What is HTWS.L's Intrinsic value?

Helios Towers PLC (HTWS.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Helios Towers PLC's estimated intrinsic value ranges from $26.31 to $188.35 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $188.35 +64.1%
Discounted Cash Flow (5Y) $152.82 +33.1%
Dividend Discount Model (Multi-Stage) $26.31 -77.1%
Dividend Discount Model (Stable) $34.97 -69.5%

Is Helios Towers PLC (HTWS.L) undervalued or overvalued?

With the current market price at $114.80, the stock appears to be fairly valued.

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 Helios Towers PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.71 0.84
Cost of equity 8.2% 10.8%
Cost of debt 8.8% 9.2%
Tax rate 20.7% 34.1%
Debt/Equity ratio 1.23 1.23
After-tax WACC 7.6% 8.2%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $792 (FY12-2024) to $1,255 (FY12-2034)
  • Net profit margin expansion from 3% to 4%
  • Capital expenditures maintained at approximately 32% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $203 $3,923M 79.4%
10-Year Growth $250 $4,420M 64.0%
5-Year EBITDA $155 $3,417M 76.4%
10-Year EBITDA $201 $3,906M 59.3%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.5%
  • Long-term growth rate: 3.0%
  • Fair value: $26.31 (-77.1% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.8% (Low) to 8.2% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $25 to $68
  • Selected fair value: $34.97 (-69.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $1210M
Enterprise Value $2553M
Trailing P/E 47.96
Forward P/E 50.33
Trailing EV/EBITDA 7.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.23

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
Discounted Cash Flow (10Y) 33% $56.51
Discounted Cash Flow (5Y) 28% $38.20
Dividend Discount Model (Multi-Stage) 22% $5.26
Dividend Discount Model (Stable) 17% $5.25
Weighted Average 100% $116.91

Investment Conclusion

Based on our comprehensive valuation analysis, Helios Towers PLC's weighted average intrinsic value is $116.91, which is approximately 1.8% above the current market price of $114.80.

Key investment considerations:

  • Strong projected earnings growth (3% to 4% margin)
  • Consistent cash flow generation

Given these factors, we believe Helios Towers PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.