What is AUG.L's Intrinsic value?

Augean PLC (AUG.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Augean PLC's estimated intrinsic value ranges from $25.75 to $919.63 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $374.60 +1.0%
Discounted Cash Flow (5Y) $287.61 -22.5%
Dividend Discount Model (Multi-Stage) $259.65 -30.0%
Dividend Discount Model (Stable) $25.75 -93.1%
Earnings Power Value $919.63 +147.9%

Is Augean PLC (AUG.L) undervalued or overvalued?

With the current market price at $371.00, the stock appears to be moderately overvalued.

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 Augean 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
  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 2.9% 3.4%
Equity market risk premium 5.3% 6.3%
Adjusted beta 0.7 0.85
Cost of equity 6.7% 9.3%
Cost of debt 5.0% 5.0%
Tax rate 18.3% 19.3%
Debt/Equity ratio 0.04 0.04
After-tax WACC 6.6% 9.1%

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: 7.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $92 (FY12-2020) to $193 (FY12-2030)
  • Net profit margin expansion from 14% to 14%
  • Capital expenditures maintained at approximately 8% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $288 $298M 82.4%
10-Year Growth $375 $390M 68.4%
5-Year EBITDA $171 $176M 70.2%
10-Year EBITDA $236 $244M 49.6%

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: 8.0%
  • Long-term growth rate: 3.0%
  • Fair value: $259.65 (-30.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.3% (Low) to 6.7% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $11 to $40
  • Selected fair value: $25.75 (-93.1% 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 $73M
Discount Rate (WACC) 9.1% - 6.6%
Enterprise Value $808M - $1,116M
Net Debt $(3)M
Equity Value $812M - $1,119M
Outstanding Shares 1M
Fair Value $773 - $1,066
Selected Fair Value $919.63

Key Financial Metrics

Metric Value
Market Capitalization $389M
Enterprise Value $386M
Trailing P/E 310.07
Forward P/E 28.12
Trailing EV/EBITDA 5.05
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.04

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) 30% $112.38
Discounted Cash Flow (5Y) 25% $71.90
Dividend Discount Model (Multi-Stage) 20% $51.93
Dividend Discount Model (Stable) 15% $3.86
Earnings Power Value 10% $91.96
Weighted Average 100% $332.04

Investment Conclusion

Based on our comprehensive valuation analysis, Augean PLC's weighted average intrinsic value is $332.04, which is approximately 10.5% below the current market price of $371.00.

Key investment considerations:

  • Strong projected earnings growth (14% to 14% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.04)

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