What is 888.L's Intrinsic value?

888 Holdings PLC (888.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, 888 Holdings PLC's estimated intrinsic value ranges from $155.40 to $155.40 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $155.40 +184.4%

Is 888 Holdings PLC (888.L) undervalued or overvalued?

With the current market price at $54.65, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate 888 Holdings PLC's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.7% 4.2%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.44 0.77
Cost of equity 6.4% 10.1%
Cost of debt 17.7% 169.0%
Tax rate 13.1% 22.9%
Debt/Equity ratio 3.87 3.87
After-tax WACC 13.6% 105.6%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $564M
Discount Rate (WACC) 105.6% - 13.6%
Enterprise Value $534M - $4,156M
Net Debt $1,492M
Equity Value $(958)M - $2,663M
Outstanding Shares 4M
Fair Value $(221) - $614
Selected Fair Value $155.40

Key Financial Metrics

Metric Value
Market Capitalization $237M
Enterprise Value $1361M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 3.25
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 3.87

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Earnings Power Value 100% $15.54
Weighted Average 100% $155.40

Investment Conclusion

Based on our comprehensive valuation analysis, 888 Holdings PLC's weighted average intrinsic value is $155.40, which is approximately 184.4% above the current market price of $54.65.

Key investment considerations:

  • Strong projected earnings growth (-3% to 1% margin)
  • Consistent cash flow generation

Given these factors, we believe 888 Holdings PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.