Valuation of PANDORA A/S

Pernille Vestergaard Boesen

Student thesis: Master thesis


The aim of my thesis is to valuate PANDORA A/S from an analysis of their strategic and financial position. In my external strategic analysis, I found that the global jewellery market is growing during the next five years in PANDORA’s three geographical market Asia Pacific, Americas and Europe. PANDORA is affected by several macroeconomics factors as prices on silver and gold, fluctuations in exchange rates and trends. The competition in the global jewellery market is fragmented with a lack of truly dominated players. The lack of dominated players in the market and an increasing growth does that PANDORA has the opportunity to gain market shares worldwide. On the other hand, high profits, increasing market growth, online sales platforms and low switching costs make the threat of new entrants and substitutes high. PANDORA’s jewelleries are in the category affordable luxury. Especially this kind of jewelleries has been very popular and a new trend in most markets worldwide. Since it is in the category affordable luxury, it is not as affected of economic factors as luxury jewelleries are. The internal analyse of PANDORA showed that one of their key value drivers was their design and production of affordable luxury jewelleries. PANDORA has own production facilities in Thailand and have seven launches of new jewelleries every year. Therefore, PANDORA has the opportunities to follow trends and demands in the market faster than if they not had own production facilities or the only had new launches one or twice a year. After an analysis of the internal and external factors PANDORA’s profitable historical ratios was calculated and analysed to get an overview of their ability to create value for their shareholders and their historical financial profitability. The overall profitability measure ROIC has been increasing since 2012 with only a small decrease in 2015. PANDORA’s ability to create value for their shareholders has also been increasing since 2012. Based on the strategic and financial analysis of PANDORA the pro forma income statement and pro forma balance sheet were estimated and the free cash flow to the firm calculated. Based on the Discounted Cash Flow model I have estimated PANDORA’s enterprise value and expected market equity to conclude whether PANDORA’s shares had a fair price 21 October 2016 or whether the shares were over- or undervalued.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2016
Number of pages85
SupervisorsSøren Plesner