As of June 19, 2025, HomeServe PLC's estimated intrinsic value ranges from $912.61 to $2578.22 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1225.42 | +2.3% |
| Discounted Cash Flow (5Y) | $912.61 | -23.8% |
| Dividend Discount Model (Multi-Stage) | $947.60 | -20.9% |
| Dividend Discount Model (Stable) | $1149.54 | -4.0% |
| Earnings Power Value | $2578.22 | +115.2% |
Is HomeServe PLC (HSV.L) undervalued or overvalued?
With the current market price at $1198.00, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate HomeServe 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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.5 | 0.58 |
| Cost of equity | 7.0% | 9.0% |
| Cost of debt | 4.0% | 4.9% |
| Tax rate | 22.9% | 23.5% |
| Debt/Equity ratio | 0.2 | 0.2 |
| After-tax WACC | 6.3% | 8.1% |
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 | $913 | $3,779M | 86.7% |
| 10-Year Growth | $1,225 | $4,837M | 76.4% |
| 5-Year EBITDA | $454 | $2,229M | 77.4% |
| 10-Year EBITDA | $673 | $2,968M | 61.6% |
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 | $669M |
| Discount Rate (WACC) | 8.1% - 6.3% |
| Enterprise Value | $8,215M - $10,609M |
| Net Debt | $693M |
| Equity Value | $7,522M - $9,915M |
| Outstanding Shares | 3M |
| Fair Value | $2,224 - $2,932 |
| Selected Fair Value | $2578.22 |
| Metric | Value |
|---|---|
| Market Capitalization | $4051M |
| Enterprise Value | $4744M |
| Trailing P/E | 30.01 |
| Forward P/E | 28.80 |
| Trailing EV/EBITDA | 5.90 |
| Current Dividend Yield | 56.28% |
| Dividend Growth Rate (5Y) | 15.37% |
| 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% | $367.63 |
| Discounted Cash Flow (5Y) | 25% | $228.15 |
| Dividend Discount Model (Multi-Stage) | 20% | $189.52 |
| Dividend Discount Model (Stable) | 15% | $172.43 |
| Earnings Power Value | 10% | $257.82 |
| Weighted Average | 100% | $1215.55 |
Based on our comprehensive valuation analysis, HomeServe PLC's weighted average intrinsic value is $1215.55, which is approximately 1.5% above the current market price of $1198.00.
Key investment considerations:
Given these factors, we believe HomeServe PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.