Stock Valuation Using Dividend Discounted Model and Free Cash Flow to Firm Approach: Case Study at PT Superkrane Mitra Utama Tbk.
Keywords:
Stock Valuation, Dividend Discounted Model, Free Cash Flow to Firm, Investment Decision, Root Mean Squared ErrorAbstract
One of the benefits of conducting stock valuation is as a consideration in investment decisions. This study aims to conduct stock valuation using the Dividend Discounted Model (DDM) method, and the Free Cash Flow to Firm (FCFF) approach and to find out the most accurate stock valuation method using the Root Mean Squared Error (RMSE). This study will analyze the stock valuation of PT Superkrane Mitra Utama Tbk. (SKRN) in 2019-2023 because it is a company engaged in the construction and heavy equipment rental sector which is closely related to infrastructure development in Indonesia. Although the price is below the market average, SKRN is a fairly promising issuer based on the comparison of its CAGR percentage with the CAGR of the JCI so that it can attract investors. This study is a type of descriptive research with a quantitative approach using the documentation method to collect annual reports and financial reports of companies from the official website http://superkrane.com/id/. The results of the study stated that SKRN shares are undervalued using both the DDM method and the FCFF approach because their intrinsic value is greater than the stock market value and recommends investors to buy shares or hold if they already have SKRN shares. Meanwhile, the RMSE test results show that the FCFF approach is more accurate because it has a lower RMSE value than DDM.
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