Værdiansættelse af Pandora A/S

Philip V. Hygom

Student thesis: Master thesis


Pandora has decreased significantly in value since the initial public offering (IPO) on October 5 2010. When the second quarter report for 2011 was published in August 2011 Pandora dropped 65% in value on one single trading day. The results of this thesis should help clarify whether the equity is now priced properly. The purpose of the thesis is to estimate the equity value of Pandora A/S. The valuation is divided into four parts. The first part is a strategic analysis that focuses on analyzing Pandora on a micro- and macroeconomic basis. The second part analyses the financial performance in a historical view. In the third part the findings from the strategic and financial analysis is used to create the budget forecast. The last part consists of a valuation and a sensitivity analysis of the findings. The strategic analysis shows that Pandora is a leading manufacturer of charms and bracelets with a strong brand and a vertical integrated business model. Pandora has a strong sales potential in new Asian markets but is very dependent on the sale of charms in case the consumer behavior changes. The sales growth has been low since 2010, which mainly has been a result of the decision to increase prices. The profit margins are high, but have been decreasing as a result of increased costs to distribution and administration. Following the second quarter results in 2011 it was decided to lower the prices and initiate a stock rebalancing program for the retailers. Pandora seems to be on the right track with these recent initiatives. For the valuation there have been used two different methods. The first is a present value approach and the second is a relative valuation that includes a peer-group. The result of the present value approach is a stock value of 108 DKK, which is 29% higher than the current price. The valuation is based on three different scenarios where the results have been weighted in line with the estimated probability. The relative valuation approach indicates that Pandora is inexpensive compared to the peers. The average level for three multiples has been calculated for the peer-group. Using these average multiples indicates that the stock price for Pandora should be between 150 DKK and 232 DKK. The present value approach however is assessed to be the method that provides the most precise and correct estimate due to the level of detail. It is therefore estimated that the stock is 29% underestimated compared to the current stock price at 84 DKK.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
Publication date2012
Number of pages94