Digia is a Finnish IT-services and software house with recurring maintenance and managed-services revenue, a sticky public-sector and enterprise customer base, and its own software IP. Adjusted ROIC of 12% against an 8% WACC means it creates real, if modest, economic value — positive EP of +€5M on a small capital base.
Unlike the larger Nordic compounders that trade at premiums, Digia's reverse-DCF fair value sits above the current price across growth scenarios, so for once the screen's 'Attractive' rating and the deep-dive agree on direction.
Capitalising adjusted NOPAT of €14.1M at WACC−g and bridging through €23.7M net debt and 26.8M shares, fair value runs €6.50 (zero growth), €6.88 (GDP) and €7.27 (5% growth) — i.e. +11% to +24% above the €5.86 price. The model rewards Digia's above-WACC returns rather than penalising leverage or sub-cost-of-capital growth.
Base €6.90 (+18%) at GDP-plus growth; bull €7.80 as software-IP mix lifts margins; bear €5.20 if public-sector budgets tighten and project revenue slips.
The market pays today’s enterprise value for roughly -4.8% NOPAT growth over 5 years. The business earns 12% on capital against a 8% cost of capital (spread +4.0 pp); the no-growth value is €6/share (112% of price), so the rest is priced-in growth.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | €8 | +8% | +34% | 35% | Software-IP mix lifts margins |
| Base | €7 | +3% | +19% | 45% | GDP-plus growth; reverse-DCF fair value |
| Bear | €5 | -9% | -10% | 20% | Public-sector budgets tighten; project slip |
| Prob-weighted | €7 | — | +19% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 9 | 10 | 11 | 11 | 12 | 14 |
| 7.25% | 8 | 8 | 9 | 9 | 10 | 11 |
| 8.00% (base) | 6 | 7 | 7 | 8 | 8 | 9 |
| 8.75% | 6 | 6 | 6 | 7 | 7 | 7 |
| 9.50% | 5 | 5 | 5 | 6 | 6 | 6 |
Green = fair value above the current price of €5.80. The reverse-DCF conclusion is dominated by WACC and growth — see the whole surface, not a single fair value.
⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.
12% ROIC vs 8% WACC with positive economic profit — genuine value creation, unusual at this valuation.
Maintenance, managed services and software subscriptions provide a sticky, visible cash-flow core.
Fair value 11–24% above price across growth scenarios — a real margin of safety.
Growing proprietary-software share lifts blended margins above pure services.
Long-tenured Finnish public-sector relationships dampen cyclicality.
Digia is a small, profitable Finnish IT-services compounder trading below its reverse-DCF value with positive economic profit — the genuine 'cheap and good' name in the batch. BUY, medium conviction; base target €6.90 (+18%).
The principal watch-item is FCF conversion; sustained positive free cash flow would support a conviction upgrade.
Every adjustment traces to the cited note/page in the source filing — click to open it there. Source reports archived locally.
NOPAT adjustments: Not available from structured data
Company add-backs we reject: Not available without footnote extraction
Pages read — FY: — · Q: —
How the mttssn view has evolved — each prior dated note is preserved.