What is DIA.L's Intrinsic value?

Dialight PLC (DIA.L) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Dialight PLC's estimated intrinsic value ranges from $130.70 to $130.70 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $130.70 +19.4%

Is Dialight PLC (DIA.L) undervalued or overvalued?

With the current market price at $109.50, 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 Dialight PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 0.43 0.49
Cost of equity 6.6% 8.4%
Cost of debt 6.7% 7.0%
Tax rate 20.3% 23.7%
Debt/Equity ratio 0.89 0.89
After-tax WACC 6.0% 7.0%

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: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $226 (FY03-2024) to $284 (FY03-2034)
  • Net profit margin expansion from -14% to 3%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(94)M 85.8%
10-Year Growth $131 $77M 107.5%
5-Year EBITDA $12 $31M 143.4%
10-Year EBITDA $171 $92M 106.3%

Key Financial Metrics

Metric Value
Market Capitalization $43M
Enterprise Value $69M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.35
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.89

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) 100% $39.21
Weighted Average 100% $130.70

Investment Conclusion

Based on our comprehensive valuation analysis, Dialight PLC's weighted average intrinsic value is $130.70, which is approximately 19.4% above the current market price of $109.50.

Key investment considerations:

  • Strong projected earnings growth (-14% to 3% margin)
  • Consistent cash flow generation

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