What is DND.TO's Intrinsic value?

Dye & Durham Ltd (DND.TO) Intrinsic Value Analysis

Executive Summary

As of September 18, 2025, Dye & Durham Ltd's estimated intrinsic value ranges from $16.72 to $16.72 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $16.72 +89.8%

Is Dye & Durham Ltd (DND.TO) undervalued or overvalued?

With the current market price at $8.81, 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 Dye & Durham Ltd'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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 1.34 1.5
Cost of equity 10.0% 13.3%
Cost of debt 10.2% 14.9%
Tax rate 14.5% 17.9%
Debt/Equity ratio 2.13 2.13
After-tax WACC 9.1% 12.6%

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 $292M
Discount Rate (WACC) 12.6% - 9.1%
Enterprise Value $2,317M - $3,196M
Net Debt $1,634M
Equity Value $684M - $1,562M
Outstanding Shares 67M
Fair Value $10 - $23
Selected Fair Value $16.72

Key Financial Metrics

Metric Value
Market Capitalization $592M
Enterprise Value $2225M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.20
Current Dividend Yield 72.32%
Dividend Growth Rate (5Y) -41.92%
Debt-to-Equity Ratio 2.13

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% $1.67
Weighted Average 100% $16.72

Investment Conclusion

Based on our comprehensive valuation analysis, Dye & Durham Ltd's intrinsic value is $16.72, which is approximately 89.8% above the current market price of $8.81.

Key investment considerations:

  • Strong projected earnings growth (-38% to -36% margin)
  • Consistent cash flow generation

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