Atlas Technical Consultants Inc (ATCX) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Atlas Technical Consultants Inc's estimated intrinsic value ranges from $6.98 to $47.18 per share, depending on the valuation methodology applied.

Valuation Method	Fair Value (USD)	Implied Upside/Downside
Discounted Cash Flow (10Y)	$9.02	-26.3%
Discounted Cash Flow (5Y)	$6.98	-43.1%
Earnings Power Value	$47.18	+285.1%

Is Atlas Technical Consultants Inc (ATCX) undervalued or overvalued?

With the current market price at $12.25, the stock appears to be moderately 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 Atlas Technical Consultants 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	3.9%	4.4%
Equity market risk premium	4.6%	5.6%
Adjusted beta	1.13	1.18
Cost of equity	9.0%	11.5%
Cost of debt	9.1%	9.1%
Tax rate	12.4%	21.9%
Debt/Equity ratio	0.99	0.99
After-tax WACC	8.5%	9.3%

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 $539 (FY12-2021) to $734 (FY12-2031)
• Net profit margin expansion from -6% to 0%
• Capital expenditures maintained at approximately 1% of revenue

DCF Model	Fair Value	Enterprise Value	% from Terminal Value
5-Year Growth	$7	$774M	78.1%
10-Year Growth	$9	$853M	56.6%
5-Year EBITDA	$2	$594M	71.4%
10-Year EBITDA	$5	$710M	47.8%

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	$206M
Discount Rate (WACC)	9.3% - 8.5%
Enterprise Value	$2,216M - $2,423M
Net Debt	$506M
Equity Value	$1,710M - $1,918M
Outstanding Shares	38M
Fair Value	$44 - $50
Selected Fair Value	$47.18

Key Financial Metrics

Metric	Value
Market Capitalization	$471M
Enterprise Value	$977M
Trailing P/E	0.00
Forward P/E	0.00
Trailing EV/EBITDA	9.45
Current Dividend Yield	62.96%
Dividend Growth Rate (5Y)	0.00%
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)	46%	$2.71
Discounted Cash Flow (5Y)	38%	$1.74
Earnings Power Value	15%	$4.72
Weighted Average	100%	$14.10

Investment Conclusion

Based on our comprehensive valuation analysis, Atlas Technical Consultants Inc's weighted average intrinsic value is $14.10, which is approximately 15.1% above the current market price of $12.25.

Key investment considerations:

• Strong projected earnings growth (-6% to 0% margin)
• Consistent cash flow generation

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