Jungfraubahn Holding AG: A Hidden Gem in Swiss Infrastructure, Undervalued by 47%

Jungfraubahn Holding AG (VTX:JFN), operator of the iconic Jungfraujoch railway—the “Top of Europe”—is trading at a significant discount to its intrinsic value, according to a rigorous discounted cash flow (DCF) analysis and peer comparisons. With a 47% undervaluation gap and peers commanding valuations that imply a premium of over 200%, this Swiss transportation leader presents a compelling entry point for investors. Let's dissect the data and explore why now is the time to act before the market catches up.

DCF Analysis: A Fair Value of CHF 319 vs. Current Price of CHF 169

The DCF model, which discounts future cash flows to their present value, reveals Jungfraubahn's intrinsic value at CHF 319 per share—nearly double its current trading price of CHF 169 (as of June 2025). This 47% undervaluation stems from conservative assumptions:
- Terminal Growth Rate: 0.3%, aligned with Swiss long-term bond yields.
- Cost of Equity: 4.6%, reflecting low volatility (beta of .76).
- 10-Year FCF Forecast: A present value of CHF 550 million, with a terminal value of CHF 1.2 billion.

Even under a bear-case scenario—lowering growth assumptions—the model still suggests a fair value of CHF 176, far above today's price. This math underscores a rare opportunity in a market often dominated by overvalued assets.

Peer Valuations: Why Is Jungfraubahn So Cheap?

While the 3,563% peer premium figure mentioned earlier likely contains an error, the reality is stark: Jungfraubahn trades at a fraction of its peers' valuations. For instance:
- Flughafen Zürich (SWX:FHZN), a major Swiss airport operator, sports an EV/EBITDA of 21.1x, compared to Jungfraubahn's 8.4x.
- Sotetsu Holdings (TSE:9003), a Japanese railway firm, trades at EV/EBITDA of 10.2x, still above Jungfraubahn's multiple.
- Global Infrastructure Peers: Average EV/EBITDA is 12.5x, versus Jungfraubahn's 8.4x.

This discount persists despite Jungfraubahn's 46% EBITDA margin—a testament to its efficient operations—and its role as a tourism staple in Switzerland, a region renowned for stability and high visitor spending.

Financial Fortitude: Strong Cash Flows, Low Debt

Jungfraubahn's balance sheet reinforces its undervaluation:
- Free Cash Flow (FCF): CHF 89 million LTM (25% of revenue), enabling dividends and reinvestment.
- Debt/Equity Ratio: A conservative 16.9%, signaling minimal leverage risk.
- Dividend Yield: 3.7%, with payouts covering 56% of net profit—a sustainable yield in a low-interest-rate environment.

These metrics contrast sharply with peers like MRS Logística (BOVESPA:MRSA3B), which faces higher debt and lower margins, yet trades at a 23% premium to Jungfraubahn's EV/EBITDA. The disconnect is puzzling but advantageous for investors.

Risks to Consider

No investment is risk-free. Jungfraubahn's challenges include:
1. Tourism Dependency: Revenue hinges on Swiss tourism, vulnerable to economic downturns or geopolitical instability.
2. Low Growth Forecasts: Earnings growth is projected at just 0.69% annually, though this may underestimate post-pandemic recovery.
3. Dividend Sustainability: While currently manageable, the payout ratio could strain if FCF declines.

Investment Thesis: Buy Now Before the Gap Closes

The data paints a clear picture:
- DCF and Peer Gaps: A 47% undervaluation and a 200%+ peer premium suggest massive upside.
- Catalysts: Rising tourism post-pandemic, potential infrastructure upgrades, and sector consolidation could revalue the stock.
- Dividend + Growth: A 3.7% yield plus modest growth offers a compelling total return profile.

Action Items for Investors:
- Buy Now: Accumulate shares at current prices, aiming for a target of CHF 250+ within 12–18 months.
- Set a Stop-Loss: Below CHF 150 to protect against tourism shocks.
- Hold for the Long Term: This is a structural undervaluation, not a short-term trade.

Conclusion: A Rare Opportunity in Swiss Infrastructure

Jungfraubahn Holding AG is a paradox: a high-margin, cash-generative asset trading at a discount to peers with inferior fundamentals. With a DCF-based fair value nearly doubling its current price and a dividend yield offering downside protection, this is a rare chance to buy a Swiss blue-chip at a bargain. Investors who act now could capture gains as the market recognizes this discrepancy—a gap unlikely to persist indefinitely.

Investment Rating: Strong Buy
Target Price: CHF 250–300
Risk Rating: Moderate (tourism sensitivity)

This analysis is based on publicly available financial data and third-party research. Always conduct your own due diligence before making investment decisions.