fair Value Using a 2-Stage Free Cash Flow to Equity Model.

PAL Next AG's (ETR:PAL) fair value estimate is €1.09 using the 2 Stage Free Cash Flow to Equity model. The company's current share price of €1.17 suggests it may be trading close to its fair value. Compared to the industry average discount of -14%, PAL Next's competitors are trading at a greater premium to fair value.

PAL Next AG (ETR:PAL) is a prominent player in the capital goods sector, producing and selling crane and lifting solutions. The company's fair value estimate, using the 2-Stage Free Cash Flow to Equity model, is €1.09 [1]. The current share price of €1.17 suggests that PAL Next AG may be trading close to its fair value.

The 2-Stage Free Cash Flow to Equity model projects future cash flows over two stages: a high-growth period followed by a steady growth phase. For PAL Next AG, the model estimates a free cash flow of €0.15 per share in the first stage and €0.10 per share in the second stage. The terminal value is calculated using a conservative growth rate of 0.4%, resulting in a present value of €1.55 per share.

Compared to the industry average discount of -14%, PAL Next AG's competitors are trading at a greater premium to fair value. For instance, Palfinger AG (VIE:PAL), a competitor in the same sector, is trading at a 54% discount to its fair value estimate of €2.00 [2].

While the fair value estimate suggests that PAL Next AG may be trading close to its intrinsic value, it is essential to consider other factors such as risks, future earnings growth, and alternative investment opportunities. The company has a high level of debt, which could pose a risk to its financial health [2]. Additionally, the company's share price has been volatile over the past three months, with a 38.07% change [2].

Investors should conduct further analysis and consider their risk tolerance before making investment decisions. It is crucial to stay informed about the company's latest financial performance and any potential risks or opportunities.

References:
[1] https://finance.yahoo.com/news/estimating-fair-value-meier-tobler-041601117.html
[2] https://simplywall.st/stocks/at/capital-goods/vie-pal/palfinger-shares