| Cancom SE (DE0005419105) | |||
26,40 EURStand (close): 04.07.25 |
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| Datum / Uhrzeit | Titel | Bewertung |
| 28.12.23 10:06:51 | Does Cancom SE's (ETR:COK) Weak Fundamentals Mean That The Market Could Correct Its Share Price? |  |
| Most readers would already be aware that Cancom's (ETR:COK) stock increased significantly by 21% over the past three months. However, we decided to pay close attention to its weak financials as we are doubtful that the current momentum will keep up, given the scenario. Particularly, we will be paying attention to Cancom's ROE today. Return on equity or ROE is an important factor to be considered by a shareholder because it tells them how effectively their capital is being reinvested. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. Check out our latest analysis for Cancom How Is ROE Calculated? Return on equity can be calculated by using the formula: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Cancom is: 3.7% = €27m ÷ €745m (Based on the trailing twelve months to September 2023). The 'return' is the profit over the last twelve months. So, this means that for every €1 of its shareholder's investments, the company generates a profit of €0.04. Why Is ROE Important For Earnings Growth? So far, we've learned that ROE is a measure of a company's profitability. We now need to evaluate how much profit the company reinvests or "retains" for future growth which then gives us an idea about the growth potential of the company. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. Cancom's Earnings Growth And 3.7% ROE When you first look at it, Cancom's ROE doesn't look that attractive. We then compared the company's ROE to the broader industry and were disappointed to see that the ROE is lower than the industry average of 11%. Therefore, it might not be wrong to say that the five year net income decline of 3.4% seen by Cancom was probably the result of it having a lower ROE. We believe that there also might be other aspects that are negatively influencing the company's earnings prospects. For example, it is possible that the business has allocated capital poorly or that the company has a very high payout ratio. Story continues That being said, we compared Cancom's performance with the industry and were concerned when we found that while the company has shrunk its earnings, the industry has grown its earnings at a rate of 17% in the same 5-year period. XTRA:COK Past Earnings Growth December 28th 2023 Earnings growth is a huge factor in stock valuation. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). This then helps them determine if the stock is placed for a bright or bleak future. What is COK worth today? The intrinsic value infographic in our free research report helps visualize whether COK is currently mispriced by the market. Is Cancom Making Efficient Use Of Its Profits? Cancom's declining earnings is not surprising given how the company is spending most of its profits in paying dividends, judging by its three-year median payout ratio of 81% (or a retention ratio of 19%). The business is only left with a small pool of capital to reinvest - A vicious cycle that doesn't benefit the company in the long-run. To know the 3 risks we have identified for Cancom visit our risks dashboard for free. Moreover, Cancom has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 70%. Still, forecasts suggest that Cancom's future ROE will rise to 7.2% even though the the company's payout ratio is not expected to change by much. Conclusion In total, we would have a hard think before deciding on any investment action concerning Cancom. As a result of its low ROE and lack of much reinvestment into the business, the company has seen a disappointing earnings growth rate. That being so, the latest industry analyst forecasts show that the analysts are expecting to see a huge improvement in the company's earnings growth rate. To know more about the latest analysts predictions for the company, check out this visualization of analyst forecasts for the company. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. |
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| 12.12.23 04:39:15 | While shareholders of Cancom (ETR:COK) are in the red over the last three years, underlying earnings have actually grown | |
| As an investor its worth striving to ensure your overall portfolio beats the market average. But the risk of stock picking is that you will likely buy under-performing companies. Unfortunately, that's been the case for longer term Cancom SE (ETR:COK) shareholders, since the share price is down 37% in the last three years, falling well short of the market decline of around 2.9%. On the other hand the share price has bounced 5.8% over the last week. The recent uptick of 5.8% could be a positive sign of things to come, so let's take a look at historical fundamentals. Check out our latest analysis for Cancom While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time. Although the share price is down over three years, Cancom actually managed to grow EPS by 27% per year in that time. