| Siltronic AG (DE000WAF3001) | |||
39,94 EURStand (close): 04.07.25 |
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| Datum / Uhrzeit | Titel | Bewertung |
| 07.03.25 07:02:56 | Siltronic AG (SSLLF) Q4 2024 Earnings Call Highlights: Navigating Challenges with Strategic ... |  |
| Revenue: EUR1.4 billion, reflecting a 7% decline year-over-year. EBITDA: EUR364 million, down EUR70 million compared to 2023. EBITDA Margin: 26% for the full year. Net Income: EUR67 million for the full year. Net Financial Debt: Increased to EUR734 million by the end of 2024. CapEx: EUR523 million for 2024, with a planned reduction to EUR350 million to EUR400 million in 2025. Equity Ratio: Decreased to 44%. Dividend Proposal: $0.20 per share, approximately 10% payout ratio. Depreciation and Amortization: Expected to be between EUR380 million and EUR440 million in 2025. Sales Guidance for 2025: Anticipated to be in the region of 2024 levels. EBIT Guidance for 2025: Expected to be significantly lower than the previous year and negative. Warning! GuruFocus has detected 8 Warning Signs with SSLLF. Release Date: March 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points Siltronic AG (SSLLF) achieved its annual guidance at the upper end despite challenges in 2024. The company maintained a stable market share in the semiconductor-based market. A positive development in 300 millimeter wafers compensated for the planned exit from the SD sales business. Siltronic AG (SSLLF) implemented a stringent cost and cash management program, resulting in a resilient EBITDA margin of 26%. The company is well-positioned for growth, with strong relationships with major industry players and a focus on leading-edge technologies. Negative Points Year-over-year sales declined by 7%, reflecting subdued demand in the wafer industry. Net financial debt increased to EUR734 million due to continued negative net cash flow. The company anticipates a further reduction in CapEx payments in 2025, but net cash flow will remain significantly negative. Siltronic AG (SSLLF) expects sales in 2025 to be similar to 2024, with a negative impact on average selling prices. The company plans to reduce its dividend to $0.20 per share, corresponding to a payout ratio of approximately 10% of consolidated net income. Q & A Highlights Q: What gives you confidence in a strong ramp in the second half of 2025, given the guidance for a high single-digit decline in the first half? Also, what are your assumptions for demand, particularly in the automotive sector? A: Michael Heckmeier, CEO: We have seen some customers asking for volume postponements from H1 to H2, which aligns with the general industry sentiment that H2 should be better. Regarding automotive demand, we see growth driven by electro mobility and server market dynamics. However, macroeconomic factors could affect PC and smartphone unit growth, making our 7% growth assumption balanced with some risks and opportunities. Story Continues Q: Can you provide more color on inventory levels, particularly in logic, and how they compare to your peers? A: Michael Heckmeier, CEO: We gather information from public sources and direct customer insights. Logic inventories are close to normal, unlike memory and power segments, which are more elevated. Our visibility comes from aligning customer insights with publicly available data. Q: How does spot market pricing differ from LTA pricing for 12-inch wafers, and what pricing is embedded in your guidance for this year? A: Michael Heckmeier, CEO: Two-thirds of our business is in LTAs, with prices honored by customers. Spot market pricing is more variable, with smaller diameters facing more pressure. We saw some price effects in 2024, which will continue in 2025, but two-thirds of our business remains unaffected by these changes. Q: Are you seeing any replacement of demand for your wafers by local Chinese manufacturers, particularly for 300mm wafers? A: Michael Heckmeier, CEO: The market situation in China is stable, with no significant changes in market share. Local Chinese manufacturers are more advanced in smaller diameters, but there are still gaps in 300mm, especially in high-end and leading-edge segments. Q: What is the impact of the 150mm wafer phase-out on sales and costs, and how does it affect your financials? A: Michael Heckmeier, CEO: The 150mm business is a minor part of our sales, with a mid-single-digit share in 2024, declining in 2025. The phase-out is progressing smoothly, with minimal impact on costs. Claudia Schmitt, CFO: The financial impact is minor, with no significant effect on COGS. 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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| 04.02.25 06:57:59 | Germany's Siltronic sees stagnant sales in 2025, postpones mid-term targets | |
