What is FWRD's Intrinsic value?

Forward Air Corp (FWRD) Intrinsic Value Analysis

Executive Summary

As of May 24, 2025, Forward Air Corp's estimated intrinsic value ranges from $106.51 to $106.51 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $106.51 +534.4%

Is Forward Air Corp (FWRD) undervalued or overvalued?

With the current market price at $16.79, 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 Forward Air Corp'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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.46 0.94
Cost of equity 6.0% 10.1%
Cost of debt 6.2% 23.9%
Tax rate 24.2% 24.7%
Debt/Equity ratio 2.96 2.96
After-tax WACC 5.0% 16.0%

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 $370M
Discount Rate (WACC) 16.0% - 5.0%
Enterprise Value $2,315M - $7,389M
Net Debt $1,614M
Equity Value $701M - $5,775M
Outstanding Shares 30M
Fair Value $23 - $190
Selected Fair Value $106.51

Key Financial Metrics

Metric Value
Market Capitalization $510M
Enterprise Value $2125M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.45
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 2.96

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% $10.65
Weighted Average 100% $106.51

Investment Conclusion

Based on our comprehensive valuation analysis, Forward Air Corp's weighted average intrinsic value is $106.51, which is approximately 534.4% above the current market price of $16.79.

Key investment considerations:

  • Strong projected earnings growth (-45% to -26% margin)
  • Consistent cash flow generation

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