What is ICON's Intrinsic value?

Iconix Brand Group Inc (ICON) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Iconix Brand Group Inc's estimated intrinsic value ranges from $9.41 to $9.41 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $9.41 +335.4%

Is Iconix Brand Group Inc (ICON) undervalued or overvalued?

With the current market price at $2.16, 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 Iconix Brand Group Inc's intrinsic value, including:

  1. 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 0.26 0.38
Cost of equity 5.1% 7.0%
Cost of debt 23.9% 23.9%
Tax rate 26.2% 27.0%
Debt/Equity ratio 4.36 4.36
After-tax WACC 15.3% 15.5%

Valuation Methods

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 $5M
Discount Rate (WACC) 15.5% - 15.3%
Enterprise Value $31M - $31M
Net Debt $16M
Equity Value $15M - $15M
Outstanding Shares 1M
Fair Value $12 - $12
Selected Fair Value $9.41

Key Financial Metrics

Metric Value
Market Capitalization $3M
Enterprise Value $19M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.75
Current Dividend Yield 653.95%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 4.36

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
Earnings Power Value 100% $0.94
Weighted Average 100% $9.41

Investment Conclusion

Based on our comprehensive valuation analysis, Iconix Brand Group Inc's weighted average intrinsic value is $9.41, which is approximately 335.4% above the current market price of $2.16.

Key investment considerations:

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

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