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past. It's worth taking a look at other metrics, because the EPS growth doesn't seem to match with the falling share price. Revenue is actually up 4.2% over the three years, so the share price drop doesn't seem to hinge on revenue, either. This analysis is just perfunctory, but it might be worth researching Cancom more closely, as sometimes stocks fall unfairly. This could present an opportunity. You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image). earnings-and-revenue-growth It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. You can see what analysts are predicting for Cancom in this interactivegraph of future profit estimates. Story continues What About Dividends? As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Cancom's TSR for the last 3 years was -32%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments! A Different Perspective Cancom shareholders are down 4.2% for the year (even including dividends), but the market itself is up 11%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. On the bright side, long term shareholders have made money, with a gain of 0.1% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Cancom better, we need to consider many other factors. Take risks, for example - Cancom has 3 warning signs we think you should be aware of. If you are like me, then you will not want to miss this freelist of growing companies that insiders are buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on German exchanges. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. |
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| 27.11.23 12:37:43 | Should You Investigate Cancom SE (ETR:COK) At €27.44? | |
| While Cancom SE (ETR:COK) might not be the most widely known stock at the moment, it led the XTRA gainers with a relatively large price hike in the past couple of weeks. As a stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine Cancom’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. See our latest analysis for Cancom What Is Cancom Worth? Good news, investors! Cancom is still a bargain right now. According to my valuation, the intrinsic value for the stock is €45.24, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Cancom’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility. What kind of growth will Cancom generate? earnings-and-revenue-growth Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Cancom's earnings over the next few years are expected to increase by 96%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value. What This Means For You Are you a shareholder? Since COK is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With an optimistic outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation. Story continues Are you a potential investor? If you’ve been keeping an eye on COK for a while, now might be the time to make a leap. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy COK. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. While conducting our analysis, we found that Cancom has 3 warning signs and it would be unwise to ignore them. If you are no longer interested in Cancom, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. |
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| 13.11.23 11:55:41 | An Intrinsic Calculation For Cancom SE (ETR:COK) Suggests It's 34% Undervalued |  |
| Key Insights Using the 2 Stage Free Cash Flow to Equity, Cancom fair value estimate is €41.07 Cancom's €27.18 share price signals that it might be 34% undervalued Our fair value estimate is 30% higher than Cancom's analyst price target of €31.61 How far off is Cancom SE (ETR:COK) from its intrinsic value? Using the most recent financial data, we'll take a look at whether the stock is fairly priced by taking the expected future cash flows and discounting them to their present value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. See our latest analysis for Cancom Step By Step Through The Calculation We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate: Story continues 10-year free cash flow (FCF) forecast 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 Levered FCF (€, Millions) €62.6m €82.6m €85.2m €87.3m €88.8m €90.1m €91.1m €91.9m €92.7m €93.3m Growth Rate Estimate Source Analyst x5 Analyst x6 Est @ 3.21% Est @ 2.39% Est @ 1.81% Est @ 1.40% Est @ 1.12% Est @ 0.92% Est @ 0.78% Est @ 0.69% Present Value (€, Millions) Discounted @ 6.1% €59.0 €73.3 €71.3 €68.8 €66.0 €63.0 €60.0 €57.1 €54.2 €51.4 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = €624m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.5%. We discount the terminal cash flows to today's value at a cost of equity of 6.1%. Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = €93m× (1 + 0.5%) ÷ (6.1%– 0.5%) = €1.7b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €1.7b÷ ( 1 + 6.1%)10= €909m The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is €1.5b. In the final step we divide the equity value by the number of shares outstanding. Relative to the current share price of €27.2, the company appears quite undervalued at a 34% discount to where the stock price trades currently. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. dcf The Assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Cancom as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.1%, which is based on a levered beta of 1.136. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. SWOT Analysis for Cancom Strength Debt is not viewed as a risk. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the IT market. Shareholders have been diluted in the past year. Opportunity Annual earnings are forecast to grow faster than the German market. Trading below our estimate of fair value by more than 20%. Threat Dividends are not covered by earnings. Revenue is forecast to grow slower than 20% per year. Looking Ahead: Valuation is only one side of the coin in terms of building your investment thesis, and it shouldn't be the only metric you look at when researching a company. DCF models are not the be-all and end-all of investment valuation. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. Why is the intrinsic value higher than the current share price? For Cancom, we've compiled three fundamental items you should consider: Risks: Every company has them, and we've spotted 3 warning signs for Cancom you should know about. Future Earnings: How does COK's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every German stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. |
