As of June 4, 2025, Chatham Lodging Trust's estimated intrinsic value ranges from $3.89 to $10.47 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $10.47 | +46.1% |
| Discounted Cash Flow (5Y) | $6.16 | -14.1% |
| Dividend Discount Model (Multi-Stage) | $4.71 | -34.3% |
| Dividend Discount Model (Stable) | $3.89 | -45.8% |
| Earnings Power Value | $10.04 | +40.0% |
Is Chatham Lodging Trust (CLDT) undervalued or overvalued?
With the current market price at $7.17, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Chatham Lodging Trust'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 | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.99 | 1.16 |
| Cost of equity | 8.4% | 11.4% |
| Cost of debt | 5.1% | 15.6% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 1.17 | 1.17 |
| After-tax WACC | 5.9% | 11.4% |
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 | $664M | 82.9% |
| 10-Year Growth | $10 | $876M | 69.1% |
| 5-Year EBITDA | $12 | $940M | 87.9% |
| 10-Year EBITDA | $14 | $1,035M | 73.9% |
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 | $66M |
| Discount Rate (WACC) | 11.4% - 5.9% |
| Enterprise Value | $583M - $1,126M |
| Net Debt | $363M |
| Equity Value | $220M - $763M |
| Outstanding Shares | 49M |
| Fair Value | $4 - $16 |
| Selected Fair Value | $10.04 |
| Metric | Value |
|---|---|
| Market Capitalization | $351M |
| Enterprise Value | $714M |
| Trailing P/E | 32.14 |
| Forward P/E | 63.35 |
| Trailing EV/EBITDA | 8.70 |
| Current Dividend Yield | 640.99% |
| Dividend Growth Rate (5Y) | 8.28% |
| Debt-to-Equity Ratio | 1.17 |
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% | $3.14 |
| Discounted Cash Flow (5Y) | 25% | $1.54 |
| Dividend Discount Model (Multi-Stage) | 20% | $0.94 |
| Dividend Discount Model (Stable) | 15% | $0.58 |
| Earnings Power Value | 10% | $1.00 |
| Weighted Average | 100% | $7.21 |
Based on our comprehensive valuation analysis, Chatham Lodging Trust's weighted average intrinsic value is $7.21, which is approximately 0.6% above the current market price of $7.17.
Key investment considerations:
Given these factors, we believe Chatham Lodging Trust is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.