Current price: 17.0USDTarget price: 14.5USDOur opinion: downside potentialStreet’s opinion: downside potential Carlsberg is a stock you are not sure where you want to see in the future. On one hand, it is an established business that will most likely be there in the years to come. On the other hand, there is no clear idea how to move forward. The graph fully reflects the dilemma for the stock: on the same levels after 5 years of trading. We do not like technical ideas but we note that, clearly, there is a downtrend on the chart. The stock is already at the levels where it will be decided if the path for near future lies in the upper part of the chart or lower. Our short argument is there is no reason for the stock to go up, thus the only way is down, to the old historical levels. As always, we look at the main points of interest – financial performance, multiples and, finally, shareholders return. We note that on the financials side, the performance is weak, among the worst companies out there. The return on investments is at the 4% level (vs 9% cost of capital), and there is no sign of improvement. The market environment is harsh for the company, considering it had exposure to Russia, so there is also no hope for miracles here. The current payout ratio is at 30%, so there may be a possible improvement on the dividend side if problems arise. Although, the dividend yield is so low, it is hard to believe the company will make a major breakthrough here. We estimate forward dividend yield at 1.5%, so if the company decides to pay twice it currently pays, it still would be only 3%. We do not believe the company will pay more, contrary to its historical payout, thus, the earnings will continue to be invested in this unprofitable business. Finally, on the multiple side, the company does not look cheap either. The current P/E ratio is at 23.5, more than the 21.5 industry level and the companies' levels we previously wrote about. It is not clear why would you buy Carlsberg at higher multiples provided the stock lacked in all possible measures. We set Carlsberg at a sell with downside to its previous historical levels at around 14.5USD. -AB