What is BRMK's Intrinsic value?

Broadmark Realty Capital Inc (BRMK) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Broadmark Realty Capital Inc's estimated intrinsic value ranges from $7.09 to $7.09 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $7.09 +47.2%

Is Broadmark Realty Capital Inc (BRMK) undervalued or overvalued?

With the current market price at $4.82, 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 Broadmark Realty Capital Inc'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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.4 0.41
Cost of equity 5.7% 7.2%
Cost of debt 5.1% 5.1%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.15 0.15
After-tax WACC 5.5% 6.7%

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 $60M
Discount Rate (WACC) 6.7% - 5.5%
Enterprise Value $890M - $1,096M
Net Debt $59M
Equity Value $832M - $1,038M
Outstanding Shares 132M
Fair Value $6 - $8
Selected Fair Value $7.09

Key Financial Metrics

Metric Value
Market Capitalization $635M
Enterprise Value $694M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 86.05
Current Dividend Yield 1462.66%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.15

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% $0.71
Weighted Average 100% $7.09

Investment Conclusion

Based on our comprehensive valuation analysis, Broadmark Realty Capital Inc's weighted average intrinsic value is $7.09, which is approximately 47.2% above the current market price of $4.82.

Key investment considerations:

  • Strong projected earnings growth (-107% to -78% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.15)

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