Equity valuation of Mota-Engil S.G.P.S., S.A.

: case study on equity valuation

Abstract

The objective of this Dissertation is to obtain a price per share of the Portuguese construction company, Mota-Engil, SGPS, S.A. Equity valuation is important for a variety of reasons. One of the most important reasons is that equity valuation of a company provides an analysis that potential buyers or sellers of stocks of that respective company take into consideration. The recent trend in the last years of mergers and acquisitions of companies also reinforces the importance of equity valuation in the current business environment. Inevitably, equity valuation of a company is subjective by nature, depending on the assumptions considered to perform the valuation. Despite that fact, this Dissertation’s objective is to perform an equity valuation of Mota-Engil as accurate as possible. A good valuation has to be technically correct, based on solid assumptions that translate the reality of the company and it has to take into consideration the different activities of the firm being evaluated, as well as the future operational targets of the company. In the particular case of Mota-Engil, it is essential to differentiate the different activities of the company and evaluating each one of them individually, otherwise the equity value of the company would be incorrect. Following this line of reasoning, the evaluation of Mota-Engil conducted in this Dissertation consisted in a sum of all the different activities of the company separately, using the Discounted Cash Flow approach. The equity value of Mota-Engil estimated in this Dissertation tryies to reflect the reality of the company, despite considering that many variables might influence the correcteness of this valuation process. In the end, a comparison between this Dissertation and Millenium Investment Banking equity valuation of Mota-Engil was made.

Date of Award	2011
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)