| Fraport AG (DE0005773303) | |||
64,65 EURStand (close): 01.07.25 |
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| Datum / Uhrzeit | Titel | Bewertung |
| 14.05.25 07:00:47 | Fraport AG (FPRUF) Q1 2025 Earnings Call Highlights: Passenger Growth and Expansion Amid ... |  |
| Release Date: May 13, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Passenger numbers showed a positive trend in April, with a 4.8% year-on-year increase at Frankfurt Airport. Lima Airport outperformed other airports in Q1 due to capacity additions by airlines, with further growth expected. The terminal expansion at Antalya Airport was successfully inaugurated, enhancing its capacity to handle up to 65 million passengers. The new wage agreement provides stability with a duration of 27 months, effective from January 1, 2025. Retail spend per passenger increased, with advertising revenues growing by more than EUR1 million compared to last year. Negative Points Total revenues were down by around 2% in Q1 2025, with a negative group result of minus EUR26 million. The financial result was negatively impacted by lower traffic numbers in Antalya and exchange rate-driven deferred tax effects. Operational cash flow decreased to EUR12 million in Q1 due to higher interest payments and concession fees. Net debt increased to more than EUR8.6 billion, reaching the peak for the year. The new labor agreement is expected to cost EUR40 million to EUR50 million this year for Frankfurt operations. Q & A Highlights Warning! GuruFocus has detected 6 Warning Sign with FPRUF. Q: Can you provide more details on the traffic performance at Frankfurt Airport and the factors affecting it? A: The slight reduction in passengers of 0.9% in Q1 was mainly due to the timing of the Easter holidays, which started in April this year, and capacity constraints from Lufthansa. However, April saw a 4.8% increase in traffic, aligning with our expectations. We anticipate further growth over the summer season, targeting up to 64 million passengers in 2025. - Matthias Zieschang, CFO Q: What is the status of the major expansion programs at your international airports? A: The terminal expansion at Antalya Airport was inaugurated on April 12, 2025, allowing it to handle up to 65 million passengers. The new terminal at Lima Airport is set to open on June 1, 2025, with a soft opening scheduled for this week. Terminal 3 in Frankfurt is progressing well and is expected to open in 2025. - Matthias Zieschang, CFO Q: How is the new wage agreement expected to impact your financials? A: The new wage agreement, effective January 1, 2025, includes a two-stage wage increase and other benefits, costing approximately EUR40 million to EUR50 million this year for Frankfurt operations. This agreement provides stability until March 2027. - Matthias Zieschang, CFO Story Continues Q: Can you explain the changes in your financial results, particularly regarding EBITDA and EBIT? A: Total revenues were down by 2%, but excluding IFRIC 12 effects, they were up 6%. EBITDA faced a EUR28 million drop due to the absence of COVID-related compensation and a EUR10 million impact from a changed reimbursement system for passenger screening. Adjusted for these, EBITDA was flat compared to last year. EBIT, adjusted for these effects, was up by EUR8 million. - Matthias Zieschang, CFO Q: What are your expectations for the financial performance and guidance for the rest of the year? A: We expect Frankfurt Airport to grow up to 64 million passengers, with a moderate single-digit percentage increase in EBITDA. The group net result is expected to be flat to down due to extra gains from last year's share disposal in St. Petersburg. No dividend payment is planned for the 2025 financial year. - Matthias Zieschang, CFO For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments |
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| 07.04.25 04:52:43 | With A Return On Equity Of 9.7%, Has Fraport AG's (ETR:FRA) Management Done Well? | |
| One of the best investments we can make is in our own knowledge and skill set. With that in mind, this article will work through how we can use Return On Equity (ROE) to better understand a business. To keep the lesson grounded in practicality, we'll use ROE to better understand Fraport AG (ETR:FRA). ROE or return on equity is a useful tool to assess how effectively a company can generate returns on the investment it received from its shareholders. Simply put, it is used to assess the profitability of a company in relation to its equity capital. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. How Do You Calculate Return On Equity? The formula for ROE is: Return on Equity = Net Profit (from continuing operations) ÷ Shareholders' Equity So, based on the above formula, the ROE for Fraport is: 9.7% = €502m ÷ €5.2b (Based on the trailing twelve months to December 2024). The 'return' refers to a company's earnings over the last year. That means that for every €1 worth of shareholders' equity, the company generated €0.10 in profit. Check out our latest analysis for Fraport Does Fraport Have A Good Return On Equity? By comparing a company's ROE with its industry average, we can get a quick measure of how good it is. The limitation of this approach is that some companies are quite different from others, even within the same industry classification. If you look at the image below, you can see Fraport has a similar ROE to the average in the Infrastructure industry classification (11%).XTRA:FRA Return on Equity April 7th 2025 So while the ROE is not exceptional, at least its acceptable. Even if the ROE is respectable when compared to the industry, its worth checking if the firm's ROE is being aided by high debt levels. If so, this increases its exposure to financial risk. To know the 2 risks we have identified for Fraport visit our risks dashboard for free. Why You Should Consider Debt When Looking At ROE Virtually all companies need money to invest in the business, to grow profits. That cash can come from