What is CVLY's Intrinsic value?

Codorus Valley Bancorp Inc (CVLY) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Codorus Valley Bancorp Inc's estimated intrinsic value ranges from $26.75 to $30.16 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $30.16 +25.5%
Dividend Discount Model (Stable) $26.75 +11.3%

Is Codorus Valley Bancorp Inc (CVLY) undervalued or overvalued?

With the current market price at $24.04, the stock appears to be moderately 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 Codorus Valley Bancorp Inc's intrinsic value, including:

  1. 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.76 0.81
Cost of equity 7.3% 9.4%
Cost of debt 5.0% 5.0%
Tax rate 21.2% 21.4%
Debt/Equity ratio 0.43 0.43
After-tax WACC 6.3% 7.8%

Valuation Methods

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: 29.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.4%
  • Long-term growth rate: 1.0%
  • Fair value: $30.16 (25.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.4% (Low) to 7.3% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $18 to $35
  • Selected fair value: $26.75 (11.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $232M
Enterprise Value $305M
Trailing P/E 10.44
Forward P/E 9.03
Trailing EV/EBITDA 0.00
Current Dividend Yield 277.57%
Dividend Growth Rate (5Y) 1.29%
Debt-to-Equity Ratio 0.43

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
Dividend Discount Model (Multi-Stage) 57% $6.03
Dividend Discount Model (Stable) 43% $4.01
Weighted Average 100% $28.70

Investment Conclusion

Based on our comprehensive valuation analysis, Codorus Valley Bancorp Inc's weighted average intrinsic value is $28.70, which is approximately 19.4% above the current market price of $24.04.

Key investment considerations:

  • Historical dividend growth of 1.29%

Given these factors, we believe Codorus Valley Bancorp Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.