What is DJCO's Intrinsic value?

Daily Journal Corp (DJCO) Intrinsic Value Analysis

Executive Summary

As of April 5, 2026, Daily Journal Corp's estimated intrinsic value ranges from $75.18 to $7979.49 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $3547.26 +584.9%
Dividend Discount Model (Stable) $7979.49 +1440.6%
Earnings Power Value $75.18 -85.5%

Is Daily Journal Corp (DJCO) undervalued or overvalued?

With the current market price at $517.94, 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 Daily Journal Corp's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  2. 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.34 0.39
Cost of equity 5.4% 7.1%
Cost of debt 4.4% 4.8%
Tax rate 25.2% 25.7%
Debt/Equity ratio 0.03 0.03
After-tax WACC 5.3% 7.0%

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: 6.2%
  • Long-term growth rate: 4.0%
  • Fair value: $3547.26 (584.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.1% (Low) to 5.4% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $1,165 to $14,794
  • Selected fair value: $7979.49 (1440.6% 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 $7M
Discount Rate (WACC) 7.0% - 5.3%
Enterprise Value $94M - $122M
Net Debt $4M
Equity Value $90M - $118M
Outstanding Shares 1M
Fair Value $65 - $85
Selected Fair Value $75.18

Key Financial Metrics

Metric Value
Market Capitalization $715M
Enterprise Value $719M
Trailing P/E 7.66
Forward P/E 5.79
Trailing EV/EBITDA 7.85
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.03

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) 44% $709.45
Dividend Discount Model (Stable) 33% $1196.92
Earnings Power Value 22% $7.52
Weighted Average 100% $4253.10

Investment Conclusion

Based on our comprehensive valuation analysis, Daily Journal Corp's intrinsic value is $4253.10, which is approximately 721.2% above the current market price of $517.94.

Key investment considerations:

  • Strong projected earnings growth (128% to 130% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.03)

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