retained earnings, issuing new shares (equity), or debt. In the first two cases, the ROE will capture this use of capital to grow. In the latter case, the debt required for growth will boost returns, but will not impact the shareholders' equity. In this manner the use of debt will boost ROE, even though the core economics of the business stay the same. Combining Fraport's Debt And Its 9.7% Return On Equity Fraport does use a high amount of debt to increase returns. It has a debt to equity ratio of 2.38. The combination of a rather low ROE and significant use of debt is not particularly appealing. Debt increases risk and reduces options for the company in the future, so you generally want to see some good returns from using it. Story Continues Summary Return on equity is useful for comparing the quality of different businesses. Companies that can achieve high returns on equity without too much debt are generally of good quality. If two companies have around the same level of debt to equity, and one has a higher ROE, I'd generally prefer the one with higher ROE. But when a business is high quality, the market often bids it up to a price that reflects this. The rate at which profits are likely to grow, relative to the expectations of profit growth reflected in the current price, must be considered, too. So you might want to take a peek at this data-rich interactive graph of forecasts for the company . Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies. 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. View Comments |
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| 21.03.25 09:18:07 | At €58.10, Is It Time To Put Fraport AG (ETR:FRA) On Your Watch List? |  |
| Fraport AG (ETR:FRA), might not be a large cap stock, but it saw a decent share price growth of 12% on the XTRA over the last few months. The company is now trading at yearly-high levels following the recent surge in its share price. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Today we will analyse the most recent data on Fraport’s outlook and valuation to see if the opportunity still exists. We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free. What Is Fraport Worth? Good news, investors! Fraport is still a bargain right now. Our valuation model shows that the intrinsic value for the stock is €77.39, but it is currently trading at €58.10 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because Fraport’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity. View our latest analysis for Fraport What does the future of Fraport look like?XTRA:FRA Earnings and Revenue Growth March 21st 2025 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. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -6.2% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Fraport. This certainty tips the risk-return scale towards higher risk. What This Means For You Are you a shareholder? Although FRA is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to FRA, or whether diversifying into another stock may be a better move for your total risk and return. Are you a potential investor? If you’ve been keeping tabs on FRA for some time, but hesitant on making the leap, we recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future. Story Continues With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. At Simply Wall St, we found 1 warning sign for Fraport and we think they deserve your attention. If you are no longer interested in Fraport, 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. View Comments |
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| 19.03.25 07:02:04 | Fraport AG (FPRUF) (FY 2024) Earnings Call Highlights: Record EBITDA and Strategic Expansion ... | |
| EBITDA: Achieved an all-time high of EUR1.3 billion. Net Result: More than EUR500 million, close to the record level of 2018. Passenger Traffic: Frankfurt at 87% recovery rate with a 3.7% increase; international portfolio fully recovered to 2019 levels. Group Net Debt: Approximately EUR8.4 billion with a leverage ratio of 6.4 times. Operating Cash Flow: EUR1.18 billion, a 37% increase from the previous year. Free Cash Flow: Negative at minus EUR675 million due to expansion CapEx. Retail Revenue: Expected increase of 50% by 2027 with Terminal 3 operations. Average Cost of Debt: Expected to rise to a maximum of 3.5% in 2025. Segment EBITDA - Aviation: Increased by more than 21% to EUR374 million. Segment EBITDA - Retail and Real Estate: Slight growth to EUR375 million. Segment EBITDA - International Activities: Strong growth driven by investments in Fraport Greece, Fraport USA, and Lima Airport. Dividend Expectation: No dividend payment expected for 2025 financial year. Warning! GuruFocus has detected 3 Warning Sign with FPRUF. Release Date: March 18, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Fraport AG (FPRUF) achieved an all-time high EBITDA of EUR1.3 billion and a group result of more than EUR500 million, close to the record level of 2018. The group airports outside of Frankfurt have fully recovered to 2019 levels on average, with significant growth in Greece and Peru. Fraport AG (FPRUF) expects a turning point in Frankfurt traffic momentum, driven by new capacities and routes from airlines like Condor and EasyJet. The company is on track with major expansion programs, including the new terminal at Lima Airport and the upcoming opening of a new terminal in Antalya. Fraport AG (FPRUF) is implementing AI initiatives to increase operational efficiency and improve customer satisfaction at Frankfurt Airport. Negative Points Fraport AG (FPRUF) faces challenges from high location costs and continued low supply of aircraft, impacting traffic growth in Frankfurt. The German aviation tax and increased security costs have made Germany one of the most expensive countries to operate, affecting competitiveness. The company expects a flat to down group result for 2025 due to non-recurring gains from the previous year and ongoing financial pressures. Ground handling remains a loss-making