What is JPR.AX's Intrinsic value?

Jupiter Energy Ltd (JPR.AX) Intrinsic Value Analysis

Executive Summary

As of June 10, 2025, Jupiter Energy Ltd's estimated intrinsic value ranges from $0.01 to $0.05 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.05 +51.3%
Discounted Cash Flow (5Y) $0.01 -50.8%
Dividend Discount Model (Multi-Stage) $0.04 +44.4%
Dividend Discount Model (Stable) $0.02 -34.3%

Is Jupiter Energy Ltd (JPR.AX) undervalued or overvalued?

With the current market price at $0.03, the stock appears to be fairly valued.

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 Jupiter Energy Ltd'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

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 4.0% 4.5%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.26 0.38
Cost of equity 5.4% 7.3%
Cost of debt 4.0% 7.0%
Tax rate 30.0% 30.0%
Debt/Equity ratio 0.49 0.49
After-tax WACC 4.5% 6.5%

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: 5.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $11 (FY06-2024) to $14 (FY06-2034)
  • Net profit margin expansion from 17% to 20%
  • Capital expenditures maintained at approximately 41% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $37M 100.4%
10-Year Growth $0 $76M 91.0%
5-Year EBITDA $0 $68M 100.2%
10-Year EBITDA $0 $79M 91.3%

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: 6.3%
  • Long-term growth rate: 3.6%
  • Fair value: $0.04 (44.4% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.3% (Low) to 5.4% (High)
  • Long-term growth rate: 3.0% (Low) to 4.3% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $0.02 (-34.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $38M
Enterprise Value $56M
Trailing P/E 74.90
Forward P/E 26.63
Trailing EV/EBITDA 13.30
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.49

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) 33% $0.01
Discounted Cash Flow (5Y) 28% $0.00
Dividend Discount Model (Multi-Stage) 22% $0.01
Dividend Discount Model (Stable) 17% $0.00
Weighted Average 100% $0.03

Investment Conclusion

Based on our comprehensive valuation analysis, Jupiter Energy Ltd's weighted average intrinsic value is $0.03, which is approximately 7.2% above the current market price of $0.03.

Key investment considerations:

  • Strong projected earnings growth (17% to 20% margin)

Given these factors, we believe Jupiter Energy Ltd is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.