| By Ozan Ergenay (Reuters) -German semiconductor materials supplier Siltronic expects no increase in sales this year after a 7% drop in 2024, citing high inventory levels, it said on Tuesday. "For the year 2025, we anticipate that the growth in the end-markets, primarily driven by AI, will not yet be reflected in our wafer demand due to the persistently elevated inventory levels in the value chain," CEO Michael Heckmeier said in a statement. Its shares, which lost around 47% last year, were down 8% in early Frankfurt trade as of 0713 GMT. Siltronic, which makes silicon wafers used in semiconductor chips, anticipates that the first half of 2025 will be considerably weaker than the second half of 2024. The German company also said its mid-term targets for 2028 were expected to be realised after the year 2028. It did not give a new timeframe. "The weak guidance is another disappointment," Stifel analyst Juergen Wagner said in a note, adding it could lead to a more than 20% revision to 2025 earnings per share forecasts. Last week, STMicroelectronics, one of Europe's largest chipmakers, flagged that it was too early to give forecasts for 2025 as a downturn seen in its key automotive and industrial markets drags on into the new year. Siltronic also cut its dividend late on Monday and said it would propose a reduced payout of 0.20 euros for the financial year of 2024. The company reported preliminary 2024 revenue of 1.41 billion euros ($1.45 billion), down from 1.51 billion euros a year earlier, versus expectations of 1.40 billion euros, based on a poll by Vara Research. It said it will give a more detailed outlook at the release of its annual report on March 6. ($1 = 0.9713 euros) (Reporting by Ozan Ergenay; Editing by Christopher Cushing, Sherry Jacob-Phillips and Louise Heavens) View Comments |
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| 14.10.24 13:21:18 | Returns On Capital At Siltronic (ETR:WAF) Paint A Concerning Picture | |
| If you're not sure where to start when looking for the next multi-bagger, there are a few key trends you should keep an eye out for. Firstly, we'd want to identify a growing return on capital employed (ROCE) and then alongside that, an ever-increasing base of capital employed. This shows us that it's a compounding machine, able to continually reinvest its earnings back into the business and generate higher returns. In light of that, when we looked at Siltronic (ETR:WAF) and its ROCE trend, we weren't exactly thrilled. Return On Capital Employed (ROCE): What Is It? For those that aren't sure what ROCE is, it measures the amount of pre-tax profits a company can generate from the capital employed in its business. The formula for this calculation on Siltronic is: Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets - Current Liabilities) 0.033 = €134m ÷ (€4.6b - €526m) (Based on the trailing twelve months to June 2024). So, Siltronic has an ROCE of 3.3%. Ultimately, that's a low return and it under-performs the Semiconductor industry average of 14%. Check out our latest analysis for Siltronic roce In the above chart we have measured Siltronic's prior ROCE against its prior performance, but the future is arguably more important. If you'd like to see what analysts are forecasting going forward, you should check out our free analyst report for Siltronic . What The Trend Of ROCE Can Tell Us When we looked at the ROCE trend at Siltronic, we didn't gain much confidence. Over the last five years, returns on capital have decreased to 3.3% from 29% five years ago. And considering revenue has dropped while employing more capital, we'd be cautious. This could mean that the business is losing its competitive advantage or market share, because while more money is being put into ventures, it's actually producing a lower return - "less bang for their buck" per se. What We Can Learn From Siltronic's ROCE In summary, we're somewhat concerned by Siltronic's diminishing returns on increasing amounts of capital. And long term shareholders have watched their investments stay flat over the last five years. That being the case, unless the underlying trends revert to a more positive trajectory, we'd consider looking elsewhere. Since virtually every company faces some risks, it's worth knowing what they are, and we've spotted 3 warning signs for Siltronic (of which 1 shouldn't be ignored!) that you should know about. If you want to search for solid companies with great earnings, check out this freelist of companies with good balance sheets and impressive returns on equity. 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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| 28.09.24 08:12:49 | Following a 12% decline over last year, recent gains may please Siltronic AG (ETR:WAF) institutional owners | |
| Key Insights Significantly high institutional ownership implies Siltronic's stock price is sensitive to their trading actions 53% of the business is held by the top 5 shareholders Ownership research along with analyst forecasts data help provide a good understanding of opportunities in a stock A look at the shareholders of Siltronic AG (ETR:WAF) can tell us which group is most powerful. The group holding the most number of shares in the company, around 45% to be precise, is institutions. In other words, the group stands to gain the most (or lose the most) from their investment into the company. After a year of 12% losses, last week’s 5.4% gain would be welcomed by institutional investors as a possible sign that returns might start trending higher. In the chart below, we zoom in on the different ownership groups of Siltronic. See our latest analysis for Siltronic ownership-breakdown What Does The Institutional Ownership Tell Us About Siltronic? 