As of May 31, 2025, AutoCanada Inc's estimated intrinsic value ranges from $135.48 to $392.68 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $392.68 | +1716.3% |
| Discounted Cash Flow (5Y) | $249.95 | +1056.1% |
| Dividend Discount Model (Multi-Stage) | $135.48 | +526.6% |
| Earnings Power Value | $170.52 | +688.7% |
Is AutoCanada Inc (ACQ.TO) undervalued or overvalued?
With the current market price at $21.62, 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 AutoCanada Inc'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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.18 | 1.34 |
| Cost of equity | 9.2% | 12.4% |
| Cost of debt | 4.5% | 14.9% |
| Tax rate | 25.7% | 28.3% |
| Debt/Equity ratio | 4.15 | 4.15 |
| After-tax WACC | 4.5% | 11.0% |
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 | $250 | $7,732M | 80.9% |
| 10-Year Growth | $393 | $11,036M | 66.0% |
| 5-Year EBITDA | $146 | $5,315M | 72.2% |
| 10-Year EBITDA | $274 | $8,290M | 54.8% |
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 | $376M |
| Discount Rate (WACC) | 11.0% - 4.5% |
| Enterprise Value | $3,408M - $8,379M |
| Net Debt | $1,946M |
| Equity Value | $1,463M - $6,433M |
| Outstanding Shares | 23M |
| Fair Value | $63 - $278 |
| Selected Fair Value | $170.52 |
| Metric | Value |
|---|---|
| Market Capitalization | $501M |
| Enterprise Value | $2446M |
| Trailing P/E | 0.00 |
| Forward P/E | 4.30 |
| Trailing EV/EBITDA | 6.85 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | -100.00% |
| Debt-to-Equity Ratio | 4.15 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $117.80 |
| Discounted Cash Flow (5Y) | 29% | $62.49 |
| Dividend Discount Model (Multi-Stage) | 24% | $27.10 |
| Earnings Power Value | 12% | $17.05 |
| Weighted Average | 100% | $264.05 |
Based on our comprehensive valuation analysis, AutoCanada Inc's weighted average intrinsic value is $264.05, which is approximately 1121.3% above the current market price of $21.62.
Key investment considerations:
Given these factors, we believe AutoCanada Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.