What is HUN's Intrinsic value?

Huntsman Corp (HUN) Intrinsic Value Analysis

Executive Summary

As of June 4, 2025, Huntsman Corp's estimated intrinsic value ranges from $9.46 to $22.29 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $22.29 +95.4%
Discounted Cash Flow (5Y) $14.88 +30.4%
Dividend Discount Model (Multi-Stage) $14.06 +23.2%
Earnings Power Value $9.46 -17.0%

Is Huntsman Corp (HUN) undervalued or overvalued?

With the current market price at $11.41, 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 Huntsman Corp'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
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.96 1.06
Cost of equity 8.3% 10.8%
Cost of debt 4.2% 12.4%
Tax rate 22.1% 41.9%
Debt/Equity ratio 0.95 0.95
After-tax WACC 5.8% 9.1%

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: 7.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $6,036 (FY12-2024) to $7,753 (FY12-2034)
  • Net profit margin expansion from -2% to 6%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $15 $4,205M 79.0%
10-Year Growth $22 $5,493M 61.0%
5-Year EBITDA $16 $4,316M 79.5%
10-Year EBITDA $21 $5,267M 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: 9.6%
  • Long-term growth rate: 1.0%
  • Fair value: $14.06 (23.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.8% (Low) to 8.3% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $(6) to $(12)
  • Selected fair value: $-9.05 (-179.3% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $232M
Discount Rate (WACC) 9.1% - 5.8%
Enterprise Value $2,557M - $3,972M
Net Debt $1,620M
Equity Value $937M - $2,352M
Outstanding Shares 174M
Fair Value $5 - $14
Selected Fair Value $9.46

Key Financial Metrics

Metric Value
Market Capitalization $1982M
Enterprise Value $3602M
Trailing P/E 0.00
Forward P/E 42.02
Trailing EV/EBITDA 7.05
Current Dividend Yield 898.96%
Dividend Growth Rate (5Y) 4.84%
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
Discounted Cash Flow (10Y) 35% $6.69
Discounted Cash Flow (5Y) 29% $3.72
Dividend Discount Model (Multi-Stage) 24% $2.81
Earnings Power Value 12% $0.95
Weighted Average 100% $16.66

Investment Conclusion

Based on our comprehensive valuation analysis, Huntsman Corp's weighted average intrinsic value is $16.66, which is approximately 46.1% above the current market price of $11.41.

Key investment considerations:

  • Strong projected earnings growth (-2% to 6% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 4.84%

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