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. We can see that Siltronic does have institutional investors; and they hold a good portion of the company's stock. 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. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Siltronic's earnings history below. Of course, the future is what really matters. earnings-and-revenue-growth Siltronic is not owned by hedge funds. Dr. Alexander Wacker Familiengesellschaft mbH is currently the company's largest shareholder with 31% of shares outstanding. In comparison, the second and third largest shareholders hold about 8.7% and 5.3% of the stock. To make our study more interesting, we found that the top 5 shareholders control more than half of the company which implies that this group has considerable sway over the company's decision-making. 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. There are plenty of analysts covering the stock, so it might be worth seeing what they are forecasting, too. Insider Ownership Of Siltronic 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. 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. 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 11% ownership, the general public, mostly comprising of individual investors, have some degree of sway over Siltronic. 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 Equity Ownership Private equity firms hold a 5.3% stake in Siltronic. This suggests they can be influential in key policy decisions. Sometimes we see private equity stick around for the long term, but generally speaking they have a shorter investment horizon and -- as the name suggests -- don't invest in public companies much. After some time they may look to sell and redeploy capital elsewhere. Private Company Ownership It seems that Private Companies own 31%, of the Siltronic stock. It might be worth looking deeper into this. If related parties, such as insiders, have an interest in one of these private companies, that should be disclosed in the annual report. Private companies may also have a strategic interest in the company. Public Company Ownership It appears to us that public companies own 8.7% of Siltronic. It's hard to say for sure but this suggests they have entwined business interests. This might be a strategic stake, so it's worth watching this space for changes in ownership. Next Steps: It's always worth thinking about the different groups who own shares in a company. But to understand Siltronic better, we need to consider many other factors. Case in point: We've spotted 3 warning signs for Siltronic you should be aware of, and 1 of them makes us a bit uncomfortable. 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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| 11.09.24 06:13:48 | Are Siltronic AG's (ETR:WAF) Mixed Financials The Reason For Its Gloomy Performance on The Stock Market? | |
| With its stock down 9.5% over the past three months, it is easy to disregard Siltronic (ETR:WAF). It is possible that the markets have ignored the company's differing financials and decided to lean-in to the negative sentiment. Stock prices are usually driven by a company’s financial performance over the long term, and therefore we decided to pay more attention to the company's financial performance. In this article, we decided to focus on Siltronic's ROE. 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. See our latest analysis for Siltronic 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 Siltronic is: 5.5% = €118m ÷ €2.2b (Based on the trailing twelve months to June 2024). The 'return' is the profit over the last twelve months. Another way to think of that is that for every €1 worth of equity, the company was able to earn €0.05 in profit. Why Is ROE Important For Earnings Growth? Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Depending on how much of these profits the company reinvests or "retains", and how effectively it does so, we are then able to assess a company’s earnings growth potential. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don't necessarily bear these characteristics. Siltronic's Earnings Growth And 5.5% ROE On the face of it, Siltronic's ROE is not much to talk about. 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 14%. As a result, Siltronic's flat net income growth over the past five years doesn't come as a surprise given its lower ROE. As a next step, we compared Siltronic's net income growth with the industry and were disappointed to see that the company's growth is lower than the industry average growth of 38% in the same period. past-earnings-growth Earnings growth is an important metric to consider when valuing a stock. What investors need to determine next is if the expected earnings growth, or the lack of it, is already built into the share price. Doing so will help them establish if the stock's future looks promising or ominous. 