Bailey Pemberton
4 min read
ASSA ABLOY has delivered strong multi year gains, which puts the focus squarely on whether the current share price lines up with the cash it is expected to generate. With that backdrop, the key issue for investors is whether the stock’s recent performance and portfolio changes are fully backed by its underlying cash flows.
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ASSA ABLOY has returned 66.6% over the past 3 years, which raises the question of how much future cash generation is already reflected in the price.
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The planned sale of HID’s Public Key Infrastructure unit to Vista Equity Partners may reshape the group’s mix of businesses, which can affect both future cash flow levels and the timing of those cash flows.
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What if you looked at ASSA ABLOY through its earnings instead? See what ASSA ABLOY’s 24.4x P/E says about the price.
The issue now is whether ASSA ABLOY’s current market value is well supported by the cash flows implied by a Discounted Cash Flow (DCF) intrinsic value estimate.
If you want a reference point for ASSA ABLOY’s cash flow story, it can help to compare it with companies filtered by the same lens using 191 high quality undervalued stocks.
Is ASSA ABLOY Still Cheap on Cash Flow?
The Discounted Cash Flow (DCF) model here looks at the cash ASSA ABLOY can return to shareholders over time and then discounts it back to today. Over the last twelve months, the group produced Free Cash Flow of about SEK21.2b, and the projections used in this 2 Stage Free Cash Flow to Equity model assume that this cash generation keeps growing rather than shrinking.
Analysts supplying the long term inputs expect ASSA ABLOY’s free cash flows to rise into the late 2020s and early 2030s, then settle into slower expansion, which is typical of a mature, cash generative industrial group. The DCF outcome sits substantially above the current share price of SEK359.50, which implies the market is pricing those future SEK billions quite cautiously. Because the agreed sale of HID’s Public Key Infrastructure unit to Vista Equity Partners may shift the mix of cash flows after 2026, that planned divestment helps explain why some investors are hesitant to fully close the gap that the DCF model suggests exists. Find out what ASSA ABLOY could be worth using our Discounted Cash Flow (DCF) estimate.
The ASSA ABLOY Narrative: What Would Justify Today’s Price?
Narratives for ASSA ABLOY pick up where the DCF puzzle leaves off by spelling out which paths for future growth, profitability and earnings power would need to hold for the stock to be worth materially more or less than today’s price. Each storyline on Simply Wall St’s Community page ties a fair value estimate to a clear view of the company’s possible catalysts and its key risks, so you can track over time which version of events is actually playing out.
