As of May 31, 2025, BW Offshore Ltd's estimated intrinsic value ranges from $14.65 to $74.95 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $74.95 | +131.0% |
| Discounted Cash Flow (5Y) | $62.15 | +91.5% |
| Dividend Discount Model (Multi-Stage) | $40.44 | +24.6% |
| Dividend Discount Model (Stable) | $40.63 | +25.2% |
| Earnings Power Value | $14.65 | -54.9% |
Is BW Offshore Ltd (BWO.OL) undervalued or overvalued?
With the current market price at $32.45, 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 BW Offshore 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 | 3.3% | 3.8% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 1.57 | 2.43 |
| Cost of equity | 11.4% | 19.1% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 13.7% | 13.9% |
| Debt/Equity ratio | 2.75 | 2.75 |
| After-tax WACC | 5.6% | 8.0% |
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 | $6 | $2,430M | 65.4% |
| 10-Year Growth | $7 | $2,664M | 50.5% |
| 5-Year EBITDA | $9 | $2,932M | 71.3% |
| 10-Year EBITDA | $9 | $3,014M | 56.3% |
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 | $102M |
| Discount Rate (WACC) | 8.0% - 5.6% |
| Enterprise Value | $1,285M - $1,836M |
| Net Debt | $1,292M |
| Equity Value | $(7)M - $544M |
| Outstanding Shares | 185M |
| Fair Value | $(0) - $3 |
| Selected Fair Value | $14.65 |
| Metric | Value |
|---|---|
| Market Capitalization | $6002M |
| Enterprise Value | $19060M |
| Trailing P/E | 4.93 |
| Forward P/E | 5.63 |
| Trailing EV/EBITDA | 4.45 |
| Current Dividend Yield | 1350.29% |
| Dividend Growth Rate (5Y) | 9.44% |
| Debt-to-Equity Ratio | 2.75 |
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% | $22.49 |
| Discounted Cash Flow (5Y) | 25% | $15.54 |
| Dividend Discount Model (Multi-Stage) | 20% | $8.09 |
| Dividend Discount Model (Stable) | 15% | $6.10 |
| Earnings Power Value | 10% | $1.47 |
| Weighted Average | 100% | $53.67 |
Based on our comprehensive valuation analysis, BW Offshore Ltd's weighted average intrinsic value is $53.67, which is approximately 65.4% above the current market price of $32.45.
Key investment considerations:
Given these factors, we believe BW Offshore Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.