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Equity valuation, a practical case: Glanbia plc

Leroy, Auban
(2022)

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LEROY_75931900_2022.pdf
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Details

Supervisors
Platten, Isabelle
Faculty
Louvain School of Management
Degree label
Master [120] : ingénieur de gestion, à finalité spécialisée
Abstract
The purpose of this master’s thesis is to value the Irish global nutrition group Glanbia plc listed on the Irish (Euronext: GL9) and London (LSE: GLB) stock exchanges to provide an investment recommendation regarding the company’s shares. In this report, two valuation methods are developed: the discounted cash flow and the comparable companies. On one hand, the discounted cash flow model is a fundamental valuation method to determine a company’s intrinsic value. Its main assumption is that the value of a company can be derived from the present value of the company’s projected free cash flow. On the other hand, the comparable companies model assumes that companies resembling the target can be used as a reference point to value it. To provide a meaningful valuation, some groundwork was first established where the company’s activities, geographic presence, industry, competitors, strategy, main sources of growth, main risks, SWOT and historical financial data are discussed as deemed relevant for the valuations. From this groundwork, the discounted cash flow and comparable companies models were applied to Glanbia. The discounted cash flow valuation provided a fair value of share price of €20,49, while the comparable companies valuation provided a valuation range between €10,39 and €12,46. The stock reputation of Glanbia was also evaluated according to the LPE Research methodology. The overall result was a score of 46/100, which places Glanbia as below average in terms of reputation on the stock market. Finally, a recommendation was provided by gathering and comparing the information from the two valuations and the stock reputation assessment. On the 4th of January 2020, Glanbia’s share price was €12,23. Based on this share price, the final recommendation was a buy.

Citations

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Leroy, A. (2022). Equity valuation, a practical case: Glanbia plc. https://dial-mem.test.bib.ucl.ac.be/handle/2078.2/27863