Equity valuation : Pirelli & C. SpA

Abstract

This thesis has the purpose to value Pirelli & C. SpA at 31st of December of 2014. Pirelli is publicly traded in the Milan Stock Exchange, Borsa Italiana, and it is known as the fifth largest tyre manufacturer in the world with a great focus on high-end premium tyres. To valuate Pirelli’s equity a discounted cash flow methodology is used with an outcome of a 14,39 Euros price per share. To complete the valuation it is put in place a relative valuation, which supports the author’s recommendation to buy, since the price at that time was 11,21 Euros. Finally, a comparison to a J.P. Morgan report is made where the investment bank estimates a price of 13,00 Euros followed by a neutral recommendation as it is expected no underperformance nor outperformance while compared to the market.