Is Hawesko Holding SE (ETR:HAW) Trading Below Its True Value? A DCF and Peer Analysis

The question of whether Hawesko Holding SE (ETR:HAW) is undervalued hinges on a nuanced interplay of discounted cash flow (DCF) valuation and peer comparison. With a current share price of €19.65 and a market capitalization of €207.21M, the stock appears to trade near its estimated fair value of €22.51 under a 2-Stage Free Cash Flow to Equity (FCFE) model. However, divergent DCF assumptions and mixed peer benchmarks complicate this assessment. This analysis synthesizes financial data, industry trends, and valuation methodologies to evaluate Hawesko's intrinsic worth.

DCF Valuation: Sensitivity to Assumptions

Hawesko's DCF valuation is highly sensitive to growth rate and discount rate assumptions. A 2-Stage FCFE model projects a fair value of €22.51, assuming a 5% growth rate during the 10-year high-growth phase and a 4% terminal growth rate. Conversely, a more conservative earnings-based DCF model, using a 5% growth rate and 4% terminal rate, yields a significantly lower intrinsic value of €14.57. This stark divergence underscores the importance of aligning assumptions with the company's operational realities.

Key inputs for the DCF model include Hawesko's weighted average cost of capital (WACC) of 5.8% derived from a cost of equity of 8.65% (using CAPM with a 3.05% risk-free rate and 5.60% equity risk premium) and a risk adjustment of 0.25% derived from financial analysis. Free cash flow (FCF) projections, however, are mixed. While the company generated €36M in FCF over the twelve months to September 2025, it revised its 2025 outlook to a 1%–3% sales decline and reduced FCF expectations. These conflicting signals signals-strong historical FCF generation versus near-term headwinds-introduce uncertainty into the model.

Peer Comparison: A Mixed Picture

Hawesko's valuation multiples diverge from industry benchmarks. Its price-to-earnings (P/E) ratio of 18.28 exceeds the peer average of 14.3x, suggesting a premium valuation. Meanwhile, its price-to-free cash flow (P/FCF) ratio of 134.07 appears elevated, particularly when compared to European industrial holding companies like Derichebourg, which trades at 2x EV/EBITDA and 4–5x P/FCF according to industry analysis. These comparisons highlight Hawesko's relatively high valuation despite its 9.1% operating EBITDA margin in 2024 according to financial reports, a modest improvement from 8.9% in the prior year.

The company's accrual ratio of -0.14 suggests conservative accounting practices-indicating that FCF significantly outpaced statutory profit. However, this metric also raises questions about the sustainability of its cash flow generation, particularly as its e-commerce and business-to-business segments reported -5.64% and -4.41% revenue growth, respectively. These declines contrast with the stable retail segment, which accounted for €233.53M in 2024 revenue according to financial data.

Strategic Considerations and Risks

Hawesko's 2024 performance was bolstered by cost discipline and pricing strategies, even as depreciation and amortization pressures reduced operating EBIT to €32.3M according to financial reports. The expansion of its Tornesch warehouse to improve e-commerce delivery quality according to company press releases offers a potential catalyst for future growth, but the segment's current contraction complicates near-term optimism. Additionally, the company's return on assets (ROA) of 2.29% and return on capital of 3.75% lag behind industry leaders, suggesting room for operational improvement.

Conclusion: A Stock Trading Near Fair Value

Hawesko Holding SE appears to trade near its estimated fair value of €22.51 under a 2-Stage FCFE model, but the stock's valuation is not without caveats. While its EBITDA margin improvement and conservative accounting practices are positives, the company's weak e-commerce performance and elevated P/FCF ratio raise concerns about overvaluation. Investors must weigh the sensitivity of DCF assumptions-particularly growth rates and discount rates-against the company's mixed peer comparisons. For now, Hawesko's share price of €19.65 reflects a market that appears to price in moderate growth and cautious optimism, but the path to unlocking its full value will depend on the execution of its e-commerce turnaround and cost management initiatives.