What is BRD.L's Intrinsic value?

Bluerock Diamonds PLC (BRD.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Bluerock Diamonds PLC's estimated intrinsic value ranges from $141.89 to $141.89 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $141.89 +6206.3%

Is Bluerock Diamonds PLC (BRD.L) undervalued or overvalued?

With the current market price at $2.25, 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 Bluerock Diamonds 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 0.55 0.61
Cost of equity 7.3% 9.2%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 2.75 2.75
After-tax WACC 4.9% 5.4%

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 $3M
Discount Rate (WACC) 5.4% - 4.9%
Enterprise Value $58M - $64M
Net Debt $2M
Equity Value $55M - $62M
Outstanding Shares 0M
Fair Value $134 - $149
Selected Fair Value $141.89

Key Financial Metrics

Metric Value
Market Capitalization $1M
Enterprise Value $3M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.40
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 2.75

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% $14.19
Weighted Average 100% $141.89

Investment Conclusion

Based on our comprehensive valuation analysis, Bluerock Diamonds PLC's weighted average intrinsic value is $141.89, which is approximately 6206.3% above the current market price of $2.25.

Key investment considerations:

  • Strong projected earnings growth (-17% to -14% margin)
  • Consistent cash flow generation

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