As of May 29, 2025, Burford Capital Ltd's estimated intrinsic value ranges from $397.42 to $1997.88 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1997.88 | +105.0% |
| Discounted Cash Flow (5Y) | $1828.39 | +87.6% |
| Dividend Discount Model (Multi-Stage) | $799.97 | -17.9% |
| Dividend Discount Model (Stable) | $397.42 | -59.2% |
| Earnings Power Value | $1272.65 | +30.6% |
Is Burford Capital Ltd (BUR.L) undervalued or overvalued?
With the current market price at $974.50, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Burford Capital Ltd's intrinsic value, including:
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 | 0.88 | 0.98 |
| Cost of equity | 9.3% | 11.8% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 10.1% | 11.6% |
| Debt/Equity ratio | 0.6 | 0.6 |
| After-tax WACC | 7.5% | 9.1% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $2,475 | $6,961M | 68.9% |
| 10-Year Growth | $2,705 | $7,486M | 48.7% |
| 5-Year EBITDA | $1,863 | $5,558M | 61.0% |
| 10-Year EBITDA | $2,239 | $6,420M | 40.2% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $429M |
| Discount Rate (WACC) | 9.1% - 7.5% |
| Enterprise Value | $4,735M - $5,742M |
| Net Debt | $1,294M |
| Equity Value | $3,441M - $4,449M |
| Outstanding Shares | 2M |
| Fair Value | $1,503 - $1,943 |
| Selected Fair Value | $1272.65 |
| Metric | Value |
|---|---|
| Market Capitalization | $2231M |
| Enterprise Value | $3187M |
| Trailing P/E | 20.62 |
| Forward P/E | 9.97 |
| Trailing EV/EBITDA | 8.50 |
| Current Dividend Yield | 92.03% |
| Dividend Growth Rate (5Y) | -0.83% |
| Debt-to-Equity Ratio | 0.60 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $599.36 |
| Discounted Cash Flow (5Y) | 25% | $457.10 |
| Dividend Discount Model (Multi-Stage) | 20% | $159.99 |
| Dividend Discount Model (Stable) | 15% | $59.61 |
| Earnings Power Value | 10% | $127.26 |
| Weighted Average | 100% | $1403.33 |
Based on our comprehensive valuation analysis, Burford Capital Ltd's weighted average intrinsic value is $1403.33, which is approximately 44.0% above the current market price of $974.50.
Key investment considerations:
Given these factors, we believe Burford Capital Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.