What is AKU.TO's Intrinsic value?

Akumin Inc (AKU.TO) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Akumin Inc's estimated intrinsic value ranges from $2.20 to $9.91 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $9.91 +1770.2%
Discounted Cash Flow (5Y) $2.20 +315.7%
Earnings Power Value $2.49 +370.7%

Is Akumin Inc (AKU.TO) undervalued or overvalued?

With the current market price at $0.53, the stock appears to be significantly 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 Akumin Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 1.9% 2.4%
Equity market risk premium 5.2% 6.2%
Adjusted beta 1.64 1.77
Cost of equity 10.4% 13.9%
Cost of debt 7.8% 8.7%
Tax rate 15.4% 24.4%
Debt/Equity ratio 1.94 1.94
After-tax WACC 7.9% 9.1%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 8.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $251 (FY12-2020) to $1,202 (FY12-2030)
  • Net profit margin expansion from -6% to -7%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2 $525M 72.6%
10-Year Growth $11 $1,099M 62.1%
5-Year EBITDA $4 $714M 79.8%
10-Year EBITDA $9 $1,128M 63.1%

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 $46M
Discount Rate (WACC) 9.1% - 7.9%
Enterprise Value $509M - $584M
Net Debt $361M
Equity Value $148M - $223M
Outstanding Shares 70M
Fair Value $2 - $3
Selected Fair Value $2.49

Key Financial Metrics

Metric Value
Market Capitalization $48M
Enterprise Value $552M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 8.60
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.94

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
Discounted Cash Flow (10Y) 46% $2.97
Discounted Cash Flow (5Y) 38% $0.55
Earnings Power Value 15% $0.25
Weighted Average 100% $5.81

Investment Conclusion

Based on our comprehensive valuation analysis, Akumin Inc's weighted average intrinsic value is $5.81, which is approximately 995.5% above the current market price of $0.53.

Key investment considerations:

  • Strong projected earnings growth (-6% to -7% margin)
  • Consistent cash flow generation

Given these factors, we believe Akumin Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.