segment, with challenges in renewing the Lufthansa contract and improving financial stability. Fraport AG (FPRUF) does not expect to pay a dividend for the 2025 financial year, focusing instead on reducing leverage. Story Continues Q & A Highlights Q: Do you have retail contracts in Terminal 2 running out this year, and do you expect to prolong these contracts until T2 will close next year? A: (Matthias Zieschang, CFO) The retail contracts in Terminal 2 will be finalized at the end of the second quarter as airlines move to Terminal 3. We have solutions with concessionaires, and all contracts for Terminal 3 are awarded and preparing for takeover by April next year. Q: Can you give us some initial indication on CapEx and free cash flow in 2026? A: (Matthias Zieschang, CFO) For 2026, we expect a significant reduction in CapEx compared to 2025, primarily due to the completion of major projects like Lima and Terminal 3. We aim for a clearly positive free cash flow in 2026. Q: What is the outlook for traffic in 2026, and when do you expect it to return to 2019 levels? A: (Stefan Schulte, CEO) We are optimistic about traffic growth in 2026, especially if the German aviation tax is reduced and new aircraft deliveries occur. However, returning to 2019 levels will take at least three to four years. Q: Why has the pickup in Porto Alegre been slow, and is there more compensation expected for its closure? A: (Stefan Schulte, CEO) The slow recovery is due to airlines needing to restore capacities. We received compensation for the closure, but some infrastructure issues known before the flooding were not covered. The outlook for Porto Alegre is positive. Q: What are your plans for the ground-handling segment, given its continued losses? A: (Stefan Schulte, CEO) The main issue is the long-term contract with Lufthansa, which limits price increases. We aim to negotiate better terms and improve productivity. Exiting the business is not currently planned, as stability in ground operations is crucial. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. View Comments |
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| 06.03.25 07:56:04 | State or government account for 31% of Fraport AG's (ETR:FRA) ownership, while private companies account for 24% | |
| Key Insights Significant control over Fraport by state or government implies that the general public has more power to influence management and governance-related decisions 52% of the business is held by the top 2 shareholders Institutions own 24% of Fraport Every investor in Fraport AG (ETR:FRA) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are state or government with 31% ownership. Put another way, the group faces the maximum upside potential (or downside risk). Meanwhile, private companies make up 24% of the company’s shareholders. Let's delve deeper into each type of owner of Fraport, beginning with the chart below. Check out our latest analysis for Fraport XTRA:FRA Ownership Breakdown March 6th 2025 What Does The Institutional Ownership Tell Us About Fraport? 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. Fraport already has institutions on the share registry. Indeed, they own a respectable stake in the company. 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 Fraport's historic earnings and revenue below, but keep in mind there's always more to the story.XTRA:FRA Earnings and Revenue Growth March 6th 2025 We note that hedge funds don't have a meaningful investment in Fraport. Looking at our data, we can see that the largest shareholder is Land Hessen with 31% of shares outstanding. In comparison, the second and third largest shareholders hold about 21% and 8.4% of the stock. A more detailed study of the shareholder registry showed us that 2 of the top shareholders have a considerable amount of ownership in the company, via their 52% stake. 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too. Insider Ownership Of Fraport 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. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves. Story Continues Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances. 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-- including retail investors -- own 12% stake in the company, and hence can't easily be ignored. 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 It seems that Private Companies own 24%, of the Fraport stock. 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. Public Company Ownership Public companies currently own 8.4% of Fraport stock. We can't be certain but it is quite possible this is a strategic stake. The businesses may be similar, or work together. Next Steps: I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. To that end, you should be aware of the 1 warning sign we've spotted with Fraport . 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. View Comments |
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| 19.02.25 11:03:22 | Fraport (ETR:FRA) shareholders have endured a 12% loss from investing in the stock three years ago | |
| Fraport AG (ETR:FRA) shareholders should be happy to see the share price up 14% in the last quarter. But that cannot eclipse the less-than-impressive returns over the last three years. In fact, the share price is down 12% in the last three years, falling well short of the market return. So let's have a look and see if the longer term performance of the company has been in line with the underlying business' progress. Check out our latest analysis for Fraport While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price. Fraport became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move. We note that, in three years, revenue has actually grown at a 26% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating Fraport further; while we may be missing something on this analysis, there might also be an opportunity. You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).XTRA:FRA Earnings and Revenue Growth February 19th 2025 It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So we recommend checking out this freereport showing consensus forecasts A Different Perspective Fraport shareholders gained a total return of 11% during the year. But that was short of the market average. On the bright side, that's still a gain, and it is certainly better than the yearly loss of about 1.8% endured over half a decade. It could well be that the business is stabilizing. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with Fraport , and understanding them should be part of your investment process. But note: Fraport may not be the best stock to buy. So take a peek at this freelist of interesting companies with past earnings growth (and further growth forecast). 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. View Comments |