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 Siltronic is trading on a high P/E or a low P/E, relative to its industry. Story continues Is Siltronic Efficiently Re-investing Its Profits? Despite having a normal three-year median payout ratio of 27% (implying that the company keeps 73% of its income) over the last three years, Siltronic has seen a negligible amount of growth in earnings as we saw above. Therefore, there might be some other reasons to explain the lack in that respect. For example, the business could be in decline. Additionally, Siltronic has paid dividends over a period of seven years, which means that the company's management is determined to pay dividends even if it means little to no earnings growth. Looking at the current analyst consensus data, we can see that the company's future payout ratio is expected to rise to 54% over the next three years. Despite the higher expected payout ratio, the company's ROE is not expected to change by much. Conclusion On the whole, we feel that the performance shown by Siltronic can be open to many interpretations. While the company does have a high rate of reinvestment, the low ROE means that all that reinvestment is not reaping any benefit to its investors, and moreover, its having a negative impact on the earnings growth. With that said, the latest industry analyst forecasts reveal that the company's earnings are expected to accelerate. 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. View comments |
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| 06.08.24 07:13:21 | Earnings Troubles May Signal Larger Issues for Siltronic (ETR:WAF) Shareholders |  |
| Despite Siltronic AG's (ETR:WAF) recent earnings report having lackluster headline numbers, the market responded positively. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Siltronic. Check out our latest analysis for Siltronic earnings-and-revenue-history Zooming In On Siltronic's Earnings Many investors haven't heard of the accrual ratio from cashflow, but it is actually a useful measure of how well a company's profit is backed up by free cash flow (FCF) during a given period. To get the accrual ratio we first subtract FCF from profit for a period, and then divide that number by the average operating assets for the period. The ratio shows us how much a company's profit exceeds its FCF. Therefore, it's actually considered a good thing when a company has a negative accrual ratio, but a bad thing if its accrual ratio is positive. That is not intended to imply we should worry about a positive accrual ratio, but it's worth noting where the accrual ratio is rather high. That's because some academic studies have suggested that high accruals ratios tend to lead to lower profit or less profit growth. Over the twelve months to June 2024, Siltronic recorded an accrual ratio of 0.30. We can therefore deduce that its free cash flow fell well short of covering its statutory profit, suggesting we might want to think twice before putting a lot of weight on the latter. In the last twelve months it actually had negative free cash flow, with an outflow of €626m despite its profit of €111.0m, mentioned above. We also note that Siltronic's free cash flow was actually negative last year as well, so we could understand if shareholders were bothered by its outflow of €626m. That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates. Our Take On Siltronic's Profit Performance Siltronic's accrual ratio for the last twelve months signifies cash conversion is less than ideal, which is a negative when it comes to our view of its earnings. Because of this, we think that it may be that Siltronic's statutory profits are better than its underlying earnings power. In further bad news, its earnings per share decreased in the last year. Of course, we've only just scratched the surface when it comes to analysing its earnings; one could also consider margins, forecast growth, and return on investment, among other factors. If you'd like to know more about Siltronic as a business, it's important to be aware of any risks it's facing. Case in point: We've spotted 3 warning signs for Siltronic you should be mindful of and 1 of these is significant. Story continues Today we've zoomed in on a single data point to better understand the nature of Siltronic's profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. While it might take a little research on your behalf, you may find this free collection of companies boasting high return on equity, or this list of stocks with significant insider holdings to be useful. 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. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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| 28.07.24 07:23:37 | Siltronic AG Just Reported A Surprise Profit, And Analysts Lifted Their Estimates | |
