What is KRPZ.L's Intrinsic value?

Kropz PLC (KRPZ.L) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Kropz PLC's estimated intrinsic value ranges from $0.26 to $0.26 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $0.26 -59.9%

Is Kropz PLC (KRPZ.L) undervalued or overvalued?

With the current market price at $0.65, 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 Kropz PLC's intrinsic value, including:

  1. 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 6.0% 7.0%
Adjusted beta 1.71 4.76
Cost of equity 14.2% 38.2%
Cost of debt 4.0% 7.0%
Tax rate 1.1% 1.6%
Debt/Equity ratio 8.32 8.32
After-tax WACC 5.1% 10.3%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 26.2%
  • Long-term growth rate: 2.0%
  • Fair value: $0.26 (-59.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 38.2% (Low) to 14.2% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $(1) to $(5)
  • Selected fair value: $-2.29 (-452.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $10M
Enterprise Value $109M
Trailing P/E 0.00
Forward P/E 18.84
Trailing EV/EBITDA 7.10
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 8.32

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 (Multi-Stage) 100% $0.05
Weighted Average 100% $0.26

Investment Conclusion

Based on our comprehensive valuation analysis, Kropz PLC's weighted average intrinsic value is $0.26, which is approximately 59.9% below the current market price of $0.65.

Key investment considerations:

  • Strong projected earnings growth (1% to 12% margin)
  • Consistent cash flow generation

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