The BMW Group equity valuation

Abstract

More likely than not, valuation is present in everyone’s daily life. Whether one wants to value a property, an insurance proposal or even a stock, the need for valuation appears. This dissertation focuses on the need for valuing investment opportunities in stocks, namely in the BMW Group. I start with a brief presentation of the available literature in what concerns valuation methods. One may notice that the literature is so extent because no formal decision on what the best valuation method should be has yet been reached. Therefore, the choice between the available methods depend on the characteristics of the company being valued but is also laid on the analysts’ preference. The chosen methods for valuing BMW were the DCF with a WACC approach and Multiples. After reviewing the relevant literature, a brief presentation of the BMW Group was made, and the valuation was carried forward. The DCF valuation provided a price target of €104,18 showing a clear undervaluation as of the 30th of June 2018. As for the Multiples valuation, it proved to be more challenging as the market has been suffering from many uncertainties. Lastly, a comparison between this valuation and two other produced by professional analysts was made. The conclusion of this comparison was that a valuation method is only as good as the assumptions where it lays its roots on. Nevertheless, all three valuations appointed in the same direction: BMW is actually undervalued and an upward movement in its share price is expected.

Date of Award	25 Oct 2018
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)