What is CIX.TO's Intrinsic value?

CI Financial Corp (CIX.TO) Intrinsic Value Analysis

Executive Summary

As of May 31, 2025, CI Financial Corp's estimated intrinsic value ranges from $30.57 to $73.93 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $73.93 +134.9%
Discounted Cash Flow (5Y) $63.40 +101.4%
Earnings Power Value $30.57 -2.9%

Is CI Financial Corp (CIX.TO) undervalued or overvalued?

With the current market price at $31.48, 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 CI Financial Corp's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 1.3 1.49
Cost of equity 9.8% 13.2%
Cost of debt 4.3% 4.9%
Tax rate 33.8% 46.0%
Debt/Equity ratio 0.97 0.97
After-tax WACC 6.4% 8.0%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2,972 (FY12-2024) to $4,711 (FY12-2034)
  • Net profit margin expansion from -14% to -5%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $63 $13,620M 73.2%
10-Year Growth $74 $15,139M 54.8%
5-Year EBITDA $33 $9,191M 60.3%
10-Year EBITDA $49 $11,597M 40.9%

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 $632M
Discount Rate (WACC) 8.0% - 6.4%
Enterprise Value $7,883M - $9,887M
Net Debt $4,476M
Equity Value $3,407M - $5,410M
Outstanding Shares 144M
Fair Value $24 - $38
Selected Fair Value $30.57

Key Financial Metrics

Metric Value
Market Capitalization $4540M
Enterprise Value $9016M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 9.45
Current Dividend Yield 259.71%
Dividend Growth Rate (5Y) -6.23%
Debt-to-Equity Ratio 0.97

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
Discounted Cash Flow (10Y) 46% $22.18
Discounted Cash Flow (5Y) 38% $15.85
Earnings Power Value 15% $3.06
Weighted Average 100% $63.21

Investment Conclusion

Based on our comprehensive valuation analysis, CI Financial Corp's weighted average intrinsic value is $63.21, which is approximately 100.8% above the current market price of $31.48.

Key investment considerations:

  • Strong projected earnings growth (-14% to -5% margin)
  • Consistent cash flow generation

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