As of June 18, 2025, Costain Group PLC's estimated intrinsic value ranges from $110.74 to $245.09 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $194.16 | +38.7% |
| Discounted Cash Flow (5Y) | $184.32 | +31.7% |
| Dividend Discount Model (Multi-Stage) | $110.74 | -20.9% |
| Dividend Discount Model (Stable) | $128.50 | -8.2% |
| Earnings Power Value | $245.09 | +75.1% |
Is Costain Group PLC (COST.L) undervalued or overvalued?
With the current market price at $140.00, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Costain Group PLC'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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.63 | 0.73 |
| Cost of equity | 7.8% | 10.1% |
| Cost of debt | 4.6% | 8.9% |
| Tax rate | 20.2% | 24.0% |
| Debt/Equity ratio | 0.08 | 0.08 |
| After-tax WACC | 7.5% | 9.9% |
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 | $184 | $342M | 66.0% |
| 10-Year Growth | $194 | $368M | 46.7% |
| 5-Year EBITDA | $140 | $227M | 48.6% |
| 10-Year EBITDA | $159 | $277M | 29.2% |
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 | $42M |
| Discount Rate (WACC) | 9.9% - 7.5% |
| Enterprise Value | $430M - $567M |
| Net Debt | $(133)M |
| Equity Value | $563M - $700M |
| Outstanding Shares | 3M |
| Fair Value | $219 - $272 |
| Selected Fair Value | $245.09 |
| Metric | Value |
|---|---|
| Market Capitalization | $361M |
| Enterprise Value | $228M |
| Trailing P/E | 11.79 |
| Forward P/E | 12.52 |
| Trailing EV/EBITDA | 4.05 |
| Current Dividend Yield | 96.55% |
| Dividend Growth Rate (5Y) | -34.96% |
| Debt-to-Equity Ratio | 0.08 |
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% | $58.25 |
| Discounted Cash Flow (5Y) | 25% | $46.08 |
| Dividend Discount Model (Multi-Stage) | 20% | $22.15 |
| Dividend Discount Model (Stable) | 15% | $19.27 |
| Earnings Power Value | 10% | $24.51 |
| Weighted Average | 100% | $170.26 |
Based on our comprehensive valuation analysis, Costain Group PLC's weighted average intrinsic value is $170.26, which is approximately 21.6% above the current market price of $140.00.
Key investment considerations:
Given these factors, we believe Costain Group PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.