What is ETL.PA's Intrinsic value?

Eutelsat Communications SA (ETL.PA) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Eutelsat Communications SA's estimated intrinsic value ranges from $36.23 to $36.23 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $36.23 +1016.5%

Is Eutelsat Communications SA (ETL.PA) undervalued or overvalued?

With the current market price at $3.25, 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 Eutelsat Communications SA'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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.56 0.65
Cost of equity 6.3% 8.4%
Cost of debt 4.0% 7.0%
Tax rate 11.9% 13.6%
Debt/Equity ratio 1.91 1.91
After-tax WACC 4.5% 6.9%

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 $1,076M
Discount Rate (WACC) 6.9% - 4.5%
Enterprise Value $15,674M - $24,070M
Net Debt $2,656M
Equity Value $13,019M - $21,414M
Outstanding Shares 475M
Fair Value $27 - $45
Selected Fair Value $36.23

Key Financial Metrics

Metric Value
Market Capitalization $1542M
Enterprise Value $4197M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 3.90
Current Dividend Yield 5.72%
Dividend Growth Rate (5Y) -76.28%
Debt-to-Equity Ratio 1.91

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% $3.62
Weighted Average 100% $36.23

Investment Conclusion

Based on our comprehensive valuation analysis, Eutelsat Communications SA's weighted average intrinsic value is $36.23, which is approximately 1016.5% above the current market price of $3.25.

Key investment considerations:

  • Strong projected earnings growth (-24% to -21% margin)
  • Consistent cash flow generation

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