As of May 23, 2025, Costain Group PLC's estimated intrinsic value ranges from $114.93 to $217.00 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $199.08 | +61.9% |
| Discounted Cash Flow (5Y) | $184.82 | +50.3% |
| Dividend Discount Model (Multi-Stage) | $114.93 | -6.6% |
| Dividend Discount Model (Stable) | $135.08 | +9.8% |
| Earnings Power Value | $217.00 | +76.4% |
Is Costain Group PLC (COST.L) undervalued or overvalued?
With the current market price at $123.00, 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 | 0.52 | 0.69 |
| Cost of equity | 7.1% | 9.8% |
| Cost of debt | 4.7% | 8.9% |
| Tax rate | 20.2% | 24.0% |
| Debt/Equity ratio | 0.08 | 0.08 |
| After-tax WACC | 6.9% | 9.6% |
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 | $185 | $361M | 60.7% |
| 10-Year Growth | $199 | $399M | 44.8% |
| 5-Year EBITDA | $139 | $238M | 40.3% |
| 10-Year EBITDA | $159 | $292M | 24.6% |
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 | $36M |
| Discount Rate (WACC) | 9.6% - 6.9% |
| Enterprise Value | $374M - $521M |
| Net Debt | $(133)M |
| Equity Value | $506M - $654M |
| Outstanding Shares | 3M |
| Fair Value | $189 - $245 |
| Selected Fair Value | $217.00 |
| Metric | Value |
|---|---|
| Market Capitalization | $329M |
| Enterprise Value | $196M |
| Trailing P/E | 10.75 |
| Forward P/E | 11.41 |
| Trailing EV/EBITDA | 3.45 |
| Current Dividend Yield | 96.07% |
| 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% | $59.73 |
| Discounted Cash Flow (5Y) | 25% | $46.21 |
| Dividend Discount Model (Multi-Stage) | 20% | $22.99 |
| Dividend Discount Model (Stable) | 15% | $20.26 |
| Earnings Power Value | 10% | $21.70 |
| Weighted Average | 100% | $170.88 |
Based on our comprehensive valuation analysis, Costain Group PLC's weighted average intrinsic value is $170.88, which is approximately 38.9% above the current market price of $123.00.
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.