Is Leifheit Aktiengesellschaft (ETR:LEI) a Hidden Buy Opportunity at 47% Below Intrinsic Value?

Leifheit Aktiengesellschaft (ETR:LEI), a German manufacturer of household goods, has faced a challenging 2025 amid consumer restraint and strategic overhauls. Yet, beneath the surface of its recent financial struggles lies a compelling case for undervaluation. A discounted cash flow (DCF) analysis and long-term earnings growth projections suggest the stock trades at a significant discount to its intrinsic value, potentially offering a rare entry point for patient investors.

Financial Struggles and Strategic Adjustments

Leifheit’s first-half 2025 performance was marked by a 8.6% year-on-year decline in Group turnover to €123.4 million, driven by a strategic product range streamlining, the insolvency of a major retail customer, and broader consumer caution [2]. EBIT for the period fell to €2.0 million, with full-year guidance revised downward to €9–11 million, below 2024’s €12.1 million [5]. Free cash flow remains negative (€-4.1 million in H1 2025), as the company invests in production optimization, including relocating injection moulding operations to the Czech Republic [1]. These short-term costs, however, are expected to yield annual savings of €2 million starting in the second half of 2025 [4].

DCF Analysis: A 47% Undervaluation

The DCF model, a cornerstone of intrinsic value estimation, projects Leifheit’s fair value between €20.61 and €30.13 per share, far exceeding its current price of €15.15 [1]. This 47% discount stems from two-stage growth assumptions:
1. Short-Term (2025–2034): Free cash flow is expected to grow from €6.80 million in 2025 to €14.9 million by 2034, driven by cost savings and margin expansion [1].
2. Long-Term (Terminal Value): A conservative 1.4% perpetual growth rate and 5.9% cost of equity yield a terminal value of €327 million, discounted to €185 million [1].

The resulting equity value of €278 million translates to a fair value of €30.13 per share, nearly double the current price. Even a more cautious 5-year DCF model estimates intrinsic value at €15.62, implying a 3.10% upside [4]. These figures suggest the market is underestimating the company’s ability to execute its restructuring and capitalize on its strong balance sheet (€41.4 million in cash, €1.7 million in debt) [3].

Earnings Growth: A Catalyst for Re-rating

Leifheit’s earnings trajectory further strengthens the case for optimism. Historical performance includes a 150.92% surge in 2024 net income to €8.04 million [5], while long-term forecasts project annual revenue growth of 3% and EPS growth of 35.9% [3]. Analysts anticipate 2025 EPS of €0.66, a 13.7% increase from 2024’s €0.58 [4]. If these trends persist, the stock’s 52-week low of €15.15 could represent a floor rather than a ceiling.

Risks and Considerations

While the DCF and growth metrics are compelling, investors must weigh short-term risks. The production relocation is a one-off drag on 2025 earnings, and consumer demand in the non-food sector remains volatile. Additionally, the company’s reliance on a few large retail customers (notably the insolvent one) introduces concentration risk.

Conclusion

Leifheit’s current valuation appears to discount its long-term potential excessively. The combination of strategic cost savings, a robust balance sheet, and strong earnings growth projections creates a compelling case for undervaluation. For investors with a 3–5 year horizon, ETR:LEI could offer a rare opportunity to acquire a fundamentally sound business at a meaningful discount to its intrinsic value.

Source:
[1] Leifheit Aktiengesellschaft (ETR:LEI) Shares Could Be 46 ... [https://www.webull.com/news/13015507387065344]
[2] Leifheit AG publishes final figures for the first half of 2025 [https://www.eqs-news.com/news/corporate/leifheit-ag-publishes-final-figures-for-the-first-half-of-2025/1c99100b-d024-47cf-afd6-394ac5239995]
[3] Intrinsic Value of Leifheit AG (LEI.DE) [https://investorscraft.com/intrinsic-value/lei.de]
[4] LEI.DE Intrinsic Value | Leifheit AG (LEI.DE) [https://valueinvesting.io/LEI.DE/valuation/intrinsic-value]
[5] Leifheit streamlines production structure – Forecast for the ... [https://www.eqs-news.com/news/ad-hoc/leifheit-aktiengesellschaft-leifheit-streamlines-production-structure-forecast-for-the-2025-financial-year-adjusted/abd76d76-e0ec-4122-8744-a85075c6fb61_en]