As of June 17, 2025, Dollarama Inc's estimated intrinsic value ranges from $59.50 to $225.00 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $225.00 | +16.1% |
| Discounted Cash Flow (5Y) | $179.91 | -7.1% |
| Dividend Discount Model (Multi-Stage) | $146.24 | -24.5% |
| Dividend Discount Model (Stable) | $136.82 | -29.4% |
| Earnings Power Value | $59.50 | -69.3% |
Is Dollarama Inc (DOL.TO) undervalued or overvalued?
With the current market price at $193.74, the stock appears to be moderately overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Dollarama Inc'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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.6 | 0.67 |
| Cost of equity | 6.2% | 8.2% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 25.4% | 25.6% |
| Debt/Equity ratio | 0.09 | 0.09 |
| After-tax WACC | 5.9% | 7.8% |
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 | $180 | $54,462M | 85.9% |
| 10-Year Growth | $225 | $66,961M | 75.0% |
| 5-Year EBITDA | $68 | $23,488M | 67.3% |
| 10-Year EBITDA | $104 | $33,527M | 50.0% |
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 | $1,425M |
| Discount Rate (WACC) | 7.8% - 5.9% |
| Enterprise Value | $18,207M - $23,954M |
| Net Debt | $4,587M |
| Equity Value | $13,621M - $19,367M |
| Outstanding Shares | 277M |
| Fair Value | $49 - $70 |
| Selected Fair Value | $59.50 |
| Metric | Value |
|---|---|
| Market Capitalization | $53709M |
| Enterprise Value | $58296M |
| Trailing P/E | 45.96 |
| Forward P/E | 39.89 |
| Trailing EV/EBITDA | 6.80 |
| Current Dividend Yield | 18.11% |
| Dividend Growth Rate (5Y) | 15.43% |
| Debt-to-Equity Ratio | 0.09 |
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% | $67.50 |
| Discounted Cash Flow (5Y) | 25% | $44.98 |
| Dividend Discount Model (Multi-Stage) | 20% | $29.25 |
| Dividend Discount Model (Stable) | 15% | $20.52 |
| Earnings Power Value | 10% | $5.95 |
| Weighted Average | 100% | $168.20 |
Based on our comprehensive valuation analysis, Dollarama Inc's weighted average intrinsic value is $168.20, which is approximately 13.2% below the current market price of $193.74.
Key investment considerations:
Given these factors, we believe Dollarama Inc is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.