What is BC.U.TO's Intrinsic value?

Bespoke Capital Acquisition Corp (BC.U.TO) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Bespoke Capital Acquisition Corp's estimated intrinsic value ranges from $0.03 to $0.27 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.03 -99.8%
Discounted Cash Flow (5Y) $0.03 -99.8%
Earnings Power Value $0.27 -97.9%

Is Bespoke Capital Acquisition Corp (BC.U.TO) undervalued or overvalued?

With the current market price at $12.75, 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 Bespoke Capital Acquisition Corp'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 3.4% 3.9%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1.35 1.44
Cost of equity 9.1% 11.9%
Cost of debt 5.0% 5.0%
Tax rate 24.6% 36.9%
Debt/Equity ratio 1 1
After-tax WACC 6.4% 7.5%

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: 7.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2 (FY12-2020) to $3 (FY12-2030)
  • Net profit margin expansion from 6% to -2%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $(1)M 80.5%
10-Year Growth $0 $(1)M 64.8%
5-Year EBITDA $0 $(1)M 70.1%
10-Year EBITDA $0 $(1)M 51.2%

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 $1M
Discount Rate (WACC) 8.7% - 7.8%
Enterprise Value $10M - $11M
Net Debt $(2)M
Equity Value $12M - $13M
Outstanding Shares 45M
Fair Value $0 - $0
Selected Fair Value $0.27

Key Financial Metrics

Metric Value
Market Capitalization $762M
Enterprise Value $761M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 9.58
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.19

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% $0.01
Discounted Cash Flow (5Y) 38% $0.01
Earnings Power Value 15% $0.03
Weighted Average 100% $0.06

Investment Conclusion

Based on our comprehensive valuation analysis, Bespoke Capital Acquisition Corp's weighted average intrinsic value is $0.06, which is approximately 99.5% below the current market price of $12.75.

Key investment considerations:

  • Strong projected earnings growth (6% to -2% margin)
  • Consistent cash flow generation

Given these factors, we believe Bespoke Capital Acquisition Corp is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.