Valmet supplies pulp, paper and tissue machinery plus a growing, higher-margin services and process-automation business (enlarged by the Neles flow-control merger). It is a quality industrial with a large installed base, but adjusted ROIC of 9.3% only just exceeds the 8% WACC, leaving thin economic profit (+€47M).
The reverse-DCF implies the €23 price embeds ~5.2% perpetual growth — demanding given the thin returns and the cyclicality of capital-equipment orders. The stabilising services/automation mix is the offset, but the equity looks fully valued.
Bridging adjusted NOPAT through net debt, reverse-DCF fair value runs €18.6–20.9 across growth scenarios — below the €23.26 price, i.e. the market prices ~5.2% perpetual growth against thin returns. For a cyclical capital-equipment supplier that is a full valuation.
Base €21 (−10%, modest de-rate); bull €27 (services/automation mix lifts margins and ROIC above WACC, capex cycle recovers); bear €17 (capital-equipment order weakness and margin pressure).
At today’s enterprise value the constant-ROIC reverse-DCF maxes out: even at its sustainable-growth ceiling (~8.5%, limited by ROIC 9% ≈ WACC 8%) it cannot reach the current EV. No-growth value is €16/share (76% of price); the market prices in growth and/or a higher ROIC than booked — richly valued on this lens. Read the sensitivity grid.
| Scenario | 24m target | Impl. g | Upside | Prob. | Driver |
|---|---|---|---|---|---|
| Bull | €27 | ≥9% | +25% | 30% | Services/automation lifts ROIC; capex recovers |
| Base | €21 | ≥9% | -3% | 40% | Modest de-rate; thin spread, full growth |
| Bear | €17 | +3% | -21% | 30% | Capital-equipment order weakness + margin pressure |
| Prob-weighted | €22 | — | -0% | 100% | Scenario-weighted expected value |
| WACC \ g | 0% | 3% | 5% | 8% | 10% | 15% |
|---|---|---|---|---|---|---|
| 6.50% | 24 | 25 | 26 | 28 | 29 | 32 |
| 7.25% | 19 | 20 | 21 | 22 | 23 | 24 |
| 8.00% (base) | 16 | 17 | 17 | 18 | 18 | 18 |
| 8.75% | 14 | 14 | 14 | 14 | 14 | 14 |
| 9.50% | 12 | 12 | 12 | 12 | 12 | 11 |
Green = fair value above the current price of €21.64. 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.
Higher-margin stable services and process-automation (post-Neles) lift blended returns — the key to the thesis.
A vast installed machinery base generates recurring service and upgrade demand.
Bio-based materials, packaging and decarbonisation support long-run demand.
A project backlog provides near-term revenue visibility.
Cost and mix initiatives could push ROIC durably above WACC.
Valmet is a quality industrial whose thin returns and full implied growth leave the equity fully-to-richly valued despite an improving services mix. We rate it HOLD with a bearish lean, medium conviction; base target €21 (−10%).
Evidence that the services/automation mix is durably lifting ROIC above WACC, or a cyclical pullback toward the high-teens, would improve the risk/reward.
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.