What is GBT.PA's Intrinsic value?

Guerbet SA (GBT.PA) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Guerbet SA's estimated intrinsic value ranges from $8.06 to $245.19 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $8.06 -59.9%
Discounted Cash Flow (5Y) $11.71 -41.7%
Dividend Discount Model (Multi-Stage) $9.94 -50.5%
Dividend Discount Model (Stable) $11.71 -41.7%
Earnings Power Value $245.19 +1119.8%

Is Guerbet SA (GBT.PA) undervalued or overvalued?

With the current market price at $20.10, 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 Guerbet SA'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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 1.18 1.49
Cost of equity 9.9% 14.2%
Cost of debt 4.0% 6.6%
Tax rate 24.0% 29.0%
Debt/Equity ratio 1.53 1.53
After-tax WACC 5.7% 8.4%

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: 7.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $841 (FY12-2024) to $1,441 (FY12-2034)
  • Net profit margin expansion from 2% to 2%
  • Capital expenditures maintained at approximately 7% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $12 $490M 82.0%
10-Year Growth $8 $444M 62.3%
5-Year EBITDA $54 $1,030M 91.5%
10-Year EBITDA $54 $1,026M 83.7%

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: 39.2%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 12.0%
  • Long-term growth rate: 2.0%
  • Fair value: $9.94 (-50.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 14.2% (Low) to 9.9% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $7 to $17
  • Selected fair value: $11.71 (-41.7% 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 $235M
Discount Rate (WACC) 8.4% - 5.7%
Enterprise Value $2,785M - $4,097M
Net Debt $342M
Equity Value $2,443M - $3,755M
Outstanding Shares 13M
Fair Value $193 - $297
Selected Fair Value $245.19

Key Financial Metrics

Metric Value
Market Capitalization $254M
Enterprise Value $596M
Trailing P/E 15.80
Forward P/E 16.94
Trailing EV/EBITDA 10.40
Current Dividend Yield 245.72%
Dividend Growth Rate (5Y) -8.06%
Debt-to-Equity Ratio 1.53

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% $2.42
Discounted Cash Flow (5Y) 25% $2.93
Dividend Discount Model (Multi-Stage) 20% $1.99
Dividend Discount Model (Stable) 15% $1.76
Earnings Power Value 10% $24.52
Weighted Average 100% $33.61

Investment Conclusion

Based on our comprehensive valuation analysis, Guerbet SA's weighted average intrinsic value is $33.61, which is approximately 67.2% above the current market price of $20.10.

Key investment considerations:

  • Strong projected earnings growth (2% to 2% margin)
  • Consistent cash flow generation

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