Valuation of Heineken N.V. : a fundamental analysis of a Dutch beer company
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- Master Thesis 
The main objective of this paper is to determine the intrinsic value of one Heineken share as of May 15, 2020. The primary method that is used in order to achieve this objective is fundamental valuation (absolute valuation). This valuation technique, however, is also complemented by the use of relative valuation. Based on our analyses, we believe that Heineken’s fair share price should be €92.55. This price results from our forecasts for the company’s performance in the future. Specifically, troubled by the coronavirus-made pandemic, its revenue growth is forecasted to contract by 12% in 2020 before bouncing back by 6.8% and 8.4% in 2021 and 2022, respectively. Thanks to its ownership of a fair number of internationally leading brands and its geographically diversified operation, we believe that, for the next 15 years that follow 2022, the company will enjoy relatively attractive revenue growths before reaching a constant growth of 2.6% from 2038 onwards. Furthermore, the company’s return on invested capital (ROIC) is forecasted to gradually increase to 25.1% by 2027 and maintain at this level afterward, while its weighted average cost of capital (WACC) is forecasted to be 6.84%. Built upon the estimation of Heineken’s fair share price, we make our recommendation on investment strategy. A margin of safety of +/- 10% is added to the intrinsic value in order to account for uncertainties around the estimate, resulting in the confidence interval [€83.3; €101.8]. If the stock is trading at a price lower than €83.3, a buy strategy is recommended. By contrast, if the stock is trading at a price higher than €101.8, a sell strategy is recommended. Finally, if the stock price is between €83.3 and €101.8, a hold strategy is recommended.