July 2024 Insights into three value stocks on the SIX Swiss Exchange

The Swiss market recently experienced a moderate rebound, closing higher as investors reacted positively to regional cues and anticipated key economic data, including an upcoming report on Swiss inflation. In such an environment, identifying undervalued stocks on the SIX Swiss Exchange can provide potential opportunities for value-oriented investment strategies.

The 10 most undervalued stocks in Switzerland based on cash flows

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Overview: Burckhardt Compression Holding AG is a global manufacturer and seller of reciprocating compressors with a market capitalization of approximately CHF 2.02 billion.

Operations: The company generates its revenue in two main segments: the Systems Division, which generated CHF 642.81 million, and the Services Division, which contributed CHF 339.15 million.

Estimated discount to fair value: 29.7%

Burckhardt Compression Holding AG has demonstrated robust financial health despite slower expected revenue growth of 6.3% per year compared to a more aggressive market average. Profit increased by 28.7% last year and net income increased from CHF 69.94 million to CHF 89.99 million. With a share price of CHF 596, well below the estimated fair value of CHF 848.11, the company appears to be undervalued on a discounted cash flow basis, although dividend coverage by cash flow remains a concern.

Overview: Sonova Holding AG is a company that manufactures and markets hearing solutions for adults and children in regions such as the United States, Europe, the Middle East, Africa and Asia-Pacific and has a market capitalization of CHF 16.71 billion.

Operations: Sonova’s sales are generated primarily in two segments: cochlear implants, which contributed CHF 282.40 million, and hearing aids, which accounted for CHF 3.36 billion.

Estimated discount to fair value: 39.5%

Sonova Holding AG appears significantly undervalued with a current trading price of CHF 280.3 compared to an estimated fair value of CHF 463.4 based on discounted cash flows. The company’s sales and profits are expected to outperform the Swiss market with growth rates of 7.1% and 9.9% per year, respectively, although the company has a high level of debt that could limit financial flexibility. Recent earnings reports confirm robust sales of CHF 3,626.9 million and net profit of CHF 609.5 million for the fiscal year ending March 2024.

Overview: Temenos AG is a global company that develops, markets and sells integrated banking software systems to financial institutions and has a market capitalization of CHF 4.53 billion.

Operations: The company generates its revenue by providing integrated banking software systems to financial institutions worldwide.

Estimated discount to fair value: 27.1%

Temenos trades at CHF 62.50 below its estimated fair value of CHF 85.78, suggesting an undervaluation based on a discounted cash flow analysis. Despite high levels of debt, Temenos has shown promising financial momentum, with earnings expected to grow by 14.7% annually – outperforming the Swiss market average of 8.4%. Recent strategic client partnerships and continued investments in scalable SaaS solutions underline the company’s potential for sustainable business growth and agility in the competitive digital banking sector.

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This Simply Wall St article is of a general nature. We comment based solely on historical data and analyst forecasts, using an unbiased methodology. Our articles are not intended as financial advice. They do not constitute a recommendation to buy or sell stocks and do not take into account your objectives or financial situation. Our goal is to provide you with long-term analysis based on fundamental data. Note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Simply Wall St does not hold any of the stocks mentioned.

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