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| 20.01.25 09:59:25 | Fraport (ETR:FRA) Will Be Hoping To Turn Its Returns On Capital Around | |
| If we want to find a potential multi-bagger, often there are underlying trends that can provide clues. One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. If you see this, it typically means it's a company with a great business model and plenty of profitable reinvestment opportunities. However, after briefly looking over the numbers, we don't think Fraport (ETR:FRA) has the makings of a multi-bagger going forward, but let's have a look at why that may be. Understanding Return On Capital Employed (ROCE) Just to clarify if you're unsure, ROCE is a metric for evaluating how much pre-tax income (in percentage terms) a company earns on the capital invested in its business. The formula for this calculation on Fraport is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.042 = €724m ÷ (€20b - €2.3b) (Based on the trailing twelve months to September 2024). Thus, Fraport has an ROCE of 4.2%. Ultimately, that's a low return and it under-performs the Infrastructure industry average of 12%. See our latest analysis for Fraport XTRA:FRA Return on Capital Employed January 20th 2025 Above you can see how the current ROCE for Fraport compares to its prior returns on capital, but there's only so much you can tell from the past. If you'd like, you can check out the forecasts from the analysts covering Fraport for free. What Can We Tell From Fraport's ROCE Trend? On the surface, the trend of ROCE at Fraport doesn't inspire confidence. Over the last five years, returns on capital have decreased to 4.2% from 6.4% five years ago. Although, given both revenue and the amount of assets employed in the business have increased, it could suggest the company is investing in growth, and the extra capital has led to a short-term reduction in ROCE. If these investments prove successful, this can bode very well for long term stock performance. In Conclusion... Even though returns on capital have fallen in the short term, we find it promising that revenue and capital employed have both increased for Fraport. These growth trends haven't led to growth returns though, since the stock has fallen 18% over the last five years. So we think it'd be worthwhile to look further into this stock given the trends look encouraging. One more thing, we've spotted 1 warning sign facing Fraport that you might find interesting. While Fraport may not currently earn the highest returns, we've compiled a list of companies that currently earn more than 25% return on equity. Check out this freelist 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. View Comments |
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| 04.01.25 07:05:32 | Is There An Opportunity With Fraport AG's (ETR:FRA) 47% Undervaluation? | |
| Key Insights The projected fair value for Fraport is €111 based on 2 Stage Free Cash Flow to Equity Current share price of €59.30 suggests Fraport is potentially 47% undervalued The €61.44 analyst price target for FRA is 45% less than our estimate of fair value Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Fraport AG (ETR:FRA) as an investment opportunity by taking the expected future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Companies can be valued in a lot of ways, so we would point out that a DCF is not perfect for every situation. 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. View our latest analysis for Fraport Step By Step Through The Calculation We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. 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 need to discount the sum of these future cash flows to arrive at a present value estimate: 10-year free cash flow (FCF) forecast 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (€, Millions) -€32.8m €404.6m €526.0m €767.0m €880.0m €960.3m €1.02b €1.08b €1.12b €1.15b Growth Rate Estimate Source Analyst x10 Analyst x10 Analyst x1 Analyst x1 Analyst x1 Est @ 9.13% Est @ 6.68% Est @ 4.96% Est @ 3.76% Est @ 2.92% Present Value (€, Millions) Discounted @ 9.2% -€30.0 €339 €404 €539 €567 €566 €553 €532 €505 €476 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = €4.5b 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 1.0%. We discount the terminal cash flows to today's value at a cost of equity of 9.2%. Story Continues Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = €1.1b× (1 + 1.0%) ÷ (9.2%– 1.0%) = €14b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €14b÷ ( 1 + 9.2%)10= €5.8b 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 €10b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of €59.3, the company appears quite undervalued at a 47% discount to where the stock price trades currently. 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.XTRA:FRA Discounted Cash Flow January 4th 2025 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 Fraport 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 9.2%, which is based on a levered beta of 2.000. 