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| 17.10.23 12:07:54 | Cancom SE (ETR:COK) is largely controlled by institutional shareholders who own 69% of the company | |
| Key Insights Given the large stake in the stock by institutions, Cancom's stock price might be vulnerable to their trading decisions 52% of the business is held by the top 10 shareholders Analyst forecasts along with ownership data serve to give a strong idea about prospects for a business To get a sense of who is truly in control of Cancom SE (ETR:COK), it is important to understand the ownership structure of the business. And the group that holds the biggest piece of the pie are institutions with 69% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). Since institutional have access to huge amounts of capital, their market moves tend to receive a lot of scrutiny by retail or individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute. Let's delve deeper into each type of owner of Cancom, beginning with the chart below. View our latest analysis for Cancom ownership-breakdown What Does The Institutional Ownership Tell Us About Cancom? Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices. Cancom already has institutions on the share registry. Indeed, they own a respectable stake in the company. This implies the analysts working for those institutions have looked at the stock and they like it. But just like anyone else, they could be wrong. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Cancom's historic earnings and revenue below, but keep in mind there's always more to the story. earnings-and-revenue-growth Since institutional investors own more than half the issued stock, the board will likely have to pay attention to their preferences. Cancom is not owned by hedge funds. Allianz Asset Management GmbH is currently the largest shareholder, with 14% of shares outstanding. Aluk-Privatstiftung is the second largest shareholder owning 6.2% of common stock, and SEO Management AG holds about 5.2% of the company stock. Story continues We also observed that the top 10 shareholders account for more than half of the share register, with a few smaller shareholders to balance the interests of the larger ones to a certain extent. Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. Insider Ownership Of Cancom The definition of company insiders can be subjective and does vary between jurisdictions. Our data reflects individual insiders, capturing board members at the very least. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO. Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group. We note our data does not show any board members holding shares, personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO. General Public Ownership With a 19% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Cancom. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders. Private Company Ownership We can see that Private Companies own 11%, of the shares on issue. It's hard to draw any conclusions from this fact alone, so its worth looking into who owns those private companies. Sometimes insiders or other related parties have an interest in shares in a public company through a separate private company. Next Steps: It's always worth thinking about the different groups who own shares in a company. But to understand Cancom better, we need to consider many other factors. To that end, you should learn about the 3 warning signs we've spotted with Cancom (including 1 which is potentially serious) . Ultimately the future is most important. You can access this freereport on analyst forecasts for the company. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. |
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| 05.07.23 08:47:41 | Cancom SE (ETR:COK) Stock's On A Decline: Are Poor Fundamentals The Cause? | |
| With its stock down 7.1% over the past three months, it is easy to disregard Cancom (ETR:COK). Given that stock prices are usually driven by a company’s fundamentals over the long term, which in this case look pretty weak, we decided to study the company's key financial indicators. Particularly, we will be paying attention to Cancom's ROE today. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. In short, ROE shows the profit each dollar generates with respect to its shareholder investments. Check out our latest analysis for Cancom How To Calculate Return On Equity? The formula for return on equity is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Cancom is: 4.5% = €32m ÷ €705m (Based on the trailing twelve months to March 2023). The 'return' is the income the business earned over the last year. So, this means that for every €1 of its shareholder's investments, the company generates a profit of €0.05. What Has ROE Got To Do With Earnings Growth? So far, we've learned that ROE is a measure of a company's profitability. