What is BOO.L's Intrinsic value?

Boohoo Group PLC (BOO.L) Intrinsic Value Analysis

Executive Summary

As of June 14, 2025, Boohoo Group PLC's estimated intrinsic value ranges from $0.82 to $0.82 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.82 -96.2%

Is Boohoo Group PLC (BOO.L) undervalued or overvalued?

With the current market price at $21.35, 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 Boohoo Group PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 0.39 0.83
Cost of equity 6.3% 10.8%
Cost of debt 4.0% 7.0%
Tax rate 19.2% 22.6%
Debt/Equity ratio 1.32 1.32
After-tax WACC 4.6% 7.7%

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: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,461 (FY02-2024) to $2,599 (FY02-2034)
  • Net profit margin expansion from -10% to 1%
  • Capital expenditures maintained at approximately 7% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(1,181)M 89.9%
10-Year Growth $1 $270M 136.6%
5-Year EBITDA $(1,234) $180M 166.1%
10-Year EBITDA $15 $484M 120.4%

Key Financial Metrics

Metric Value
Market Capitalization $318M
Enterprise Value $576M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.30
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.32

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) 100% $0.25
Weighted Average 100% $0.82

Investment Conclusion

Based on our comprehensive valuation analysis, Boohoo Group PLC's weighted average intrinsic value is $0.82, which is approximately 96.2% below the current market price of $21.35.

Key investment considerations:

  • Strong projected earnings growth (-10% to 1% margin)
  • Consistent cash flow generation

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