What is CMH.L's Intrinsic value?

Chamberlin PLC (CMH.L) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Chamberlin PLC's estimated intrinsic value ranges from $1.75 to $25.00 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $25.00 +2074.1%
Discounted Cash Flow (5Y) $16.47 +1332.0%
Dividend Discount Model (Multi-Stage) $10.68 +828.8%
Dividend Discount Model (Stable) $1.75 +52.5%

Is Chamberlin PLC (CMH.L) undervalued or overvalued?

With the current market price at $1.15, 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 Chamberlin PLC'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.5 0.72
Cost of equity 7.0% 10.0%
Cost of debt 7.0% 9.3%
Tax rate 19.0% 19.0%
Debt/Equity ratio 2.76 2.76
After-tax WACC 6.0% 8.2%

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: 7.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $21 (FY05-2023) to $48 (FY05-2033)
  • Net profit margin expansion from -1% to 7%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $16 $37M 84.4%
10-Year Growth $25 $52M 69.5%
5-Year EBITDA $13 $30M 81.0%
10-Year EBITDA $21 $44M 63.9%

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: 8.5%
  • Long-term growth rate: 2.0%
  • Fair value: $10.68 (828.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.0% (Low) to 7.0% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $1 to $3
  • Selected fair value: $1.75 (52.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $2M
Enterprise Value $9M
Trailing P/E 9.96
Forward P/E 5.45
Trailing EV/EBITDA 9.45
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 2.76

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% $7.50
Discounted Cash Flow (5Y) 28% $4.12
Dividend Discount Model (Multi-Stage) 22% $2.14
Dividend Discount Model (Stable) 17% $0.26
Weighted Average 100% $15.57

Investment Conclusion

Based on our comprehensive valuation analysis, Chamberlin PLC's weighted average intrinsic value is $15.57, which is approximately 1254.3% above the current market price of $1.15.

Key investment considerations:

  • Strong projected earnings growth (-1% to 7% margin)

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