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Generally speaking, other things being equal, firms with a high return on equity and profit retention, have a higher growth rate than firms that don’t share these attributes. A Side By Side comparison of Cancom's Earnings Growth And 4.5% ROE At first glance, Cancom's ROE doesn't look very promising. Next, when compared to the average industry ROE of 12%, the company's ROE leaves us feeling even less enthusiastic. As a result, Cancom's flat net income growth over the past five years doesn't come as a surprise given its lower ROE. Next, on comparing with the industry net income growth, we found that the industry grew its earnings by 21% over the last few years. past-earnings-growth The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company's expected earnings growth (or decline). By doing so, they will have an idea if the stock is headed into clear blue waters or if swampy waters await. Has the market priced in the future outlook for COK? You can find out in our latest intrinsic value infographic research report. Is Cancom Efficiently Re-investing Its Profits? Cancom has a high three-year median payout ratio of 80% (or a retention ratio of 20%), meaning that the company is paying most of its profits as dividends to its shareholders. This does go some way in explaining why there's been no growth in its earnings. Additionally, Cancom has paid dividends over a period of at least ten years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Our latest analyst data shows that the future payout ratio of the company is expected to drop to 62% over the next three years. As a result, the expected drop in Cancom's payout ratio explains the anticipated rise in the company's future ROE to 8.1%, over the same period. Conclusion On the whole, Cancom's performance is quite a big let-down. As a result of its low ROE and lack of much reinvestment into the business, the company has seen a disappointing earnings growth rate. With that said, we studied the latest analyst forecasts and found that while the company has shrunk its earnings in the past, analysts expect its earnings to grow in the future. Are these analysts expectations based on the broad expectations for the industry, or on the company's fundamentals? Click here to be taken to our analyst's forecasts page for the company. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Join A Paid User Research Session You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here |
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| 07.06.23 05:27:59 | Is Now An Opportune Moment To Examine Cancom SE (ETR:COK)? | |
| Cancom SE (ETR:COK), might not be a large cap stock, but it received a lot of attention from a substantial price movement on the XTRA over the last few months, increasing to €34.58 at one point, and dropping to the lows of €27.50. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Cancom's current trading price of €27.50 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Cancom’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for Cancom What Is Cancom Worth? Cancom appears to be expensive according to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 30.36x is currently well-above the industry average of 20.39x, meaning that it is trading at a more expensive price relative to its peers. If you like the stock, you may want to keep an eye out for a potential price decline in the future. Given that Cancom’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility. What does the future of Cancom look like? earnings-and-revenue-growth Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to more than double over the next couple of years, the future seems bright for Cancom. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation. What This Means For You Are you a shareholder? It seems like the market has well and truly priced in COK’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe COK should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed. Are you a potential investor? If you’ve been keeping an eye on COK for a while, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the optimistic prospect is encouraging for COK, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop. If you want to dive deeper into Cancom, you'd also look into what risks it is currently facing. When we did our research, we found 3 warning signs for Cancom (2 are potentially serious!) that we believe deserve your full attention. If you are no longer interested in Cancom, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Join A Paid User Research Session You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here |
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| 24.05.23 04:43:57 | Cancom SE (ETR:COK) Shares Could Be 24% Above Their Intrinsic Value Estimate | |
