What is AWE.L's Intrinsic value?

Alphawave IP Group PLC (AWE.L) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Alphawave IP Group PLC's estimated intrinsic value ranges from $16.46 to $16.46 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $16.46 -88.4%

Is Alphawave IP Group PLC (AWE.L) undervalued or overvalued?

With the current market price at $141.60, the stock appears to be significantly 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 Alphawave IP Group PLC's intrinsic value, including:

  1. 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.53 0.85
Cost of equity 7.2% 10.9%
Cost of debt 5.1% 7.0%
Tax rate 28.7% 41.2%
Debt/Equity ratio 0.16 0.16
After-tax WACC 6.7% 10.0%

Valuation Methods

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 $27M
Discount Rate (WACC) 10.0% - 6.7%
Enterprise Value $268M - $400M
Net Debt $160M
Equity Value $108M - $239M
Outstanding Shares 8M
Fair Value $14 - $31
Selected Fair Value $16.46

Key Financial Metrics

Metric Value
Market Capitalization $1102M
Enterprise Value $1221M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 15.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.16

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
Earnings Power Value 100% $1.65
Weighted Average 100% $16.46

Investment Conclusion

Based on our comprehensive valuation analysis, Alphawave IP Group PLC's weighted average intrinsic value is $16.46, which is approximately 88.4% below the current market price of $141.60.

Key investment considerations:

  • Strong projected earnings growth (-16% to 0% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.16)

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