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Valuation Analysis of Umicore

Project Overview

In this project, with my colleagues Florette Beghin, Tommaso Cassio, Sacha Delcourt, Laetitia Masarweh, and Mathys Ribeiro, I engaged in an in-depth financial analysis and valuation of Umicore, a global materials technology and recycling group. The goal was to estimate the company’s value using advanced financial models and to gain insights into the potential of new projects the company might undertake.

Key Learning Objectives

  • To understand and apply the principles of the Discounted Cash Flow (DCF) method.
  • To calculate the Weighted Average Cost of Capital (WACC) as a basis for the discount rate.
  • To forecast financial performance and free cash flow for Umicore.
  • To determine the terminal value and discount it appropriately to the present value.
  • To perform sensitivity analysis and understand its impact on valuation.
  • To estimate the fair stock price of Umicore based on financial analyses.

Approach and Methodologies

  • Conducted a thorough analysis of Umicore’s financial statements.
  • Employed the DCF method to project future cash flows and determine the intrinsic value of the company.
  • Analysed the company’s cost of capital and capital structure to compute the WACC.
  • Compared the DCF valuation with the comparables method, using industry benchmarks and multiples.
  • Evaluated a potential project by analyzing the investment, profitability, and Net Present Value (NPV).

Results

  • Developed a robust financial model that provided a fair valuation of Umicore’s stock.
  • Gained expertise in utilizing financial ratios and indicators for valuation purposes.
  • Presented a comprehensive comparison between DCF and comparables valuation methods.

Personal Development

Throughout this project, I have strengthened my financial modeling skills, deepened my understanding of valuation techniques, and honed my ability to analyze and interpret complex financial data. The project allowed me to apply theoretical knowledge in a practical setting, enhancing my proficiency in investment analysis and decision-making.

Conclusion

This valuation project was a significant learning experience, equipping me with the tools and confidence to assess the financial health and value of businesses in the materials technology and recycling sector.