As of May 22, 2025, G4S PLC's estimated intrinsic value ranges from $88.25 to $715.70 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $715.70 | +191.8% |
| Discounted Cash Flow (5Y) | $629.54 | +156.6% |
| Dividend Discount Model (Multi-Stage) | $361.21 | +47.3% |
| Dividend Discount Model (Stable) | $88.25 | -64.0% |
| Earnings Power Value | $431.09 | +75.7% |
Is G4S PLC (GFS.L) undervalued or overvalued?
With the current market price at $245.30, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate G4S PLC'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 | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.77 | 0.9 |
| Cost of equity | 7.0% | 9.6% |
| Cost of debt | 5.3% | 5.7% |
| Tax rate | 34.5% | 48.9% |
| Debt/Equity ratio | 0.77 | 0.77 |
| After-tax WACC | 5.5% | 6.7% |
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 | $630 | $11,435M | 88.7% |
| 10-Year Growth | $716 | $12,778M | 76.7% |
| 5-Year EBITDA | $118 | $3,454M | 62.6% |
| 10-Year EBITDA | $225 | $5,136M | 42.0% |
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 | $504M |
| Discount Rate (WACC) | 6.7% - 5.5% |
| Enterprise Value | $7,509M - $9,173M |
| Net Debt | $1,621M |
| Equity Value | $5,888M - $7,552M |
| Outstanding Shares | 16M |
| Fair Value | $378 - $484 |
| Selected Fair Value | $431.09 |
| Metric | Value |
|---|---|
| Market Capitalization | $3824M |
| Enterprise Value | $5445M |
| Trailing P/E | 68.29 |
| Forward P/E | 43.38 |
| Trailing EV/EBITDA | 3.75 |
| Current Dividend Yield | 536.09% |
| Dividend Growth Rate (5Y) | 0.85% |
| Debt-to-Equity Ratio | 0.77 |
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% | $214.71 |
| Discounted Cash Flow (5Y) | 25% | $157.39 |
| Dividend Discount Model (Multi-Stage) | 20% | $72.24 |
| Dividend Discount Model (Stable) | 15% | $13.24 |
| Earnings Power Value | 10% | $43.11 |
| Weighted Average | 100% | $500.68 |
Based on our comprehensive valuation analysis, G4S PLC's weighted average intrinsic value is $500.68, which is approximately 104.1% above the current market price of $245.30.
Key investment considerations:
Given these factors, we believe G4S PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.