What is CRTO's Intrinsic value?

Criteo SA (CRTO) Intrinsic Value Analysis

Executive Summary

As of June 13, 2025, Criteo SA's estimated intrinsic value ranges from $28.19 to $62.50 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $46.96 +78.3%
Discounted Cash Flow (5Y) $43.77 +66.2%
Dividend Discount Model (Multi-Stage) $33.79 +28.3%
Dividend Discount Model (Stable) $62.50 +137.3%
Earnings Power Value $28.19 +7.0%

Is Criteo SA (CRTO) undervalued or overvalued?

With the current market price at $26.34, 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 Criteo SA'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
  3. 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 0.57 0.7
Cost of equity 6.5% 8.8%
Cost of debt 4.5% 181.9%
Tax rate 26.4% 28.2%
Debt/Equity ratio 0 0
After-tax WACC 6.5% 9.1%

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: 7.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,933 (FY12-2024) to $1,567 (FY12-2034)
  • Net profit margin expansion from 6% to 9%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $44 $2,047M 80.2%
10-Year Growth $47 $2,217M 64.2%
5-Year EBITDA $41 $1,913M 78.8%
10-Year EBITDA $43 $1,988M 60.0%

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: 7.6%
  • Long-term growth rate: 3.0%
  • Fair value: $33.79 (28.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.8% (Low) to 6.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $28 to $97
  • Selected fair value: $62.50 (137.3% from current price)

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 $92M
Discount Rate (WACC) 9.1% - 6.5%
Enterprise Value $1,015M - $1,424M
Net Debt $(279)M
Equity Value $1,293M - $1,703M
Outstanding Shares 53M
Fair Value $24 - $32
Selected Fair Value $28.19

Key Financial Metrics

Metric Value
Market Capitalization $1400M
Enterprise Value $1121M
Trailing P/E 9.84
Forward P/E 18.08
Trailing EV/EBITDA 9.85
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.00

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) 30% $14.09
Discounted Cash Flow (5Y) 25% $10.94
Dividend Discount Model (Multi-Stage) 20% $6.76
Dividend Discount Model (Stable) 15% $9.37
Earnings Power Value 10% $2.82
Weighted Average 100% $43.98

Investment Conclusion

Based on our comprehensive valuation analysis, Criteo SA's weighted average intrinsic value is $43.98, which is approximately 67.0% above the current market price of $26.34.

Key investment considerations:

  • Strong projected earnings growth (6% to 9% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)

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