Holcim has delivered a very strong run over the past few years, which puts a spotlight on whether the current share price lines up with the cash the business can generate. With the stock now giving back some ground in recent weeks, the question is how much of Holcim's cash flow story is already built into the price.
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Over the last 5 years, Holcim has returned about 255.6%, which raises the question of how much future cash generation the current valuation is already assuming.
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The agreement to deploy Electrified Thermal Solutions' Joule Hive Thermal Battery in Holcim's operations may support lower emissions and potentially influence future capital spending, operating costs and the timing of cash flows.
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What if you looked at Holcim through its earnings instead? See why Holcim's 96.4x P/E tells a different valuation story .
The stock's next move may depend on whether Holcim's cash flows, as estimated by a Discounted Cash Flow (DCF) approach, can justify where the shares trade today.
If you want a wider cash flow comparison beyond Holcim, you can compare it with other companies in the same conversation using the 189 high quality undervalued stocks
Is Holcim a Bargain on Cash Flow?
The Discounted Cash Flow (DCF) approach here centres on the cash Holcim can return to shareholders over time. On the latest twelve month numbers, the business generated about CHF 1.98b in free cash flow, and the model assumes that this pool of cash grows rather than shrinks over the coming decade before slowing into a steadier phase.
On those cash flow assumptions, the DCF points to an estimated intrinsic value that sits substantially above the current share price of CHF68.46. The planned deployment of Electrified Thermal Solutions' Joule Hive Thermal Battery helps explain why the market might still be cautious, because it could influence future capital spending patterns even if the long term cash profile in CHF looks solid in the model. Find out what Holcim could be worth using our Discounted Cash Flow (DCF) estimate .
The Holcim Narrative: What Would Justify Today's Price?
Holcim's Simply Wall St Narratives pick up where the DCF debate leaves off, by spelling out which paths for growth, margins and earnings would need to play out for the current share price to look meaningfully higher or lower than today's level. These narratives sit on the company's Community page. Each narrative ties its implied number to a concrete view on how Holcim's expansion prospects, profitability and risk profile might evolve, so you can revisit those assumptions as fresh information arrives.
Holcim's community views pull in different directions, with one camp seeing more upside in the story than the other.
Bull case: 16% undervalued
"Holcim's focus on sustainable products, targeted acquisitions, decarbonization, and disciplined financial management positions it for resilient growth, margin strength, and industry leadership…"
Discover why this Narrative puts Holcim at 16% undervalued .
Bear case: roughly fairly valued
"The acceleration of global climate regulations and carbon pricing schemes could significantly increase Holcim's operating costs, especially since its decarbonization initiatives require substantial capex…"
Explore why this Narrative puts Holcim at roughly fairly valued .
Before acting on Holcim's valuation, look at who is steering the ship
Cash flow models only tell part of the story, because the real decisions come from the people in charge, how they think and the way they are rewarded for those choices. See who runs Holcim and how they are paid .
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include HOLN.SW .
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