Strategisk analyse og værdiansættelse af Pandora

Abstract

The purpose of the thesis is to assess, whether Pandora is correctly valued on the market on April 30 2014. The background of the choice of the valuation as a subject owes to a great personal interest in the development of the stock market. That the choice fell on Pandora as a company owes to the corporation experienced a turbulent period since its introduction at the stock exchange in 2010. New and more expensive goods along with price increases on the products contributed to core customers no longer demanded Pandora’s jewelry and hence growth evaporated. Since 2011 Pandora has worked its way back to a market segment, where everybody can afford Pandora’s jewelry. The valuation of Pandora is accomplished taking as its point of departure a study of the non‐financial and financial value drivers. In the study of non‐financial value drivers as crucial relations of future cash flows are identified. It is found that Pandora is facing uncertainty in terms of inputs due to production is concentrated in Thailand. Furthermore, the majority of revenues originate from one product. Hence, Pandora is very dependent of this product and the ability to create new best‐selling products, if the current product goes out of fashion. The study of financial value drivers offered the opportunity to examine the historical earnings. Pandora has had solid returns over the past five years. Yet, the returns have fallen. In addition to gearing due to the decrease in operating margins an increased turnover rate is seen. Taking the study of the non‐financial and financial value drivers as a point of departure future, expectations are budgeted. The budgeting covers a five year period followed by a constant terminal period. The appraisal itself is achieved by the use of the FCFF model, where the total corporate value is calculated. In the thesis the choice of model is explained as the most applicable in relation to Pandora. The value of Pandora is in the thesis calculated to 327 D.Kr. per share. The market rate per April 30 2014 is 361.90 D.Kr. Thus, Pandora is overrated with 9.6 % and hence, it is not assessed that Pandora is correctly valuated. The valuation though is associated with important uncertainties. A change in the setting of a number of conditions of budgeting might have resulted in another value, including the determination of the growth in revenue, the determination of costs as a percentage of revenue, as well as determining the WACC.