As of May 29, 2025, BlackRock Floating Rate Income Strategies Fund Inc's estimated intrinsic value ranges from $3.53 to $14.86 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $9.07 | -28.3% |
| Discounted Cash Flow (5Y) | $7.39 | -41.6% |
| Dividend Discount Model (Multi-Stage) | $13.07 | +3.3% |
| Dividend Discount Model (Stable) | $14.86 | +17.5% |
| Earnings Power Value | $3.53 | -72.1% |
Is BlackRock Floating Rate Income Strategies Fund Inc (FRA) undervalued or overvalued?
With the current market price at $12.65, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate BlackRock Floating Rate Income Strategies Fund Inc'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 | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 1.15 | 1.33 |
| Cost of equity | 9.2% | 12.3% |
| Cost of debt | 4.0% | 4.9% |
| Tax rate | 26.2% | 27.0% |
| Debt/Equity ratio | 0.33 | 0.33 |
| After-tax WACC | 7.6% | 10.2% |
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 | $7 | $406M | 67.8% |
| 10-Year Growth | $9 | $465M | 47.8% |
| 5-Year EBITDA | $18 | $794M | 83.5% |
| 10-Year EBITDA | $18 | $793M | 69.4% |
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 | $23M |
| Discount Rate (WACC) | 10.2% - 7.6% |
| Enterprise Value | $231M - $308M |
| Net Debt | $145M |
| Equity Value | $86M - $163M |
| Outstanding Shares | 35M |
| Fair Value | $2 - $5 |
| Selected Fair Value | $3.53 |
| Metric | Value |
|---|---|
| Market Capitalization | $447M |
| Enterprise Value | $591M |
| Trailing P/E | 7.12 |
| Forward P/E | 9.30 |
| Trailing EV/EBITDA | 18.15 |
| Current Dividend Yield | 834.78% |
| Dividend Growth Rate (5Y) | 9.83% |
| Debt-to-Equity Ratio | 0.33 |
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% | $2.72 |
| Discounted Cash Flow (5Y) | 25% | $1.85 |
| Dividend Discount Model (Multi-Stage) | 20% | $2.61 |
| Dividend Discount Model (Stable) | 15% | $2.23 |
| Earnings Power Value | 10% | $0.35 |
| Weighted Average | 100% | $9.76 |
Based on our comprehensive valuation analysis, BlackRock Floating Rate Income Strategies Fund Inc's weighted average intrinsic value is $9.76, which is approximately 22.8% below the current market price of $12.65.
Key investment considerations:
Given these factors, we believe BlackRock Floating Rate Income Strategies Fund Inc is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.