What is DIGP's Intrinsic value?

Digipath Inc (DIGP) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Digipath Inc's estimated intrinsic value ranges from $0.03 to $0.14 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $0.03 -8.2%
Dividend Discount Model (Stable) $0.14 +365.9%

Is Digipath Inc (DIGP) undervalued or overvalued?

With the current market price at $0.03, 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 Digipath 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 0.33 1.06
Cost of equity 5.4% 10.8%
Cost of debt 5.0% 5.0%
Tax rate 26.2% 27.0%
Debt/Equity ratio 1.96 1.96
After-tax WACC 4.3% 6.1%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.1%
  • Long-term growth rate: 0.5%
  • Fair value: $0.03 (-8.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.8% (Low) to 5.4% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $0.14 (365.9% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $3M
Enterprise Value $3M
Trailing P/E 0.00
Forward P/E 10.94
Trailing EV/EBITDA 5.60
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.96

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% $0.01
Dividend Discount Model (Stable) 43% $0.02
Weighted Average 100% $0.08

Investment Conclusion

Based on our comprehensive valuation analysis, Digipath Inc's weighted average intrinsic value is $0.08, which is approximately 152.1% above the current market price of $0.03.

Key investment considerations:

  • Strong projected earnings growth (-76% to -44% margin)
  • Consistent cash flow generation

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