As of May 31, 2025, London Finance & Investment Group PLC's estimated intrinsic value ranges from $115.15 to $318.72 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $318.72 | +355.3% |
| Discounted Cash Flow (5Y) | $272.66 | +289.5% |
| Dividend Discount Model (Multi-Stage) | $115.15 | +64.5% |
| Dividend Discount Model (Stable) | $117.65 | +68.1% |
| Earnings Power Value | $122.48 | +75.0% |
Is London Finance & Investment Group PLC (LFI.L) undervalued or overvalued?
With the current market price at $70.00, 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 London Finance & Investment Group PLC'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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.68 | 0.97 |
| Cost of equity | 8.1% | 11.8% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 16.7% | 21.2% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.7% | 7.7% |
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 | $273 | $63M | 76.6% |
| 10-Year Growth | $319 | $77M | 60.5% |
| 5-Year EBITDA | $225 | $48M | 69.4% |
| 10-Year EBITDA | $273 | $63M | 51.5% |
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 | $1M |
| Discount Rate (WACC) | 7.7% - 5.7% |
| Enterprise Value | $14M - $18M |
| Net Debt | $(22)M |
| Equity Value | $36M - $41M |
| Outstanding Shares | 0M |
| Fair Value | $115 - $130 |
| Selected Fair Value | $122.48 |
| Metric | Value |
|---|---|
| