As of May 22, 2025, Lancaster Colony Corp's estimated intrinsic value ranges from $56.52 to $271.28 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $271.28 | +66.2% |
| Discounted Cash Flow (5Y) | $204.41 | +25.2% |
| Dividend Discount Model (Multi-Stage) | $189.68 | +16.2% |
| Dividend Discount Model (Stable) | $137.72 | -15.6% |
| Earnings Power Value | $56.52 | -65.4% |
Is Lancaster Colony Corp (LANC) undervalued or overvalued?
With the current market price at $163.24, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Lancaster Colony Corp's intrinsic value, including:
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 | 0.39 | 0.43 |
| Cost of equity | 5.7% | 7.3% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 22.6% | 23.0% |
| Debt/Equity ratio | 0 | 0 |
| After-tax WACC | 5.7% | 7.3% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $204 | $5,511M | 83.7% |
| 10-Year Growth | $271 | $7,355M | 70.9% |
| 5-Year EBITDA | $170 | $4,572M | 80.4% |
| 10-Year EBITDA | $230 | $6,221M | 65.6% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $91M |
| Discount Rate (WACC) | 7.3% - 5.7% |
| Enterprise Value | $1,258M - $1,609M |
| Net Debt | $(125)M |
| Equity Value | $1,383M - $1,734M |
| Outstanding Shares | 28M |
| Fair Value | $50 - $63 |
| Selected Fair Value | $56.52 |
| Metric | Value |
|---|---|
| Market Capitalization | $4501M |
| Enterprise Value | $4376M |
| Trailing P/E | 26.53 |
| Forward P/E | 24.08 |
| Trailing EV/EBITDA | 9.85 |
| Current Dividend Yield | 218.55% |
| Dividend Growth Rate (5Y) | 6.68% |
| Debt-to-Equity Ratio | 0.00 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $81.38 |
| Discounted Cash Flow (5Y) | 25% | $51.10 |
| Dividend Discount Model (Multi-Stage) | 20% | $37.94 |
| Dividend Discount Model (Stable) | 15% | $20.66 |
| Earnings Power Value | 10% | $5.65 |
| Weighted Average | 100% | $196.73 |
Based on our comprehensive valuation analysis, Lancaster Colony Corp's weighted average intrinsic value is $196.73, which is approximately 20.5% above the current market price of $163.24.
Key investment considerations:
Given these factors, we believe Lancaster Colony Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.