Værdiansættelse af Bang & Olufsen A/S

Poul Nick Sørensen & Morten Rovelt

Student thesis: Master thesis


The objective of this thesis is to estimate the value of Bang & Olufsen A/S. Our main question is; “What should the stand-alone rate of one Bang & Olufsen A/S stock be as pr. August 18th 2011, and is the stock attractive as a passive investment?" To reach a conclusion of the main question, we have made a fundamental analysis. This analysis consists of a strategic analysis and an economical analysis. The strategic analysis will focus on the company’s internal and external environment, while the economical analysis will focus on the company’s historical performance compared to a chosen peer-group. Based on the conclusions reached from the analysis, we will make a 5-year budget period and a terminal period. The budget and terminal period will be used to estimate the future cashflow. The calculated cash-flow will be used in the discounted cash flow model for the valuation of the total company price per august 18th 2011. The total company price will be divided with the number of shares, taking the number of outstanding options in consideration, in order to estimate the price of a single stock. In addition to valuation by the DCF-model, a valuation of Bang & Olufsen using multiples EV/EBIT, EV/SALES and P/B will also be made The internal and external analysis of Bang & Olufsen A/S showed that Bang & Olufsen A/S has adapted to their new activity level and is ready for future growth. The analysis showed that Bang & Olufsen A/S operates in a market with high entry barriers and Bang & Olufsen A/S gross profit is higher than its Peer-group and even higher than its second Peer-group. This is a result of B&O A/S´ special knowledge within sound acoustics, competitive advantages when processing aluminum and their strong minimalistic design. Furthermore Bang & Olufsen A/S has made a worldwide distribution agreement with Apple concerning stand alone products from Bang & Olufsen A/S. Its was also analyzed that Bang & Olufsen A/S revenue on their two business areas ICEpower and Automotive is influenced in the same directions as the development in its partners activity. We concluded that there are good indications from business partners, that they expect an increase in their activity. The revenue in Bang & Olufsen A/S third business area, Audio & Video, is strongly influenced in the same direction as the fluctuations of the markets it operates on. We concluded that there are good indications that the economy in Europe will rise in the future and Bang & Olufsen A/S will benefit from it. Important areas which may cause problems for Bang & Olufsen A/S in the future is a tendency in faster development time and that has a negative impact on Bang & Olufsen A/S price setting of their products. In the context of faster development times Bang & Olufsen A/S is having problems with their two new product platforms software and there is still no time horizon for the release date. The economical analysis showed that Bang & Olufsen A/S revenue dropped 30 % from 2007/08 to 2008/09 and since then Bang & Olufsen A/S has tried to adjust their cost to this lower activity. This seems to be the case in 2010/11 where Bang & Olufsen A/S achieved a positive result again. The economical analysis showed an increasing tendency in higher ratios the last tree years. Through the valuation by the DCF-model, a price of 1.887 DKK has been calculated. This is divided with a total of 36.244.014 outstanding shares which give an average price of 52,06 DKK per share August 18th 2011. Our sensitivity analysis shows that the valuation is very sensitive to changes in WACC, growth during the terminal period and the development in sales. Through the valuation with the price multiples, a pricerange of 37,65 – 68,93 DKK has been calculated. The share was traded on the Copenhagen Stock Exchange, August 18th 2011 at a price of 66,50 DKK. Through the valuation methods the share has been valued at 52,06 DKK and therefore we have concluded that the price of one Bang & Olufsen A/S share is overvalued.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
Publication date2012
Number of pages136