What is CKX's Intrinsic value?

CKX Lands Inc (CKX) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, CKX Lands Inc's estimated intrinsic value ranges from $1.08 to $3.97 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $3.97 -57.6%
Discounted Cash Flow (5Y) $3.89 -58.4%
Dividend Discount Model (Multi-Stage) $1.08 -88.5%
Dividend Discount Model (Stable) $2.49 -73.4%

Is CKX Lands Inc (CKX) undervalued or overvalued?

With the current market price at $9.35, the stock appears to be significantly overvalued.

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 CKX Lands Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 0.36 0.65
Cost of equity 5.5% 8.5%
Cost of debt 5.0% 5.0%
Tax rate 25.3% 26.4%
Debt/Equity ratio 1 1
After-tax WACC 4.6% 6.1%

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: 5.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2 (FY12-2024) to $2 (FY12-2034)
  • Net profit margin expansion from 16% to 16%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $4 $1M 78.1%
10-Year Growth $4 $1M 66.6%
5-Year EBITDA $5 $2M 94.6%
10-Year EBITDA $5 $2M 90.5%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.0%
  • Long-term growth rate: 0.5%
  • Fair value: $1.08 (-88.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.5% (Low) to 5.5% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $1 to $4
  • Selected fair value: $2.49 (-73.4% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $19M
Enterprise Value $12M
Trailing P/E 52.82
Forward P/E 124.06
Trailing EV/EBITDA 21.25
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.06

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) 33% $1.19
Discounted Cash Flow (5Y) 28% $0.97
Dividend Discount Model (Multi-Stage) 22% $0.22
Dividend Discount Model (Stable) 17% $0.37
Weighted Average 100% $3.06

Investment Conclusion

Based on our comprehensive valuation analysis, CKX Lands Inc's intrinsic value is $3.06, which is approximately 67.3% below the current market price of $9.35.

Key investment considerations:

  • Strong projected earnings growth (16% to 16% margin)

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