As of June 12, 2025, Associated British Foods PLC's estimated intrinsic value ranges from $1700.23 to $2947.26 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $2947.26 | +45.3% |
| Discounted Cash Flow (5Y) | $2863.81 | +41.2% |
| Dividend Discount Model (Multi-Stage) | $2656.07 | +31.0% |
| Dividend Discount Model (Stable) | $2721.30 | +34.2% |
| Earnings Power Value | $1700.23 | -16.2% |
Is Associated British Foods PLC (ABF.L) undervalued or overvalued?
With the current market price at $2028.00, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Associated British Foods PLC's intrinsic value, including:
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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.55 | 0.58 |
| Cost of equity | 7.3% | 9.0% |
| Cost of debt | 4.0% | 4.7% |
| Tax rate | 27.9% | 31.7% |
| Debt/Equity ratio | 0.25 | 0.25 |
| After-tax WACC | 6.4% | 7.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $2,864 | $23,434M | 79.7% |
| 10-Year Growth | $2,947 | $24,035M | 62.0% |
| 5-Year EBITDA | $3,108 | $25,190M | 81.2% |
| 10-Year EBITDA | $3,242 | $26,154M | 65.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,062M |
| Discount Rate (WACC) | 7.9% - 6.4% |
| Enterprise Value | $13,511M - $16,621M |
| Net Debt | $2,838M |
| Equity Value | $10,673M - $13,783M |
| Outstanding Shares | 7M |
| Fair Value | $1,484 - $1,916 |
| Selected Fair Value | $1700.23 |
| Metric | Value |
|---|---|
| Market Capitalization | $14585M |
| Enterprise Value | $17423M |
| Trailing P/E | 11.12 |
| Forward P/E | 11.34 |
| Trailing EV/EBITDA | 8.60 |
| Current Dividend Yield | 447.48% |
| Dividend Growth Rate (5Y) | 16.66% |
| Debt-to-Equity Ratio | 0.25 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $884.18 |
| Discounted Cash Flow (5Y) | 25% | $715.95 |
| Dividend Discount Model (Multi-Stage) | 20% | $531.21 |
| Dividend Discount Model (Stable) | 15% | $408.19 |
| Earnings Power Value | 10% | $170.02 |
| Weighted Average | 100% | $2709.56 |
Based on our comprehensive valuation analysis, Associated British Foods PLC's weighted average intrinsic value is $2709.56, which is approximately 33.6% above the current market price of $2028.00.
Key investment considerations:
Given these factors, we believe Associated British Foods PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.