Intrinsic Value First Sensor AG (SIS.DE)

• Previous Close: €55.40
• Intrinsic Value: €23.65
• Upside potential: -57%

Stock Valuation Context

Business Model And Market Position

First Sensor AG operates in the semiconductor industry, specializing in high-performance sensor solutions for industrial, medical, and mobility markets. The company’s core revenue model is driven by the development and sale of sensor chips, components, and systems, including optical, radiation, pressure, level, and flow sensors. Its product portfolio, featuring quadrant PIN photodiodes, avalanche photodiodes (APDs), and silicon photomultipliers (SiPMs), caters to niche applications requiring precision and reliability. First Sensor holds a strong position in specialized sensor markets, supported by its technological expertise and custom solutions for demanding environments such as aerospace and medical diagnostics. As a subsidiary of TE Connectivity Ltd., it benefits from synergies in R&D and distribution, enhancing its competitive edge in high-growth sectors like autonomous mobility and Industry 4.0. The company’s focus on innovation and tailored sensor systems positions it as a key player in markets where accuracy and durability are critical.

Revenue Profitability And Efficiency

In FY 2022, First Sensor reported revenue of €105.3 million, with net income reaching €18.7 million, reflecting a solid profitability margin. Diluted EPS stood at €1.82, indicating efficient earnings generation. However, operating cash flow was negative at €-2.8 million, partly due to capital expenditures of €-8.3 million, suggesting reinvestment in production capabilities. The company’s ability to maintain profitability despite cash flow pressures highlights disciplined cost management.

Earnings Power And Capital Efficiency

First Sensor demonstrates robust earnings power, with net income representing approximately 17.8% of revenue. The company’s capital efficiency is underscored by its ability to generate positive earnings despite significant capital expenditures. Its focus on high-margin sensor solutions and OEM applications contributes to sustained profitability, though cash flow volatility warrants monitoring.

Balance Sheet And Financial Health

The company’s balance sheet shows €0.9 million in cash and equivalents against total debt of €16.0 million, indicating moderate leverage. With a market capitalization of €599.6 million, First Sensor maintains a stable financial position, supported by its parent company’s backing. The debt level appears manageable relative to its earnings capacity, though liquidity reserves are relatively low.

Growth Trends And Dividend Policy

First Sensor’s growth is tied to advancements in sensor technology and expanding applications in mobility and industrial automation. The company paid a dividend of €0.47 per share in FY 2022, reflecting a commitment to shareholder returns. Future growth may hinge on R&D investments and market penetration in emerging sectors like electric vehicles and smart manufacturing.

Valuation And Market Expectations

With a market cap of €599.6 million and a beta of 0.035, First Sensor is perceived as a low-volatility investment within the semiconductor sector. The valuation reflects investor confidence in its niche market positioning and growth potential, though reliance on cyclical industries may introduce variability.

Strategic Advantages And Outlook

First Sensor’s strategic advantages include its specialized product portfolio, technological expertise, and TE Connectivity’s support. The outlook remains positive, driven by demand for precision sensors in automation and healthcare. However, competitive pressures and R&D costs could influence long-term performance. The company’s ability to innovate and scale will be critical in maintaining its market position.

Sources

Company filings, Deutsche Börse data