What is FORZ.TO's Intrinsic value?

Forza Petroleum Ltd (FORZ.TO) Intrinsic Value Analysis

Executive Summary

As of June 19, 2025, Forza Petroleum Ltd's estimated intrinsic value ranges from $3.11 to $3.11 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $3.11 +1973.1%

Is Forza Petroleum Ltd (FORZ.TO) undervalued or overvalued?

With the current market price at $0.15, 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 Forza Petroleum Ltd'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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.9 1.36
Cost of equity 7.8% 12.5%
Cost of debt 5.0% 5.0%
Tax rate 4.9% 5.4%
Debt/Equity ratio 1 1
After-tax WACC 6.3% 8.6%

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 $95M
Discount Rate (WACC) 8.6% - 6.3%
Enterprise Value $1,099M - $1,511M
Net Debt $(69)M
Equity Value $1,168M - $1,580M
Outstanding Shares 600M
Fair Value $2 - $3
Selected Fair Value $3.11

Key Financial Metrics

Metric Value
Market Capitalization $90M
Enterprise Value $-4M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 1.90
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.94

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% $0.31
Weighted Average 100% $3.11

Investment Conclusion

Based on our comprehensive valuation analysis, Forza Petroleum Ltd's weighted average intrinsic value is $3.11, which is approximately 1973.1% above the current market price of $0.15.

Key investment considerations:

  • Strong projected earnings growth (-72% to -65% margin)
  • Consistent cash flow generation

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