What is CAD.L's Intrinsic value?

Cadogan Petroleum PLC (CAD.L) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Cadogan Petroleum PLC's estimated intrinsic value ranges from $4.34 to $4.34 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $4.34 +15.7%

Is Cadogan Petroleum PLC (CAD.L) undervalued or overvalued?

With the current market price at $3.75, the stock appears to be moderately 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 Cadogan Petroleum 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 0.38 0.61
Cost of equity 6.3% 9.2%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 0.01 0.01
After-tax WACC 6.2% 9.2%

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 $0M
Discount Rate (WACC) 9.2% - 6.2%
Enterprise Value $1M - $2M
Net Debt $(14)M
Equity Value $16M - $16M
Outstanding Shares 3M
Fair Value $6 - $6
Selected Fair Value $4.34

Key Financial Metrics

Metric Value
Market Capitalization $10M
Enterprise Value $-0M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 3.70
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.01

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% $0.43
Weighted Average 100% $4.34

Investment Conclusion

Based on our comprehensive valuation analysis, Cadogan Petroleum PLC's weighted average intrinsic value is $4.34, which is approximately 15.7% above the current market price of $3.75.

Key investment considerations:

  • Strong projected earnings growth (-68% to -37% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.01)

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