The Attractiveness and Fair Value of a Growth Stock: A Case Study of Fingerprint Cards

Farrukh Mobeen

Student thesis: Master thesis

Abstract

The purpose of this paper is to determine the attractiveness of the stock of high growth company dealing in a newly developed market segment. The goal is to disclose the future perspective of firm and estimate a fair and justified value while combining both the traditional approaches and those used by recent literatures for the analysis of high growth and high tech firms.
In order to achieve the desired target this paper has been given the shape of case study of Fingerprint cards. A high growth firm with an extremely volatile past, dealing in a newly developed market segment.
The paper is divided into different segments consisting of the background, fundamental analysis, forecasts and valuation. With the link of different segments and the market conditions, the future prospect of the firm has been disclosed in a fairly justified manner. Some of the ratios, activities and so transformations may differ from traditional theories and literature. This is solely because of the fact that companies used in the analysis of this paper are high growth companies in a newly developed market segment which is also offering vast growth potential with numerous ongoing transformations. It makes a lot of uncertainty and so vast fluctuations in the expected traditional results. This correspondingly fulfils the main purpose of this paper ‘valuing high growth companies’ and reaching a justified value while experiencing the differences and difficulties of the process.
Furthermore, the process also attempts to elaborate the fact that how investors are willing to pay more for high growth companies which they might not be willing to do following traditional theories of valuation.
Along with other differences one of major variances is the extreme dependence of vale on future prospect. Therefore, more part of this paper looks at the future and current strategic aspects of the firms rather than historical financial performances.
With all the considerations in the analysis Fingerprint Cards (FPC) is finally valued using the discounted cash flow (DCF) and economic value added (EVA) models and a conclusion is made on the variations between the traded value and value estimated from the perspective of this paper.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2016
Number of pages95