What is ALADA.PA's Intrinsic value?

Ada SA (ALADA.PA) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Ada SA's estimated intrinsic value ranges from $10.90 to $26.57 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $24.06 +33.6%
Discounted Cash Flow (5Y) $11.37 -36.8%
Dividend Discount Model (Multi-Stage) $26.57 +47.6%
Dividend Discount Model (Stable) $10.90 -39.5%

Is Ada SA (ALADA.PA) undervalued or overvalued?

With the current market price at $18.00, 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 Ada SA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.59 0.84
Cost of equity 6.5% 9.7%
Cost of debt 5.0% 5.0%
Tax rate 31.2% 32.1%
Debt/Equity ratio 0.52 0.52
After-tax WACC 5.4% 7.6%

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: 6.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $100 (FY12-2021) to $176 (FY12-2031)
  • Net profit margin expansion from 1% to 6%
  • Capital expenditures maintained at approximately 13% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $11 $59M 91.6%
10-Year Growth $24 $96M 81.6%
5-Year EBITDA $15 $70M 92.9%
10-Year EBITDA $20 $86M 79.3%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.1%
  • Long-term growth rate: 3.0%
  • Fair value: $26.57 (47.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.7% (Low) to 6.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $4 to $17
  • Selected fair value: $10.90 (-39.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $53M
Enterprise Value $79M
Trailing P/E 37.79
Forward P/E 34.14
Trailing EV/EBITDA 3.80
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -9.64%
Debt-to-Equity Ratio 0.52

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) 33% $7.22
Discounted Cash Flow (5Y) 28% $2.84
Dividend Discount Model (Multi-Stage) 22% $5.31
Dividend Discount Model (Stable) 17% $1.63
Weighted Average 100% $18.90

Investment Conclusion

Based on our comprehensive valuation analysis, Ada SA's weighted average intrinsic value is $18.90, which is approximately 5.0% above the current market price of $18.00.

Key investment considerations:

  • Strong projected earnings growth (1% to 6% margin)
  • Consistent cash flow generation

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