What is CNSL's Intrinsic value?

Consolidated Communications Holdings Inc (CNSL) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Consolidated Communications Holdings Inc's estimated intrinsic value ranges from $10.61 to $10.61 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $10.61 +124.9%

Is Consolidated Communications Holdings Inc (CNSL) undervalued or overvalued?

With the current market price at $4.72, 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 Consolidated Communications Holdings Inc's intrinsic value, including:

  1. 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.35 0.47
Cost of equity 5.5% 7.5%
Cost of debt 6.0% 7.0%
Tax rate 14.7% 16.2%
Debt/Equity ratio 3.85 3.85
After-tax WACC 5.2% 6.2%

Valuation Methods

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 $204M
Discount Rate (WACC) 6.2% - 5.2%
Enterprise Value $3,289M - $3,941M
Net Debt $2,358M
Equity Value $932M - $1,583M
Outstanding Shares 118M
Fair Value $8 - $13
Selected Fair Value $10.61

Key Financial Metrics

Metric Value
Market Capitalization $559M
Enterprise Value $2917M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.45
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 3.85

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
Earnings Power Value 100% $1.06
Weighted Average 100% $10.61

Investment Conclusion

Based on our comprehensive valuation analysis, Consolidated Communications Holdings Inc's weighted average intrinsic value is $10.61, which is approximately 124.9% above the current market price of $4.72.

Key investment considerations:

  • Strong projected earnings growth (-23% to -13% margin)
  • Consistent cash flow generation

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