As of June 7, 2025, Heroux Devtek Inc's estimated intrinsic value ranges from $18.51 to $75.25 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $75.25 | +131.7% |
| Discounted Cash Flow (5Y) | $55.65 | +71.3% |
| Dividend Discount Model (Multi-Stage) | $46.18 | +42.2% |
| Dividend Discount Model (Stable) | $45.45 | +39.9% |
| Earnings Power Value | $18.51 | -43.0% |
Is Heroux Devtek Inc (HRX.TO) undervalued or overvalued?
With the current market price at $32.48, 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 Heroux Devtek Inc'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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.63 | 0.79 |
| Cost of equity | 6.4% | 9.0% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 22.3% | 23.9% |
| Debt/Equity ratio | 0.2 | 0.2 |
| After-tax WACC | 5.8% | 8.0% |
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 | $56 | $2,013M | 87.3% |
| 10-Year Growth | $75 | $2,674M | 76.0% |
| 5-Year EBITDA | $42 | $1,555M | 83.5% |
| 10-Year EBITDA | $53 | $1,935M | 66.9% |
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 | $52M |
| Discount Rate (WACC) | 8.0% - 5.8% |
| Enterprise Value | $641M - $883M |
| Net Debt | $138M |
| Equity Value | $503M - $744M |
| Outstanding Shares | 34M |
| Fair Value | $15 - $22 |
| Selected Fair Value | $18.51 |
| Metric | Value |
|---|---|
| Market Capitalization | $1094M |
| Enterprise Value | $1233M |
| Trailing P/E | 20.97 |
| Forward P/E | 22.61 |
| Trailing EV/EBITDA | 10.65 |
| Current Dividend Yield | 1441.37% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.20 |
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% | $22.58 |
| Discounted Cash Flow (5Y) | 25% | $13.91 |
| Dividend Discount Model (Multi-Stage) | 20% | $9.24 |
| Dividend Discount Model (Stable) | 15% | $6.82 |
| Earnings Power Value | 10% | $1.85 |
| Weighted Average | 100% | $54.39 |
Based on our comprehensive valuation analysis, Heroux Devtek Inc's weighted average intrinsic value is $54.39, which is approximately 67.5% above the current market price of $32.48.
Key investment considerations:
Given these factors, we believe Heroux Devtek Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.