What is IPS.PA's Intrinsic value?

Ipsos SA (IPS.PA) Intrinsic Value Analysis

Executive Summary

As of June 15, 2025, Ipsos SA's estimated intrinsic value ranges from $46.05 to $73.29 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $72.86 +62.3%
Discounted Cash Flow (5Y) $65.19 +45.2%
Dividend Discount Model (Multi-Stage) $49.60 +10.5%
Dividend Discount Model (Stable) $46.05 +2.6%
Earnings Power Value $73.29 +63.2%

Is Ipsos SA (IPS.PA) undervalued or overvalued?

With the current market price at $44.90, 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 Ipsos SA'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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.88 0.93
Cost of equity 8.1% 10.3%
Cost of debt 4.0% 4.5%
Tax rate 25.7% 26.1%
Debt/Equity ratio 0.26 0.26
After-tax WACC 7.0% 8.9%

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: 8.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $2,441 (FY12-2024) to $3,433 (FY12-2034)
  • Net profit margin expansion from 9% to 9%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $65 $3,285M 69.6%
10-Year Growth $73 $3,616M 50.4%
5-Year EBITDA $52 $2,726M 63.4%
10-Year EBITDA $62 $3,166M 43.3%

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: 34.8%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.2%
  • Long-term growth rate: 0.5%
  • Fair value: $49.60 (10.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.3% (Low) to 8.1% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $32 to $60
  • Selected fair value: $46.05 (2.6% 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 $285M
Discount Rate (WACC) 8.9% - 7.0%
Enterprise Value $3,213M - $4,057M
Net Debt $469M
Equity Value $2,744M - $3,588M
Outstanding Shares 43M
Fair Value $64 - $83
Selected Fair Value $73.29

Key Financial Metrics

Metric Value
Market Capitalization $1940M
Enterprise Value $2408M
Trailing P/E 9.48
Forward P/E 8.85
Trailing EV/EBITDA 6.10
Current Dividend Yield 367.28%
Dividend Growth Rate (5Y) 37.78%
Debt-to-Equity Ratio 0.26

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) 30% $21.86
Discounted Cash Flow (5Y) 25% $16.30
Dividend Discount Model (Multi-Stage) 20% $9.92
Dividend Discount Model (Stable) 15% $6.91
Earnings Power Value 10% $7.33
Weighted Average 100% $62.31

Investment Conclusion

Based on our comprehensive valuation analysis, Ipsos SA's weighted average intrinsic value is $62.31, which is approximately 38.8% above the current market price of $44.90.

Key investment considerations:

  • Strong projected earnings growth (9% to 9% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.26)
  • Historical dividend growth of 37.78%

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