What is EVR.L's Intrinsic value?

EVRAZ plc (EVR.L) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, EVRAZ plc's estimated intrinsic value ranges from $433.21 to $2374.22 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $2374.22 +2831.1%
Discounted Cash Flow (5Y) $2202.38 +2619.0%
Dividend Discount Model (Multi-Stage) $769.08 +849.5%
Dividend Discount Model (Stable) $433.21 +434.8%
Earnings Power Value $1291.87 +1494.9%

Is EVRAZ plc (EVR.L) undervalued or overvalued?

With the current market price at $81.00, 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 EVRAZ plc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. 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 2.09 2.31
Cost of equity 16.5% 21.1%
Cost of debt 4.2% 4.6%
Tax rate 22.3% 24.8%
Debt/Equity ratio 2.32 2.32
After-tax WACC 7.3% 8.8%

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: 5-year DCF and 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 $13,486 (FY12-2021) to $15,160 (FY12-2031)
  • Net profit margin expansion from 26% to 25%
  • Capital expenditures maintained at approximately 6% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2,989 $45,167M 71.6%
10-Year Growth $3,222 $48,445M 50.9%
5-Year EBITDA $2,210 $34,218M 62.5%
10-Year EBITDA $2,628 $40,093M 40.7%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 60.4%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 18.8%
  • Long-term growth rate: 0.5%
  • Fair value: $769.08 (849.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 21.1% (Low) to 16.5% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $427 to $749
  • Selected fair value: $433.21 (434.8% from current price)

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 $2,207M
Discount Rate (WACC) 8.8% - 7.3%
Enterprise Value $25,163M - $30,431M
Net Debt $3,153M
Equity Value $22,010M - $27,278M
Outstanding Shares 14M
Fair Value $1,566 - $1,940
Selected Fair Value $1291.87

Key Financial Metrics

Metric Value
Market Capitalization $1139M
Enterprise Value $3462M
Trailing P/E 0.85
Forward P/E 0.50
Trailing EV/EBITDA 5.80
Current Dividend Yield 7080.04%
Dividend Growth Rate (5Y) 37.37%
Debt-to-Equity Ratio 2.32

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) 30% $712.27
Discounted Cash Flow (5Y) 25% $550.60
Dividend Discount Model (Multi-Stage) 20% $153.82
Dividend Discount Model (Stable) 15% $64.98
Earnings Power Value 10% $129.19
Weighted Average 100% $1610.85

Investment Conclusion

Based on our comprehensive valuation analysis, EVRAZ plc's weighted average intrinsic value is $1610.85, which is approximately 1888.7% above the current market price of $81.00.

Key investment considerations:

  • Strong projected earnings growth (26% to 25% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 37.37%

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