What is DTY.L's Intrinsic value?

Dignity PLC (DTY.L) Intrinsic Value Analysis

Executive Summary

As of June 12, 2025, Dignity PLC's estimated intrinsic value ranges from $757.70 to $757.70 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $757.70 +38.0%

Is Dignity PLC (DTY.L) undervalued or overvalued?

With the current market price at $549.00, 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 Dignity PLC'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.75 0.84
Cost of equity 8.5% 10.9%
Cost of debt 5.0% 7.0%
Tax rate 19.0% 24.6%
Debt/Equity ratio 2.15 2.15
After-tax WACC 5.4% 7.1%

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 $59M
Discount Rate (WACC) 7.1% - 5.4%
Enterprise Value $841M - $1,090M
Net Debt $582M
Equity Value $258M - $507M
Outstanding Shares 1M
Fair Value $511 - $1,004
Selected Fair Value $757.70

Key Financial Metrics

Metric Value
Market Capitalization $277M
Enterprise Value $860M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.15
Current Dividend Yield 419.99%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 2.15

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% $75.77
Weighted Average 100% $757.70

Investment Conclusion

Based on our comprehensive valuation analysis, Dignity PLC's weighted average intrinsic value is $757.70, which is approximately 38.0% above the current market price of $549.00.

Key investment considerations:

  • Strong projected earnings growth (-85% to -68% margin)
  • Consistent cash flow generation

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