What is AFX.L's Intrinsic value?

Alpha FX Group PLC (AFX.L) Intrinsic Value Analysis

Executive Summary

As of June 4, 2025, Alpha FX Group PLC's estimated intrinsic value ranges from $1858.43 to $2330.21 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $2330.21 +27.7%
Dividend Discount Model (Stable) $1858.43 +1.8%

Is Alpha FX Group PLC (AFX.L) undervalued or overvalued?

With the current market price at $1825.00, the stock appears to be moderately 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 Alpha FX 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 3.6% 4.1%
Equity market risk premium 5.3% 6.3%
Adjusted beta 0.64 0.91
Cost of equity 7.1% 10.4%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.9%
Debt/Equity ratio 0.02 0.02
After-tax WACC 7.0% 10.3%

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: 12.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.7%
  • Long-term growth rate: 3.5%
  • Fair value: $2330.21 (27.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.4% (Low) to 7.1% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $751 to $2,966
  • Selected fair value: $1858.43 (1.8% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $840M
Enterprise Value $719M
Trailing P/E 23.09
Forward P/E 17.84
Trailing EV/EBITDA 0.00
Current Dividend Yield 57.28%
Dividend Growth Rate (5Y) 28.46%
Debt-to-Equity Ratio 0.01

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% $466.04
Dividend Discount Model (Stable) 43% $278.77
Weighted Average 100% $2128.02

Investment Conclusion

Based on our comprehensive valuation analysis, Alpha FX Group PLC's weighted average intrinsic value is $2128.02, which is approximately 16.6% above the current market price of $1825.00.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.01)
  • Historical dividend growth of 28.46%

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