| It's been a good week for Siltronic AG (ETR:WAF) shareholders, because the company has just released its latest second-quarter results, and the shares gained 4.4% to €74.50. Siltronic beat expectations by 6.7% with revenues of €351m. It also surprised on the earnings front, with an unexpected statutory profit of €0.73 per share a nice improvement on the losses that the analysts forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Siltronic after the latest results. Check out our latest analysis for Siltronic earnings-and-revenue-growth Following last week's earnings report, Siltronic's eleven analysts are forecasting 2024 revenues to be €1.39b, approximately in line with the last 12 months. Statutory earnings per share are forecast to plummet 85% to €0.56 in the same period. Before this earnings report, the analysts had been forecasting revenues of €1.38b and earnings per share (EPS) of €0.26 in 2024. Although the revenue estimates have not really changed, we can see there's been a massive increase in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result. There's been no major changes to the consensus price target of €89.36, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Siltronic, with the most bullish analyst valuing it at €110 and the most bearish at €67.00 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable. These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Siltronic's past performance and to peers in the same industry. We would highlight that revenue is expected to reverse, with a forecast 1.8% annualised decline to the end of 2024. That is a notable change from historical growth of 5.8% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 8.5% per year. It's pretty clear that Siltronic's revenues are expected to perform substantially worse than the wider industry. Story continues The Bottom Line The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Siltronic following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates. With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Siltronic going out to 2026, and you can see them free on our platform here.. You should always think about risks though. Case in point, we've spotted 2 warning signs for Siltronic you should be aware of, and 1 of them is significant. 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. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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| 25.07.24 05:20:40 | Siltronic upgrades full-year guidance despite weak demand | |
| (Reuters) - German semiconductor materials supplier Siltronic reported a 14% drop in its half-year sales on Thursday, due to weak demand in the wafer market. The company, which makes silicon wafers used in semiconductor chips, posted revenue of 694.8 million euros ($753 million) for the first half of the year, compared with 808.2 million euros a year earlier. ($1 = 0.9226 euros) (Reporting by Ozan Ergenay; Editing by Himani Sarkar) View comments |
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| 24.07.24 04:52:31 | Are Investors Undervaluing Siltronic AG (ETR:WAF) By 49%? | |
| Key Insights Using the 2 Stage Free Cash Flow to Equity, Siltronic fair value estimate is €140 Siltronic is estimated to be 49% undervalued based on current share price of €71.75 Our fair value estimate is 57% higher than Siltronic's analyst price target of €89.55 Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Siltronic AG (ETR:WAF) as an investment opportunity by taking the forecast future cash flows of the company and discounting them back to today's value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. It may sound complicated, but actually it is quite simple! 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. Check out our latest analysis for Siltronic The Method 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. 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) estimate 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Levered FCF (€, Millions) €38.4m €182.6m €236.6m €276.3m €309.4m €335.9m €356.7m €373.0m €385.6m €395.5m Growth Rate Estimate Source Analyst x7 Analyst x5 Analyst x1 Est @ 16.79% Est @ 11.96% Est @ 8.57% Est @ 6.21% Est @ 4.55% Est @ 3.39% Est @ 2.58% Present Value (€, Millions) Discounted @ 8.2% €35.5 €156 €187 €202 €209 €210 €206 €199 €190 €181 ("Est" = FCF growth rate estimated by Simply Wall St) Present Value of 10-year Cash Flow (PVCF) = €1.8b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (0.7%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.2%. Story continues Terminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = €396m× (1 + 0.7%) ÷ (8.2%– 0.7%) = €5.3b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= €5.3b÷ ( 1 + 8.2%)10= €2.4b The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is €4.2b. To get the intrinsic value per share, we divide this by the total number of shares outstanding. Compared to the current share price of €71.8, the company appears quite undervalued at a 49% discount to where the stock price trades currently. The assumptions in any calculation have a big impact on the valuation, so it is better to view this as a rough estimate, not precise down to the last cent. 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. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own 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 Siltronic 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 8.2%, which is based on a levered beta of 1.624. 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 Siltronic 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 Semiconductor market. Opportunity Annual revenue is forecast to grow faster than the German market. Trading below our estimate of fair value by more than 20%. Threat Paying a dividend but company has no free cash flows. Annual earnings are forecast to decline for the next 3 years. Looking Ahead: 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 discount to intrinsic value? For Siltronic, there are three pertinent items you should consider: Risks: To that end, you should learn about the 4 warning signs we've spotted with Siltronic (including 2 which don't sit too well with us) . Future Earnings: How does WAF'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. 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. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments() |
