What is GHS.L's Intrinsic value?

Gresham House Strategic PLC (GHS.L) Intrinsic Value Analysis

Executive Summary

As of June 19, 2025, Gresham House Strategic PLC's estimated intrinsic value ranges from $3691.40 to $5753.52 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $3691.40 +152.0%
Dividend Discount Model (Stable) $5753.52 +292.7%

Is Gresham House Strategic PLC (GHS.L) undervalued or overvalued?

With the current market price at $1465.00, 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 Gresham House Strategic PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 2.9% 3.4%
Equity market risk premium 5.3% 6.3%
Adjusted beta 1.15 1.2
Cost of equity 9.1% 11.6%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 1 1
After-tax WACC 6.6% 7.8%

Valuation Methods

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: 7.6%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.3%
  • Long-term growth rate: 0.5%
  • Fair value: $3691.40 (152.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.6% (Low) to 9.1% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $4,056 to $7,451
  • Selected fair value: $5753.52 (292.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $51M
Enterprise Value $49M
Trailing P/E 2.18
Forward P/E 3.02
Trailing EV/EBITDA 0.00
Current Dividend Yield 347.41%
Dividend Growth Rate (5Y) 16.76%
Debt-to-Equity Ratio 0.95

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
Dividend Discount Model (Multi-Stage) 57% $738.28
Dividend Discount Model (Stable) 43% $863.03
Weighted Average 100% $4575.17

Investment Conclusion

Based on our comprehensive valuation analysis, Gresham House Strategic PLC's weighted average intrinsic value is $4575.17, which is approximately 212.3% above the current market price of $1465.00.

Key investment considerations:

  • Historical dividend growth of 16.76%

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