Stock Valuation in International Environment

The thesis investigates the process of distressed company stock valuation, for potential investment and expansion of investors portfolio. The study examines multiple methods and techniques for valuing a company in distress. The valuation is built up on using the top-down approach, firstly conducting an overview of todays risky and volatile financial markets, secondary creating an comprehensive analysis of the selected automotive industry. For practical case of valuing a distressed stock,Volkswagen AG company is selected. Volkswagen AG is a perfect example of a mature and at the same time distressed company, which is challenged by the biggest in the corporate history scandal and faces significant financial problems. As a consequence, the stock price is heavily dropped in short period of time. Hence, the study explores the opportunity of investing in Volkswagen AG - using multiple methods the intrinsic value is determined and is compared to the market values. Further investment recommendations are given, whether to buy, sell, short sell, or avoid investing in the stock. Finally, conclusions are made, including a summary of lessons learnt and distress stock valuing recommendations for analysts. Findings indicate that as of Dec 12, 2015 the company is overvalued in comparison with market prices and a short/medium term investment should be avoided. However, an long term opportunity for investing in Volkswagen AG does exist, believing that present management is capable of decreasing the harm of the scandal, and turning around the company towards previous growth rates in the future.