As of May 31, 2025, Dunelm Group PLC's estimated intrinsic value ranges from $1138.62 to $4622.60 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1638.16 | +37.3% |
| Discounted Cash Flow (5Y) | $1472.62 | +23.4% |
| Dividend Discount Model (Multi-Stage) | $1263.12 | +5.9% |
| Dividend Discount Model (Stable) | $1138.62 | -4.6% |
| Earnings Power Value | $4622.60 | +287.5% |
Is Dunelm Group PLC (DNLM.L) undervalued or overvalued?
With the current market price at $1193.00, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Dunelm Group PLC's intrinsic value, including:
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 | 0.52 | 0.67 |
| Cost of equity | 7.1% | 9.7% |
| Cost of debt | 4.0% | 4.6% |
| Tax rate | 19.6% | 20.2% |
| Debt/Equity ratio | 0.14 | 0.14 |
| After-tax WACC | 6.6% | 8.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $1,473 | $3,148M | 77.0% |
| 10-Year Growth | $1,638 | $3,481M | 59.6% |
| 5-Year EBITDA | $778 | $1,752M | 58.8% |
| 10-Year EBITDA | $1,040 | $2,279M | 38.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $721M |
| Discount Rate (WACC) | 8.9% - 6.6% |
| Enterprise Value | $8,064M - $10,897M |
| Net Debt | $187M |
| Equity Value | $7,876M - $10,710M |
| Outstanding Shares | 2M |
| Fair Value | $3,918 - $5,327 |
| Selected Fair Value | $4622.60 |
| Metric | Value |
|---|---|
| Market Capitalization | $2398M |
| Enterprise Value | $2586M |
| Trailing P/E | 15.77 |
| Forward P/E | 14.18 |
| Trailing EV/EBITDA | 5.45 |
| Current Dividend Yield | 671.12% |
| Dividend Growth Rate (5Y) | 23.61% |
| Debt-to-Equity Ratio | 0.14 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $491.45 |
| Discounted Cash Flow (5Y) | 25% | $368.16 |
| Dividend Discount Model (Multi-Stage) | 20% | $252.62 |
| Dividend Discount Model (Stable) | 15% | $170.79 |
| Earnings Power Value | 10% | $462.26 |
| Weighted Average | 100% | $1745.28 |
Based on our comprehensive valuation analysis, Dunelm Group PLC's weighted average intrinsic value is $1745.28, which is approximately 46.3% above the current market price of $1193.00.
Key investment considerations:
Given these factors, we believe Dunelm Group PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.