| Key Insights Using the 2 Stage Free Cash Flow to Equity, Cancom fair value estimate is €23.43 Current share price of €29.06 suggests Cancom is potentially 24% overvalued Our fair value estimate is 38% lower than Cancom's analyst price target of €37.78 Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Cancom SE (ETR:COK) as an investment opportunity by projecting its future cash flows and then discounting them to today's value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Believe it or not, it's not too difficult to follow, as you'll see from our example! We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model. Check out our latest analysis for Cancom What's The Estimated Valuation? We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second 'steady growth' period. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars: 10-year free cash flow (FCF) forecast 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Levered FCF (€, Millions) €114.2m €82.2m €68.5m €60.6m €55.7m €52.6m €50.6m €49.3m €48.4m €47.9m Growth Rate Estimate Source Analyst x4 Analyst x5 Analyst x3 Est @ -11.60% Est @ -8.05% Est @ -5.56% Est @ -3.82% Est @ -2.60% Est @ -1.75% Est @ -1.15% Present Value (€, Millions) Discounted @ 7.0% €107 €71.8 €56.0 €46.2 €39.7 €35.1 €31.5 €28.7 €26.4 €24.4 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = €466m The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 0.2%. We discount the terminal cash flows to today's value at a cost of equity of 7.0%. Terminal Value (TV)= FCF2032 × (1 + g) ÷ (r – g) = €48m× (1 + 0.2%) ÷ (7.0%– 0.2%) = €711m Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €711m÷ ( 1 + 7.0%)10= €362m The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €828m. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Relative to the current share price of €29.1, the company appears slightly overvalued at the time of writing. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. dcf The Assumptions We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. If you don't agree with these result, have a go at the calculation yourself and play with the assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Cancom as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.0%, which is based on a levered beta of 1.136. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. SWOT Analysis for Cancom Strength Currently debt free. Weakness Earnings declined over the past year. Dividend is low compared to the top 25% of dividend payers in the IT market. Opportunity Annual earnings are forecast to grow faster than the German market. Good value based on P/E ratio compared to estimated Fair P/E ratio. Threat Dividends are not covered by earnings. Revenue is forecast to grow slower than 20% per year. Next Steps: Whilst important, the DCF calculation is only one of many factors that you need to assess for a company. DCF models are not the be-all and end-all of investment valuation. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Can we work out why the company is trading at a premium to intrinsic value? For Cancom, there are three additional aspects you should further examine: Risks: To that end, you should learn about the 3 warning signs we've spotted with Cancom (including 2 which are concerning) . Future Earnings: How does COK's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! PS. Simply Wall St updates its DCF calculation for every German stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Join A Paid User Research Session You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here |
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| 08.05.23 10:32:16 | Cancom SE (ETR:COK) is favoured by institutional owners who hold 70% of the company | |
| Key Insights Given the large stake in the stock by institutions, Cancom's stock price might be vulnerable to their trading decisions The top 9 shareholders own 50% of the company Using data from analyst forecasts alongside ownership research, one can better assess the future performance of a company A look at the shareholders of Cancom SE (ETR:COK) can tell us which group is most powerful. With 70% stake, institutions possess the maximum shares in the company. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn). Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. As a result, a sizeable amount of institutional money invested in a firm is generally viewed as a positive attribute. In the chart below, we zoom in on the different ownership groups of Cancom. Check out our latest analysis for Cancom ownership-breakdown What Does The Institutional Ownership Tell Us About Cancom? Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index. We can see that Cancom does have institutional investors; and they hold a good portion of the company's stock. This can indicate that the company has a certain degree of credibility in the investment community. However, it is best to be wary of relying on the supposed validation that comes with institutional investors. They too, get it wrong sometimes. When multiple institutions own a stock, there's always a risk that they are in a 'crowded trade'. When such a trade goes wrong, multiple parties may compete to sell stock fast. This risk is higher in a company without a history of growth. You can see Cancom's historic earnings and revenue below, but keep in mind there's always more to the story. Story continues earnings-and-revenue-growth Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. Cancom is not owned by hedge funds. Our data shows that Allianz Asset Management AG is the largest shareholder with 20% of shares outstanding. For context, the second largest shareholder holds about 6.7% of the shares outstanding, followed by an ownership of 4.1% by the third-largest shareholder. On further inspection, we found that more than half the company's shares are owned by the top 9 shareholders, suggesting that the interests of the larger shareholders are balanced out to an extent by the smaller ones. While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. Quite a few analysts cover the stock, so you could look into forecast growth quite easily. Insider Ownership Of Cancom While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. Company management run the business, but the CEO will answer to the board, even if he or she is a member of it. Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group. Our data cannot confirm that board members are holding shares personally. Not all jurisdictions have the same rules around disclosing insider ownership, and it is possible we have missed something, here. So you can click here learn more about the CEO. General Public Ownership The general public, who are usually individual investors, hold a 27% stake in Cancom. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run. Private Company Ownership We can see that Private Companies own 3.3%, of the shares on issue. Private companies may be related parties. Sometimes insiders have an interest in a public company through a holding in a private company, rather than in their own capacity as an individual. While it's hard to draw any broad stroke conclusions, it is worth noting as an area for further research. Next Steps: While it is well worth considering the different groups that own a company, there are other factors that are even more important. Case in point: We've spotted 3 warning signs for Cancom you should be aware of, and 2 of them are potentially serious. If you would prefer discover what analysts are predicting in terms of future growth, do not miss this freereport on analyst forecasts. NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Join A Paid User Research Session You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here |
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| 12.01.23 06:17:20 | Cancom SE's (ETR:COK) Stock Going Strong But Fundamentals Look Weak: What Implications Could This Have On The Stock? | |
| Cancom's (ETR:COK) stock is up by a considerable 30% over the past three months. However, we decided to pay close attention to its weak financials as we are doubtful that the current momentum will keep up, given the scenario. Specifically, we decided to study Cancom's ROE in this article. Return on Equity or ROE is a test of how effectively a company is growing its value and managing investors’ money. Simply put, it is used to assess the profitability of a company in relation to its equity capital. See our latest analysis for Cancom How Is ROE Calculated? The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Cancom is: 6.0% = €42m ÷ €691m (Based on the trailing twelve months to September 2022). The 'return' is the amount earned after tax over the last twelve months. One way to conceptualize this is that for each €1 of shareholders' capital it has, the company made €0.06 in profit. What Is The Relationship Between ROE And Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or "retain", we are then able to evaluate a company's future ability to generate profits. Assuming all else is equal, companies that have both a higher return on equity and higher profit retention are usually the ones that have a higher growth rate when compared to companies that don't have the same features. Cancom's Earnings Growth And 6.0% ROE At first glance, Cancom's ROE doesn't look very promising. A quick further study shows that the company's ROE doesn't compare favorably to the industry average of 13% either. As a result, Cancom's flat net income growth over the past five years doesn't come as a surprise given its lower ROE. We then compared Cancom's net income growth with the industry and found that the company's growth figure is lower than the average industry growth rate of 17% in the same period, which is a bit concerning. Story continues past-earnings-growth The basis for attaching value to a company is, to a great extent, tied to its earnings growth. The investor should try to establish if the expected growth or decline in earnings, whichever the case may be, is priced in. This then helps them determine if the stock is placed for a bright or bleak future. One good indicator of expected earnings growth is the P/E ratio which determines the price the market is willing to pay for a stock based on its earnings prospects. So, you may want to check if Cancom is trading on a high P/E or a low P/E, relative to its industry. Is Cancom Making Efficient Use Of Its Profits? With a high three-year median payout ratio of 81% (implying that the company keeps only 19% of its income) of its business to reinvest into its business), most of Cancom's profits are being paid to shareholders, which explains the absence of growth in earnings. Moreover, Cancom has been paying dividends for at least ten years or more suggesting that management must have perceived that the shareholders prefer dividends over earnings growth. Based on the latest analysts' estimates, we found that the company's future payout ratio over the next three years is expected to hold steady at 66%. Regardless, the future ROE for Cancom is predicted to rise to 7.9% despite there being not much change expected in its payout ratio. Conclusion Overall, we would be extremely cautious before making any decision on Cancom. Because the company is not reinvesting much into the business, and given the low ROE, it's not surprising to see the lack or absence of growth in its earnings. That being so, the latest analyst forecasts show that the company will continue to see an expansion in its earnings. To know more about the company's future earnings growth forecasts take a look at this freereport on analyst forecasts for the company to find out more. Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Join A Paid User Research Session You’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here |
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