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• Ever wondered if Andritz is actually trading below what it’s worth? Let’s break down where the value may be hiding, and what savvy investors are watching for right now.

• Andritz shares have delivered strong long-term gains, up 106.6% over five years and 26.1% year-to-date, despite a recent 5.1% dip in the last month.

• It’s not just price moves making headlines. Industry partnerships and major contract wins have put a spotlight on Andritz recently, fueling optimism about future prospects. Investors are closely following these developments, as they could impact both the company’s growth story and how the market views its risk profile.

• On our 6-point valuation checklist, Andritz scores a 5, signaling that it passes nearly every key test for being undervalued. We’ll dig into each valuation approach in a moment, but stick around. By the end, you’ll see how a holistic view can reveal even more than traditional models.

Andritz delivered 23.4% returns over the last year. See how this stacks up to the rest of the Machinery industry.

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its future cash flows and discounting them back to their present value. For Andritz, the model uses current free cash flow figures and analyst growth forecasts, then extrapolates future performance over the next decade.

Andritz’s most recent free cash flow stands at €374.5 million. According to analysts, this is expected to grow steadily, reaching €673.4 million by 2027. After that, Simply Wall St extrapolates these projections and estimates that annual free cash flow could rise as high as €906.5 million by 2035. Each cash flow estimate is discounted to reflect value in today’s euros, ensuring future expectations are not overstated.

Based on this model, the DCF intrinsic value for Andritz is calculated at €140.57 per share. This suggests the stock is trading at a significant 55.7% discount to its estimated fair value, highlighting substantial potential upside.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Andritz is undervalued by 55.7%. Track this in your watchlist or portfolio, or discover 913 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Andritz.

For profitable companies like Andritz, the Price-to-Earnings (PE) ratio is a time-tested valuation multiple. It gives investors a snapshot of how much the market is willing to pay for each euro of current profit. Because it incorporates both market sentiment and recent performance, PE is widely used for companies with steady, positive earnings.

However, not all PE ratios are created equal. Growth expectations and risk play a crucial role in setting a “normal” or “fair” PE. Fast-growing or lower-risk firms typically trade at a higher PE, while slower-growth or riskier companies usually have lower ratios.

Currently, Andritz trades on a PE ratio of 13.3x. For context, the Machinery industry trades at an average PE of 23.7x, and Andritz’s immediate peers average 15.7x. At first glance, this suggests Andritz might be undervalued compared to the broader sector.

That is where Simply Wall St’s “Fair Ratio” comes in. Unlike a simple peer or industry comparison, the Fair Ratio goes further. It analyzes the company’s earnings growth, profit margins, industry profile, company size, and unique risk factors. For Andritz, the Fair Ratio is 15.6x, reflecting what investors might reasonably pay after accounting for all those variables.

Comparing the Fair Ratio (15.6x) to the current PE (13.3x) shows Andritz is trading modestly below this fair value. So, after quantifying both its strengths and risks, Andritz’s PE suggests it is potentially undervalued based on Simply Wall St’s comprehensive approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1437 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your investment story, your perspective on where Andritz is headed, turning your views about future revenue, earnings, and margins into clear numbers and a fair value estimate. Narratives bridge the gap between a company’s story, the financial forecast it implies, and what you should pay for the shares today.

With Narratives on Simply Wall St’s Community page, used by millions of investors worldwide, you can easily create, update, or follow real-time investment stories. Narratives let you compare your Fair Value to the current share price so you can decide if it’s time to buy, hold, or sell. They stay up to date as new information like earnings or news comes in.

For example, one Andritz Narrative assumes robust hydropower growth, margin expansion, and a price target of €80, while another more cautious viewpoint focuses on exposure to cyclical downturns and values the stock at only €43. Narratives make it simple to test your own assumptions and see how they stack up against others.

Do you think there’s more to the story for Andritz? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include ANDR.VI.

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