As of June 18, 2025, Headwater Exploration Inc's estimated intrinsic value ranges from $6.15 to $9.53 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $9.53 | +35.8% |
| Discounted Cash Flow (5Y) | $8.04 | +14.6% |
| Dividend Discount Model (Multi-Stage) | $7.93 | +13.0% |
| Dividend Discount Model (Stable) | $8.11 | +15.6% |
| Earnings Power Value | $6.15 | -12.4% |
Is Headwater Exploration Inc (HWX.TO) undervalued or overvalued?
With the current market price at $7.02, the stock appears to be moderately 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 Headwater Exploration 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 | 1.3 | 1.39 |
| Cost of equity | 9.8% | 12.6% |
| Cost of debt | 4.0% | 13.2% |
| Tax rate | 23.3% | 23.4% |
| Debt/Equity ratio | 0 | 0 |
| After-tax WACC | 9.8% | 12.6% |
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 | $8 | $1,790M | 66.6% |
| 10-Year Growth | $10 | $2,144M | 46.8% |
| 5-Year EBITDA | $14 | $3,154M | 81.0% |
| 10-Year EBITDA | $14 | $3,247M | 64.9% |
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 | $148M |
| Discount Rate (WACC) | 12.6% - 9.8% |
| Enterprise Value | $1,169M - $1,508M |
| Net Debt | $(123)M |
| Equity Value | $1,292M - $1,631M |
| Outstanding Shares | 238M |
| Fair Value | $5 - $7 |
| Selected Fair Value | $6.15 |
| Metric | Value |
|---|---|
| Market Capitalization | $1669M |
| Enterprise Value | $1546M |
| Trailing P/E | 8.33 |
| Forward P/E | 7.57 |
| Trailing EV/EBITDA | 7.05 |
| Current Dividend Yield | 568.57% |
| Dividend Growth Rate (5Y) | 0.00% |
| 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% | $2.86 |
| Discounted Cash Flow (5Y) | 25% | $2.01 |
| Dividend Discount Model (Multi-Stage) | 20% | $1.59 |
| Dividend Discount Model (Stable) | 15% | $1.22 |
| Earnings Power Value | 10% | $0.61 |
| Weighted Average | 100% | $8.29 |
Based on our comprehensive valuation analysis, Headwater Exploration Inc's weighted average intrinsic value is $8.29, which is approximately 18.1% above the current market price of $7.02.
Key investment considerations:
Given these factors, we believe Headwater Exploration Inc is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.