As of May 22, 2025, Computer Modelling Group Ltd's estimated intrinsic value ranges from $3.95 to $7.02 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $7.02 | -17.5% |
| Discounted Cash Flow (5Y) | $6.88 | -19.1% |
| Dividend Discount Model (Multi-Stage) | $5.96 | -30.0% |
| Dividend Discount Model (Stable) | $5.72 | -32.8% |
| Earnings Power Value | $3.95 | -53.6% |
Is Computer Modelling Group Ltd (CMG.TO) undervalued or overvalued?
With the current market price at $8.51, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Computer Modelling Group 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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.97 | 1.02 |
| Cost of equity | 8.1% | 10.4% |
| Cost of debt | 4.0% | 4.9% |
| Tax rate | 25.3% | 25.5% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 7.8% | 10.1% |
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 | $7 | $567M | 81.4% |
| 10-Year Growth | $7 | $579M | 63.8% |
| 5-Year EBITDA | $4 | $317M | 66.7% |
| 10-Year EBITDA | $5 | $381M | 44.9% |
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 | $29M |
| Discount Rate (WACC) | 10.1% - 7.8% |
| Enterprise Value | $285M - $365M |
| Net Debt | $(1)M |
| Equity Value | $286M - $366M |
| Outstanding Shares | 83M |
| Fair Value | $3 - $4 |
| Selected Fair Value | $3.95 |
| Metric | Value |
|---|---|
| Market Capitalization | $702M |
| Enterprise Value | $702M |
| Trailing P/E | 28.60 |
| Forward P/E | 24.53 |
| Trailing EV/EBITDA | 6.65 |
| Current Dividend Yield | 238.21% |
| Dividend Growth Rate (5Y) | -15.71% |
| Debt-to-Equity Ratio | 0.05 |
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% | $2.11 |
| Discounted Cash Flow (5Y) | 25% | $1.72 |
| Dividend Discount Model (Multi-Stage) | 20% | $1.19 |
| Dividend Discount Model (Stable) | 15% | $0.86 |
| Earnings Power Value | 10% | $0.40 |
| Weighted Average | 100% | $6.27 |
Based on our comprehensive valuation analysis, Computer Modelling Group Ltd's weighted average intrinsic value is $6.27, which is approximately 26.3% below the current market price of $8.51.
Key investment considerations:
Given these factors, we believe Computer Modelling Group Ltd is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.