What is BOMN's Intrinsic value?

Boston Omaha Corp (BOMN) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Boston Omaha Corp's estimated intrinsic value ranges from $4.99 to $540.65 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $540.65 +1998.8%
Earnings Power Value $4.99 -80.6%

Is Boston Omaha Corp (BOMN) undervalued or overvalued?

With the current market price at $25.76, 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 Boston Omaha Corp's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  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 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 0.45 0.56
Cost of equity 5.1% 7.1%
Cost of debt 7.0% 7.0%
Tax rate 27.0% 27.0%
Debt/Equity ratio 0.03 0.03
After-tax WACC 5.1% 7.0%

Valuation Methods

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: 6.1%
  • Long-term growth rate: 3.9%
  • Fair value: $-0.40 (-101.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.1% (Low) to 5.1% (High)
  • Long-term growth rate: 3.0% (Low) to 4.8% (High)
  • Fair value range: $49 to $1,033
  • Selected fair value: $540.65 (1998.8% 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 $3M
Discount Rate (WACC) 7.0% - 5.1%
Enterprise Value $46M - $64M
Net Debt $(93)M
Equity Value $139M - $157M
Outstanding Shares 30M
Fair Value $5 - $5
Selected Fair Value $4.99

Key Financial Metrics

Metric Value
Market Capitalization $764M
Enterprise Value $671M
Trailing P/E 9.03
Forward P/E 9.01
Trailing EV/EBITDA 6.45
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.03

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
Dividend Discount Model (Stable) 60% $81.10
Earnings Power Value 40% $0.50
Weighted Average 100% $326.39

Investment Conclusion

Based on our comprehensive valuation analysis, Boston Omaha Corp's weighted average intrinsic value is $326.39, which is approximately 1167.0% above the current market price of $25.76.

Key investment considerations:

  • Strong projected earnings growth (-5% to 1% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.03)

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