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| 04.07.24 03:02:44 | Choosing Beyond Siltronic For One Superior Dividend Stock | |
| In the German equity market, where dividends have seen an average growth of 6.4% over the past year, investors are often drawn to stocks offering attractive payouts. However, it's crucial to examine not just the size of the dividend but its growth trajectory as well. Companies with declining dividends, such as Siltronic, may pose risks for those relying on dividend income for long-term financial stability. Top 10 Dividend Stocks In Germany Name Dividend Yield Dividend Rating Allianz (XTRA:ALV) 5.31% ★★★★★★ Deutsche Post (XTRA:DHL) 4.67% ★★★★★★ Südzucker (XTRA:SZU) 6.41% ★★★★★☆ OVB Holding (XTRA:O4B) 4.79% ★★★★★☆ DATA MODUL Produktion und Vertrieb von elektronischen Systemen (XTRA:DAM) 6.67% ★★★★★☆ MLP (XTRA:MLP) 5.14% ★★★★★☆ INDUS Holding (XTRA:INH) 4.98% ★★★★★☆ Deutsche Telekom (XTRA:DTE) 3.24% ★★★★★☆ Mercedes-Benz Group (XTRA:MBG) 8.12% ★★★★★☆ Uzin Utz (XTRA:UZU) 3.14% ★★★★★☆ Click here to see the full list of 31 stocks from our Top Dividend Stocks screener. Here we highlight one of our preferred stocks from the screener and one that could be better to shun. Top Pick Heidelberg Materials Simply Wall St Dividend Rating: ★★★★☆☆ Overview: Heidelberg Materials AG operates globally, producing and distributing cement, aggregates, ready-mixed concrete, and asphalt, with a market capitalization of approximately €17.59 billion. Operations: The company generates revenue through several key segments: €11.21 billion from cement, €4.88 billion from aggregates, and €5.90 billion from ready-mixed concrete and asphalt. Dividend Yield: 3.1% Heidelberg Materials AG, despite a volatile dividend history over the past decade, has demonstrated resilience with a recent 15% increase in its annual dividend payout to €3 per share. The company's dividends are well-covered by both earnings and cash flows, with payout ratios of 27.3% and 29%, respectively. This coverage is complemented by consistent earnings growth, including a notable 26.6% rise last year and an expected annual growth rate of 4.28%. However, its current yield of 3.16% remains below the German market's top quartile average of 4.66%. Recent strategic moves include significant fixed-income green bond offerings totaling €685 million and an aggressive share buyback program signaling strong financial confidence moving forward. Dive into the specifics of Heidelberg Materials here with our thorough dividend report. The analysis detailed in our Heidelberg Materials valuation report hints at an deflated share price compared to its estimated value. XTRA:HEI Dividend History as at Jul 2024 One To Reconsider Siltronic Simply Wall St Dividend Rating: ★★☆☆☆☆ Story continues Overview: Siltronic AG operates globally, supplying hyperpure semiconductor silicon wafers, with a market capitalization of approximately €2.21 billion. Operations: The company generates €1.45 billion primarily from the development, production, and sale of semiconductor silicon wafers. Dividend Yield: 1.6% Siltronic AG's dividend profile is less appealing due to its unstable and declining payouts, with a recent annual drop exceeding 20%. Despite a low payout ratio of 25%, indicating earnings coverage, the dividends are not supported by free cash flows. Additionally, the company's profit margins have decreased from 19.7% to 9.9% over the past year, and earnings are projected to shrink annually by 1.5% for the next three years. This financial backdrop suggests caution for dividend-focused investors considering Siltronic AG. Click here and access our complete dividend analysis report to understand the dynamics of Siltronic. XTRA:WAF Dividend History as at Jul 2024 Summing It All Up Unlock our comprehensive list of 31 Top Dividend Stocks by clicking here. Are you invested in any of these stocks already? Keep abreast of every twist and turn by setting up a portfolio with Simply Wall St, where we make it simple for investors like you to stay informed and proactive. Enhance your investing ability with the Simply Wall St app and enjoy free access to essential market intelligence spanning every continent. Contemplating Other Strategies? Explore high-performing small cap companies that haven't yet garnered significant analyst attention. Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management. Find companies with promising cash flow potential yet trading below their fair value. 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. Companies discussed in this article include XTRA:HEI and XTRA:WAF. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com View comments |
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