As of June 10, 2025, Gulf Keystone Petroleum Ltd's estimated intrinsic value ranges from $65.93 to $902.75 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $902.75 | +476.5% |
| Discounted Cash Flow (5Y) | $151.71 | -3.1% |
| Dividend Discount Model (Multi-Stage) | $870.04 | +455.6% |
| Dividend Discount Model (Stable) | $65.93 | -57.9% |
| Earnings Power Value | $295.21 | +88.5% |
Is Gulf Keystone Petroleum Ltd (GKP.L) undervalued or overvalued?
With the current market price at $156.60, 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 Gulf Keystone Petroleum Ltd'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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.52 | 0.63 |
| Cost of equity | 7.1% | 9.4% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 0.6% | 0.8% |
| Debt/Equity ratio | 0 | 0 |
| After-tax WACC | 7.1% | 9.4% |
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 | $205 | $340M | 89.7% |
| 10-Year Growth | $1,221 | $2,525M | 82.7% |
| 5-Year EBITDA | $145 | $211M | 83.4% |
| 10-Year EBITDA | $412 | $785M | 44.5% |
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 | $61M |
| Discount Rate (WACC) | 9.4% - 7.1% |
| Enterprise Value | $652M - $864M |
| Net Debt | $(101)M |
| Equity Value | $753M - $964M |
| Outstanding Shares | 2M |
| Fair Value | $350 - $448 |
| Selected Fair Value | $295.21 |
| Metric | Value |
|---|---|
| Market Capitalization | $337M |
| Enterprise Value | $262M |
| Trailing P/E | 63.64 |
| Forward P/E | 20.35 |
| Trailing EV/EBITDA | 1.25 |
| Current Dividend Yield | 766.82% |
| Dividend Growth Rate (5Y) | -3.31% |
| Debt-to-Equity Ratio | 0.00 |
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% | $270.82 |
| Discounted Cash Flow (5Y) | 25% | $37.93 |
| Dividend Discount Model (Multi-Stage) | 20% | $174.01 |
| Dividend Discount Model (Stable) | 15% | $9.89 |
| Earnings Power Value | 10% | $29.52 |
| Weighted Average | 100% | $522.17 |
Based on our comprehensive valuation analysis, Gulf Keystone Petroleum Ltd's weighted average intrinsic value is $522.17, which is approximately 233.4% above the current market price of $156.60.
Key investment considerations:
Given these factors, we believe Gulf Keystone Petroleum Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.