What is JLG.L's Intrinsic value?

John Laing Group PLC (JLG.L) Intrinsic Value Analysis

Executive Summary

As of June 8, 2025, John Laing Group PLC's estimated intrinsic value ranges from $274.46 to $334.56 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $274.46 -31.8%
Earnings Power Value $334.56 -16.9%

Is John Laing Group PLC (JLG.L) undervalued or overvalued?

With the current market price at $402.60, the stock appears to be significantly overvalued.

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 John Laing Group PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  2. 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 2.9% 3.4%
Equity market risk premium 5.3% 6.3%
Adjusted beta 0.63 0.77
Cost of equity 6.3% 8.8%
Cost of debt 5.0% 5.0%
Tax rate 0.6% 1.0%
Debt/Equity ratio 0.07 0.07
After-tax WACC 6.2% 8.5%

Valuation Methods

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: 276.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.6%
  • Long-term growth rate: 4.0%
  • Fair value: $-5517.32 (-1470.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.8% (Low) to 6.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $83 to $466
  • Selected fair value: $274.46 (-31.8% 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 $129M
Discount Rate (WACC) 8.5% - 6.2%
Enterprise Value $1,509M - $2,066M
Net Debt $136M
Equity Value $1,373M - $1,930M
Outstanding Shares 5M
Fair Value $278 - $391
Selected Fair Value $334.56

Key Financial Metrics

Metric Value
Market Capitalization $1987M
Enterprise Value $2123M
Trailing P/E 58.45
Forward P/E 58.45
Trailing EV/EBITDA 6.60
Current Dividend Yield 473.00%
Dividend Growth Rate (5Y) 15.73%
Debt-to-Equity Ratio 0.07

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
Dividend Discount Model (Stable) 60% $41.17
Earnings Power Value 40% $33.46
Weighted Average 100% $298.50

Investment Conclusion

Based on our comprehensive valuation analysis, John Laing Group PLC's weighted average intrinsic value is $298.50, which is approximately 25.9% below the current market price of $402.60.

Key investment considerations:

  • Strong projected earnings growth (-264% to -258% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.07)
  • Historical dividend growth of 15.73%

Given these factors, we believe John Laing Group PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.