What is AGM.L's Intrinsic value?

Applied Graphene Materials PLC (AGM.L) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Applied Graphene Materials PLC's estimated intrinsic value ranges from $1.76 to $1.76 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $1.76 -66.5%

Is Applied Graphene Materials PLC (AGM.L) undervalued or overvalued?

With the current market price at $5.25, the stock appears to be significantly overvalued.

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 Applied Graphene Materials 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.34 0.35
Cost of equity 6.0% 7.5%
Cost of debt 5.0% 5.0%
Tax rate 16.5% 20.5%
Debt/Equity ratio 0.02 0.02
After-tax WACC 6.0% 7.4%

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 $(0)M
Discount Rate (WACC) 7.4% - 6.0%
Enterprise Value $(3)M - $(3)M
Net Debt $(4)M
Equity Value $2M - $1M
Outstanding Shares 1M
Fair Value $2 - $1
Selected Fair Value $1.76

Key Financial Metrics

Metric Value
Market Capitalization $4M
Enterprise Value $-1M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 11.60
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.02

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% $0.18
Weighted Average 100% $1.76

Investment Conclusion

Based on our comprehensive valuation analysis, Applied Graphene Materials PLC's weighted average intrinsic value is $1.76, which is approximately 66.5% below the current market price of $5.25.

Key investment considerations:

  • Strong projected earnings growth (-2580% to -404% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.02)

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