What is DDV1.L's Intrinsic value?

Downing One VCT PLC (DDV1.L) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, Downing One VCT PLC's estimated intrinsic value ranges from $23.36 to $23.36 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $23.36 -59.0%

Is Downing One VCT PLC (DDV1.L) undervalued or overvalued?

With the current market price at $57.00, 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 Downing One VCT 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 4.4% 4.9%
Equity market risk premium 6.4% 7.4%
Adjusted beta 1.61 1.78
Cost of equity 14.8% 18.7%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 1 1
After-tax WACC 9.4% 11.4%

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 $3M
Discount Rate (WACC) 11.4% - 9.4%
Enterprise Value $24M - $29M
Net Debt $(15)M
Equity Value $39M - $44M
Outstanding Shares 2M
Fair Value $22 - $25
Selected Fair Value $23.36

Key Financial Metrics

Metric Value
Market Capitalization $102M
Enterprise Value $87M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 8.80
Current Dividend Yield 479.75%
Dividend Growth Rate (5Y) -17.01%
Debt-to-Equity Ratio 0.94

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% $2.34
Weighted Average 100% $23.36

Investment Conclusion

Based on our comprehensive valuation analysis, Downing One VCT PLC's intrinsic value is $23.36, which is approximately 59.0% below the current market price of $57.00.

Key investment considerations:

  • Strong projected earnings growth (126% to -1268% margin)
  • Consistent cash flow generation

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