What is ASC.L's Intrinsic value?

ASOS PLC (ASC.L) Intrinsic Value Analysis

Executive Summary

As of May 24, 2025, ASOS PLC's estimated intrinsic value ranges from $1129.02 to $1129.02 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1129.02 +261.9%

Is ASOS PLC (ASC.L) undervalued or overvalued?

With the current market price at $312.00, 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 ASOS PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 0.56 0.95
Cost of equity 7.3% 11.6%
Cost of debt 4.0% 7.0%
Tax rate 16.4% 22.1%
Debt/Equity ratio 2.61 2.61
After-tax WACC 4.4% 7.2%

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: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 5.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2,896 (FY09-2024) to $3,539 (FY09-2034)
  • Net profit margin expansion from -12% to 1%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(441)M 64.0%
10-Year Growth $1,129 $1,829M 99.5%
5-Year EBITDA $(1,234) $203M 178.3%
10-Year EBITDA $172 $712M 98.8%

Key Financial Metrics

Metric Value
Market Capitalization $364M
Enterprise Value $875M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 2.61

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) 100% $338.71
Weighted Average 100% $1129.02

Investment Conclusion

Based on our comprehensive valuation analysis, ASOS PLC's weighted average intrinsic value is $1129.02, which is approximately 261.9% above the current market price of $312.00.

Key investment considerations:

  • Strong projected earnings growth (-12% to 1% margin)
  • Consistent cash flow generation

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