Editing Safran SA (section)

== Valuation ==
===What's the Current Value of Safran?===
As of 26th July 2023, the stock of Safran closed at 144.82€ per share, demonstrating a steady recovery from the impact of the Covid-19 pandemic. The current stock price is approaching its historical peak value of 148.45€, which was recorded in November 2019, indicating positive momentum in the market.
{| class="wikitable"
|+
! colspan="4" |Safran Current Valuation - July 2023
|-
|Share Price (@30/07)
|[€]
|
|'''144.82'''
|-
|Shares Outstanding
|[#M]
|
|426.5
|-
|Equity Value
|[€B]
|
|61.77
|-
|Add:
Net Debt at Dec. 31, 2022
|[€M]
|
|14
|-
|'''Enterprise Value'''
|[€B]
|
|'''61.78'''
|}

In our analysis of Safran's valuation, we employed three distinct methods:
#'''Discounted Cashflow''': With a discount rate of 8.7% and a long-term growth rate of 1.7%, the Perpetuity approach values Safran shares at '''152.32€''', while the EBITDA approach results in a valuation of '''140.35€'''. Given Safran's current stock price of '''144.82€''', it appears '''undervalued''' relative to the discounted cash flow (DCF) model valuation. 
#'''Trading Comps''': The negative income and EBITDA figures made it impractical to apply the P/E or EV/EBITDA ratios in this case. This straightforward analysis makes it evident that the company is considered '''overvalued''' when utilizing the PB ratio. The current market value per share is 144.82€, whereas our analysis, based on the PB ratio, estimates it to be '''101.87€.'''
#'''Dividend Discount Model''': In 2019, Safran encountered challenges that led to the inability to pay dividends. However, the company has demonstrated a consistent track record of paying fair dividends in the preceding years. To assess Safran's valuation, we utilized the Gordon Growth Model (GGM) by projecting the past dividend growth rate to estimate the 2023 dividend. The GGM valuation resulted in a per-share value of '''19.67€'''. Assuming market efficiency, i.e. the current share price is correct, the adequate cost of equity of Safran would be  '''2.64%'''.

=== What's the expected return of an Investment in the Company? ===
Based on our DCF model and the current market value, the Stockhub users estimate that the expected return of an investment in Safran over the next five years is approximately '''5.21%'''. In practical terms, this means that a £1,000 investment in Safran is projected to grow to £1,052.10 in five years' time.

Assuming that a suitable return level over five years is 10% per year and  achieves its expected return level (of 5.21%), then an investment in the company is considered to be an '''<nowiki/>'unsuitable'''' one.