Equity Valuation - Tessenderlo Group

Details

Supervisors

Grégoire, Philippe

Faculty

Louvain School of Management

Degree label

Master [120] en ingénieur de gestion

Abstract

Every asset has a price. Every security has a price. Every stock has a price. But are these prices good estimates of the true value of their underlying product? Public securities are traded on financial markets, which basically refer to any marketplace where the trading of said securities occurs. However, the question of whether markets are efficient is very important. When a market is said to be efficient, it means that the market price provides the best estimate value and all information are already incorporated into market prices. An inefficient market, however, does not incorporate all information. The market price may deviate from the true value, but the process of valuation is to estimate its reasonable value. The investor then gets high returns by spotting under- and overvalued firms, and invests in them hoping the market will correct itself. The objective of my thesis is not to prove whether markets are efficient, but rather to estimate the true value of a company and compare it with its market price to find out if the stock is under- or overvalued. There are many quantitative tools and methods an analyst can use, but the inputs leave room for subjectivity, which means the target price is the result of my own research and assumptions. In my thesis, I determine the value of Tessenderlo Group, an industrial conglomerate that mainly produces fertilizers, gelatin and plastic pipe systems.