What is DNM.L's Intrinsic value?

Dianomi PLC (DNM.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Dianomi PLC's estimated intrinsic value ranges from $10.48 to $36.14 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $10.48 -65.1%
Earnings Power Value $36.14 +20.5%

Is Dianomi PLC (DNM.L) undervalued or overvalued?

With the current market price at $30.00, the stock appears to be significantly overvalued.

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 Dianomi PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.99 1.42
Cost of equity 9.9% 14.9%
Cost of debt 4.6% 4.6%
Tax rate 19.0% 19.0%
Debt/Equity ratio 1 1
After-tax WACC 6.8% 9.3%

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: 8.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $30 (FY12-2023) to $54 (FY12-2033)
  • Net profit margin expansion from -10% to 1%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(10)M 68.1%
10-Year Growth $10 $(5)M 22.1%
5-Year EBITDA $13 $(4)M 21.4%
10-Year EBITDA $17 $(3)M 31.5%

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 $0M
Discount Rate (WACC) 9.3% - 6.8%
Enterprise Value $2M - $3M
Net Debt $(8)M
Equity Value $10M - $11M
Outstanding Shares 0M
Fair Value $35 - $38
Selected Fair Value $36.14

Key Financial Metrics

Metric Value
Market Capitalization $9M
Enterprise Value $1M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.30
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.01

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) 75% $3.14
Earnings Power Value 25% $3.61
Weighted Average 100% $16.90

Investment Conclusion

Based on our comprehensive valuation analysis, Dianomi PLC's weighted average intrinsic value is $16.90, which is approximately 43.7% below the current market price of $30.00.

Key investment considerations:

  • Strong projected earnings growth (-10% to 1% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.01)

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