As of May 23, 2025, Edinburgh Investment Trust PLC's estimated intrinsic value ranges from $605.56 to $1176.18 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1116.59 | +39.6% |
| Discounted Cash Flow (5Y) | $1035.70 | +29.5% |
| Dividend Discount Model (Multi-Stage) | $762.09 | -4.7% |
| Dividend Discount Model (Stable) | $1176.18 | +47.0% |
| Earnings Power Value | $605.56 | -24.3% |
Is Edinburgh Investment Trust PLC (EDIN.L) undervalued or overvalued?
With the current market price at $800.00, 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 Edinburgh Investment Trust 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 | 1.09 | 1.24 |
| Cost of equity | 10.5% | 13.7% |
| Cost of debt | 4.6% | 7.0% |
| Tax rate | 0.4% | 0.4% |
| Debt/Equity ratio | 0.11 | 0.11 |
| After-tax WACC | 9.9% | 13.0% |
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 | $1,036 | $1,521M | 65.4% |
| 10-Year Growth | $1,117 | $1,635M | 42.5% |
| 5-Year EBITDA | $613 | $930M | 43.4% |
| 10-Year EBITDA | $821 | $1,221M | 23.0% |
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 | $103M |
| Discount Rate (WACC) | 13.0% - 9.9% |
| Enterprise Value | $795M - $1,044M |
| Net Debt | $73M |
| Equity Value | $723M - $971M |
| Outstanding Shares | 1M |
| Fair Value | $517 - $695 |
| Selected Fair Value | $605.56 |
| Metric | Value |
|---|---|
| Market Capitalization | $1119M |
| Enterprise Value | $1192M |
| Trailing P/E | 5.97 |
| Forward P/E | 7.89 |
| Trailing EV/EBITDA | 4.35 |
| Current Dividend Yield | 375.99% |
| Dividend Growth Rate (5Y) | -0.82% |
| Debt-to-Equity Ratio | 0.11 |
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% | $334.98 |
| Discounted Cash Flow (5Y) | 25% | $258.92 |
| Dividend Discount Model (Multi-Stage) | 20% | $152.42 |
| Dividend Discount Model (Stable) | 15% | $176.43 |
| Earnings Power Value | 10% | $60.56 |
| Weighted Average | 100% | $983.30 |
Based on our comprehensive valuation analysis, Edinburgh Investment Trust PLC's weighted average intrinsic value is $983.30, which is approximately 22.9% above the current market price of $800.00.
Key investment considerations:
Given these factors, we believe Edinburgh Investment Trust PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.