An analysis and valuation of Ekornes Group

Christian Lønn Jacobsen

Student thesis: Master thesis


This thesis presents the results from a historical analysis and a valuation of Ekornes Group. Ekornes Group is the largest furniture producer in Norway, and a leading furniture producer located in the Nordic region. Ekornes have three major product lines and registered trademarks, Stressless®, Svane® and Ekornes®. The main purpose of the paper is to provide the reader with a theoretical value of Ekornes Group. In order to do so, a number of mathematical and statistical approaches are being applied in an indepth analysis of Ekornes historic economical performance and cost of capital estimation. The thesis is largely based on the framework for valuation by McKinsey & Co, namely their enterprise discounted cash flow model. The financial statements have been reorganized to reflect economic value and measures of economical profitability based on the recommendations from McKinsey & Co. The discounted free cash flow model applied to the case of Ekornes Group indicates an equity value of approximately NOK 3.4 billion, NOK 91.99 per share. The estimated value of Ekornes Group is higher than the value of which the company was trading at on the base date. The theoretical value indicates that Ekornes Group could be undervalued by the market. A number of tools have been applied to validate the result from the discounted free cash flow model. Checking the integrity of the results is an important part of this report, as the future is highly uncertain to predict multiple assumptions have been made in the valuation process. The main conclusion drawn from the different analytical tools, included validity checking is that the value estimated by the discounted free cash flow method is the best current estimate. If a recommendation on a position in Ekornes ASA stock should be made on the basis of this thesis, it would advocate a buy recommendation.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2009
Number of pages88