Valuation of Pandora A/S

Student thesis: Master Thesis and HD Thesis

  • Monica Marie Bloch-Nielsen
In this assignment the international jewellery manufacturing company Pandora A/S is the chosen topic. The company is successful and is a well-known large international company, whom operates in many different countries. Pandora was listed on the stock exchange in 2010. Listed price DKK 263 per share. The stock price has fluctuated since the stock listing in 2010. As of 31th December 2019 the share price was DKK 289.80.

The main purpose of this assignment is to estimate the stock value as of 31th December 2019. I will compare the conclusion of this assignment against the current stock price at the same date to validate if the value is over- or undervalued.

In order to reach a conclusion this assignment will lead the reader through different steps.

First step will be compiling a financial analysis from 2015 to 2019. This analysis is based on ‘The Drivers of Return on Equity’, which means that the balance is converted into a managerial balance sheet. This sheet will be used when the budget is going to be prepared. The financial analysis shows that Pandora’s bottom line has been reduced during the last few years. Furthermore, Pandora’s key figures have been deteriorated during the period of analysis.

Next step is compiling a strategic analysis. Both internal and external factors will be included in the strategic analysis. The strategic analysis contains theories: PESTEL, Porters Five Forces, PLC, Boston, growth analysis, value chain analysis and competitive strategy analysis. These analysis shows Pandora’s strategic position. The financial and strategic analysis is actually a historical analysis.

To clarify the most important strengths, weaknesses, opportunities and threats in relation to Pandora’s success I have used the SWOT-analysis. These spots will be combined in a TOWS-analysis. The TOWS-model is prepared to find the company’s development opportunities. Especially the product category ‘charms’ needs attention. ‘Charms’ is the bestselling product category in Pandora’s product portfolio. However, ‘charms’ in 2019 accounted for 52% of the overall sales the product category is in a falling sales curve. Furthermore, the COVID-19 pandemic is a big threat to Pandora.

The financial analysis and the strategic analysis will form the foundation of the budget. The budget period is determined for five years. The budget has been prepared in order to determine the indication of valuation. The indication of valuation was based on two different valuation methods: DCF-model and EV/EBITDA. In the assignment you will find an argumentation that the most true and fair model to do the indication of value of Pandora is the DCF-model.

According to the DCF-model the value of Pandora as of 31th December 2019 has a calculated value of DKK 985.60 per share.

The conclusion is that Pandora’s stock price as of 31th December 2019 DKK 289.80 was underestimated compared to the calculated value.
Publication date31 May 2020
Number of pages66
ID: 331735004