What is ALADM.PA's Intrinsic value?

Adthink SA (ALADM.PA) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Adthink SA's estimated intrinsic value ranges from $0.53 to $1.78 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1.78 +99.8%
Discounted Cash Flow (5Y) $1.54 +73.5%
Dividend Discount Model (Multi-Stage) $0.78 -12.2%
Earnings Power Value $0.53 -40.5%

Is Adthink SA (ALADM.PA) undervalued or overvalued?

With the current market price at $0.89, 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 Adthink 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
  3. 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 2.6% 3.1%
Equity market risk premium 5.2% 6.2%
Adjusted beta 1.14 1.51
Cost of equity 8.6% 13.0%
Cost of debt 5.0% 5.0%
Tax rate 4.4% 6.9%
Debt/Equity ratio 0.46 0.46
After-tax WACC 7.4% 10.3%

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: 8.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $10 (FY12-2020) to $13 (FY12-2030)
  • Net profit margin expansion from 7% to 6%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2 $11M 67.6%
10-Year Growth $2 $12M 47.7%
5-Year EBITDA $1 $8M 55.5%
10-Year EBITDA $1 $10M 34.5%

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: 10.8%
  • Long-term growth rate: 0.5%
  • Fair value: $0.78 (-12.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.0% (Low) to 8.6% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $(4) to $(9)
  • Selected fair value: $-6.34 (-811.8% from current price)

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 $0M
Discount Rate (WACC) 10.3% - 7.4%
Enterprise Value $4M - $5M
Net Debt $1M
Equity Value $2M - $4M
Outstanding Shares 6M
Fair Value $0 - $1
Selected Fair Value $0.53

Key Financial Metrics

Metric Value
Market Capitalization $5M
Enterprise Value $7M
Trailing P/E 0.00
Forward P/E 8.52
Trailing EV/EBITDA 4.85
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.46

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) 35% $0.53
Discounted Cash Flow (5Y) 29% $0.39
Dividend Discount Model (Multi-Stage) 24% $0.16
Earnings Power Value 12% $0.05
Weighted Average 100% $1.33

Investment Conclusion

Based on our comprehensive valuation analysis, Adthink SA's weighted average intrinsic value is $1.33, which is approximately 49.2% above the current market price of $0.89.

Key investment considerations:

  • Strong projected earnings growth (7% to 6% margin)

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