A Look At The Intrinsic Value Of Schweizer Electronic AG (ETR:SCE)

Schweizer Electronic AG (ETR:SCE), a leading provider of electronic components and systems, has been making headlines recently due to its strategic initiatives and financial performance. As investors evaluate the company's intrinsic value, it's essential to consider various factors, including debt-to-equity ratio, earnings growth, return on equity, cash runway, and free cash flow growth. This article will delve into these aspects to provide a comprehensive analysis of Schweizer Electronic AG's intrinsic value.



Debt-to-Equity Ratio and Interest Coverage Ratio

Schweizer Electronic AG's debt-to-equity ratio stands at 134.7%, indicating a high level of debt relative to its equity. This ratio has increased from 99.2% over the past five years, suggesting that the company has been accumulating debt at a faster rate than it has been reducing it. However, the company's stable cash runway for more than three years, assuming it maintains its current positive free cash flow level, indicates that it has sufficient liquidity to meet its short-term obligations and invest in growth opportunities. The company's interest coverage ratio is not provided, but its ability to maintain a positive free cash flow suggests that it is able to service its debt and maintain its financial health.



Earnings Growth Rate and Return on Equity

Schweizer Electronic AG is forecast to grow its earnings by 99.4% per annum and its EPS by 99.1% per annum. This high growth rate indicates that the company is expected to generate significant value over time. Additionally, the company's future return on equity is forecast to be 6% in three years, suggesting that it is efficient in generating profits from its investments. These factors contribute to the company's intrinsic value by indicating strong earnings power and profitability.

Cash Runway and Free Cash Flow Growth Rate

Schweizer Electronic AG is expected to have a stable cash runway for more than three years, assuming it maintains its current positive free cash flow level. Additionally, the company's free cash flow is expected to grow by 26.8% per year, which is a positive sign for its long-term financial health and ability to generate value for shareholders. These factors contribute to the company's overall intrinsic value assessment, as they demonstrate its ability to generate cash and maintain its financial stability.

Conclusion

Schweizer Electronic AG's high debt-to-equity ratio, while a concern, is mitigated by its stable cash runway and positive free cash flow. The company's strong earnings growth rate and forecasted return on equity further enhance its intrinsic value. As investors evaluate the company's intrinsic value, they should consider these factors and monitor the company's debt levels, cash flow, and market conditions to ensure that it continues to manage its debt effectively and maintain its financial health.