What is ADM.L's Intrinsic value?

Admiral Group PLC (ADM.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Admiral Group PLC's estimated intrinsic value ranges from $3107.28 to $4078.68 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $3107.28 -6.4%
Dividend Discount Model (Stable) $4078.68 +22.9%

Is Admiral Group PLC (ADM.L) undervalued or overvalued?

With the current market price at $3320.00, the stock appears to be fairly valued.

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 Admiral Group PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.61 0.84
Cost of equity 7.6% 10.9%
Cost of debt 5.0% 5.0%
Tax rate 19.9% 21.0%
Debt/Equity ratio 0.14 0.14
After-tax WACC 7.2% 10.0%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 55.8%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.2%
  • Long-term growth rate: 3.5%
  • Fair value: $3107.28 (-6.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.9% (Low) to 7.6% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $1,836 to $6,322
  • Selected fair value: $4078.68 (22.9% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $10046M
Enterprise Value $11134M
Trailing P/E 15.15
Forward P/E 14.76
Trailing EV/EBITDA 0.00
Current Dividend Yield 369.65%
Dividend Growth Rate (5Y) -3.46%
Debt-to-Equity Ratio 0.14

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
Dividend Discount Model (Multi-Stage) 57% $621.46
Dividend Discount Model (Stable) 43% $611.80
Weighted Average 100% $3523.60

Investment Conclusion

Based on our comprehensive valuation analysis, Admiral Group PLC's weighted average intrinsic value is $3523.60, which is approximately 6.1% above the current market price of $3320.00.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.14)

Given these factors, we believe Admiral Group PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.