| dc.description.abstract | I have performed a valuation for the XXL ASA company in this thesis. My research question has been about finding the company's fundamental value and suggesting to a fictive investor whether to buy, sell or hold the shares of XXL company.
This thesis is based on a group of analysis tools. First, starting from the financial statements analysis, I analyzed the annual reports using Excel to learn more about the company's financial position. Then, I have decided on the growth in each vital variable using this analysis together with the strategic analysis, where I have tried to find trends in the macroeconomic environments, market outlook, and external & internal factors that will affect the company. Research such as value chain, VRIO, PESTEL, Porter's five forces, and other types of analysis has been performed. Key findings are that XXL is losing market share, and the sports industry has a negative development. But at the same time, XXL has the potential to have positive growth with its internal strengths.
The forecasting period is set to 5 years. Therefore, the discounted cash flow model is the primary valuation approach for this thesis. Still, at the same time, I have performed the relative valuation, with multiples such as EV/EBIT, P/E, and EV/S, to compare XXL to its competitors. The result follows EV/EBIT median ratio = 2 929,4 - P/E median ratio = 4 479,9 - DCF approach EV = 5 306 - EV/S median ratio = 7 967. The median of these four values gave me the final result of the enterprise value equal to 4 893m NOK on 31.12.2022.
I have used the DCF approach to estimate the share price of XXL. I have taken the average FCFF and FCFE values and got a share price equal to 3,97 NOK per share on 31.12.2022. I suggest that a fictive investor buy XXL shares since we can expect higher future cash flows. | en_US |
