What is DG.PA's Intrinsic value?

Vinci SA (DG.PA) Intrinsic Value Analysis

Executive Summary

As of June 13, 2025, Vinci SA's estimated intrinsic value ranges from $93.13 to $580.51 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $176.80 +40.1%
Discounted Cash Flow (5Y) $165.25 +31.0%
Dividend Discount Model (Multi-Stage) $104.84 -16.9%
Dividend Discount Model (Stable) $93.13 -26.2%
Earnings Power Value $580.51 +360.2%

Is Vinci SA (DG.PA) undervalued or overvalued?

With the current market price at $126.15, 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 Vinci 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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.79 0.86
Cost of equity 7.6% 9.9%
Cost of debt 4.0% 4.5%
Tax rate 28.4% 34.1%
Debt/Equity ratio 0.49 0.49
After-tax WACC 6.0% 7.6%

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: 6.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $72,459 (FY12-2024) to $93,643 (FY12-2034)
  • Net profit margin expansion from 7% to 7%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $165 $116,409M 75.8%
10-Year Growth $177 $123,137M 58.0%
5-Year EBITDA $91 $73,344M 61.7%
10-Year EBITDA $117 $88,462M 41.5%

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: 52.8%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.7%
  • Long-term growth rate: 1.0%
  • Fair value: $104.84 (-16.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.9% (Low) to 7.6% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $62 to $124
  • Selected fair value: $93.13 (-26.2% 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 $24,046M
Discount Rate (WACC) 7.6% - 6.0%
Enterprise Value $316,963M - $399,556M
Net Debt $20,168M
Equity Value $296,795M - $379,388M
Outstanding Shares 582M
Fair Value $510 - $651
Selected Fair Value $580.51

Key Financial Metrics

Metric Value
Market Capitalization $73471M
Enterprise Value $93639M
Trailing P/E 15.11
Forward P/E 13.33
Trailing EV/EBITDA 4.70
Current Dividend Yield 348.55%
Dividend Growth Rate (5Y) 38.72%
Debt-to-Equity Ratio 0.49

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% $53.04
Discounted Cash Flow (5Y) 25% $41.31
Dividend Discount Model (Multi-Stage) 20% $20.97
Dividend Discount Model (Stable) 15% $13.97
Earnings Power Value 10% $58.05
Weighted Average 100% $187.34

Investment Conclusion

Based on our comprehensive valuation analysis, Vinci SA's weighted average intrinsic value is $187.34, which is approximately 48.5% above the current market price of $126.15.

Key investment considerations:

  • Strong projected earnings growth (7% to 7% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 38.72%

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