What is AMAT.L's Intrinsic value?

Amati AIM VCT PLC (AMAT.L) Intrinsic Value Analysis

Executive Summary

As of May 28, 2025, Amati AIM VCT PLC's estimated intrinsic value ranges from $28.08 to $89.54 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $89.54 +54.4%
Discounted Cash Flow (5Y) $84.62 +45.9%
Dividend Discount Model (Multi-Stage) $28.08 -51.6%

Is Amati AIM VCT PLC (AMAT.L) undervalued or overvalued?

With the current market price at $58.00, 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 Amati AIM VCT PLC'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 1.32 1.58
Cost of equity 11.9% 16.0%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 1 1
After-tax WACC 8.0% 10.0%

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: 9.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $(42) (FY01-2024) to $12 (FY01-2034)
  • Net profit margin expansion from 108% to 87%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $85 $113M 70.7%
10-Year Growth $90 $121M 49.1%
5-Year EBITDA $97 $134M 75.2%
10-Year EBITDA $99 $137M 54.8%

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: 13.9%
  • Long-term growth rate: 1.0%
  • Fair value: $28.08 (-51.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 16.0% (Low) to 11.9% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $(29) to $(56)
  • Selected fair value: $-42.85 (-173.9% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $98M
Enterprise Value $68M
Trailing P/E 0.00
Forward P/E 12.10
Trailing EV/EBITDA 12.90
Current Dividend Yield 879.57%
Dividend Growth Rate (5Y) 11.86%
Debt-to-Equity Ratio 0.99

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) 40% $26.86
Discounted Cash Flow (5Y) 33% $21.15
Dividend Discount Model (Multi-Stage) 27% $5.62
Weighted Average 100% $71.51

Investment Conclusion

Based on our comprehensive valuation analysis, Amati AIM VCT PLC's weighted average intrinsic value is $71.51, which is approximately 23.3% above the current market price of $58.00.

Key investment considerations:

  • Strong projected earnings growth (108% to 87% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 11.86%

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