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 Fraport Strength Earnings growth over the past year exceeded the industry. Debt is well covered by earnings. Weakness Earnings growth over the past year is below its 5-year average. Opportunity Annual earnings are forecast to grow for the next 4 years. Good value based on P/E ratio and estimated fair value. Threat Debt is not well covered by operating cash flow. Annual earnings are forecast to grow slower than the German market. Moving On: 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. 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. What is the reason for the share price sitting below the intrinsic value? For Fraport, we've put together three fundamental elements you should consider: Risks: You should be aware of the 1 warning sign for Fraport we've uncovered before considering an investment in the company. Future Earnings: How does FRA'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. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the XTRA every day. If you want to find the calculation for other stocks 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. View Comments |
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| 21.12.24 06:34:52 | If EPS Growth Is Important To You, Fraport (ETR:FRA) Presents An Opportunity | |
| For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should. So if this idea of high risk and high reward doesn't suit, you might be more interested in profitable, growing companies, like Fraport (ETR:FRA). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it. View our latest analysis for Fraport Fraport's Improving Profits Fraport has undergone a massive growth in earnings per share over the last three years. So much so that this three year growth rate wouldn't be a fair assessment of the company's future. As a result, we'll zoom in on growth over the last year, instead. Fraport's EPS has risen over the last 12 months, growing from €4.15 to €4.94. There's little doubt shareholders would be happy with that 19% gain. Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Fraport remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 14% to €4.4b. That's progress. You can take a look at the company's revenue and earnings growth trend, in the chart below. For finer detail, click on the image.XTRA:FRA Earnings and Revenue History December 21st 2024 In investing, as in life, the future matters more than the past. So why not check out this freeinteractive visualization of Fraport's forecast profits? Are Fraport Insiders Aligned With All Shareholders? It's a good habit to check into a company's remuneration policies to ensure that the CEO and management team aren't putting their own interests before that of the shareholder with excessive salary packages. The median total compensation for CEOs of companies similar in size to Fraport, with market caps between €3.8b and €12b, is around €3.2m. Fraport offered total compensation worth €1.7m to its CEO in the year to December 2023. That comes in below the average for similar sized companies and seems pretty reasonable. While the level of CEO compensation shouldn't be the biggest factor in how the company is viewed, modest remuneration is a positive, because it suggests that the board keeps shareholder interests in mind. It can also be a sign of good governance, more generally. Story Continues Does Fraport Deserve A Spot On Your Watchlist? One positive for Fraport is that it is growing EPS. That's nice to see. Not only that, but the CEO is paid quite reasonably, which should prompt investors to feel more trusting of the board of directors. All things considered, Fraport is definitely worth taking a deeper dive into. You should always think about risks though. Case in point, we've spotted 1 warning sign for Fraport you should be aware of. While opting for stocks without growing earnings and absent insider buying can yield results, for investors valuing these key metrics, here is a carefully selected list of companies in DE with promising growth potential and insider confidence. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. 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. View Comments |
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| 12.10.24 08:43:09 | Is It Time To Consider Buying Fraport AG (ETR:FRA)? | |
| Fraport AG (ETR:FRA), might not be a large cap stock, but it saw a decent share price growth of 11% on the XTRA over the last few months. The recent rally in share prices has nudged the company in the right direction, though it still falls short of its yearly peak. With many analysts covering the mid-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Fraport’s valuation and outlook in more detail to determine if there’s still a bargain opportunity. Check out our latest analysis for Fraport What's The Opportunity In Fraport? Great news for investors – Fraport is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We’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 9.73x is currently well-below the industry average of 15.79x, meaning that it is trading at a cheaper price relative to its peers. However, given that Fraport’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 Fraport 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. Though in the case of Fraport, it is expected to deliver a relatively unexciting earnings growth of 7.3%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term. What This Means For You Are you a shareholder? Even though growth is relatively muted, since FRA is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple. Are you a potential investor? If you’ve been keeping an eye on FRA for a while, now might be the time to make a leap. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy FRA. 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 assessment. Story continues If you want to dive deeper into Fraport, you'd also look into what risks it is currently facing. While conducting our analysis, we found that Fraport has 1 warning sign and it would be unwise to ignore it. If you are no longer interested in Fraport, 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. View comments |
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