What is DCTA.L's Intrinsic value?

Directa Plus PLC (DCTA.L) Intrinsic Value Analysis

Executive Summary

As of May 24, 2025, Directa Plus PLC's estimated intrinsic value ranges from $4.02 to $4.02 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $4.02 -43.5%

Is Directa Plus PLC (DCTA.L) undervalued or overvalued?

With the current market price at $7.12, the stock appears to be significantly overvalued.

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 Directa Plus PLC'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.46 0.66
Cost of equity 6.7% 9.6%
Cost of debt 7.0% 8.7%
Tax rate 0.9% 1.1%
Debt/Equity ratio 0.31 0.31
After-tax WACC 6.8% 9.4%

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 $1M
Discount Rate (WACC) 9.4% - 6.8%
Enterprise Value $6M - $9M
Net Debt $2M
Equity Value $4M - $6M
Outstanding Shares 1M
Fair Value $4 - $6
Selected Fair Value $4.02

Key Financial Metrics

Metric Value
Market Capitalization $8M
Enterprise Value $10M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 19.50
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.31

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% $0.40
Weighted Average 100% $4.02

Investment Conclusion

Based on our comprehensive valuation analysis, Directa Plus PLC's weighted average intrinsic value is $4.02, which is approximately 43.5% below the current market price of $7.12.

Key investment considerations:

  • Strong projected earnings growth (-41% to -27% margin)
  • Consistent cash flow generation

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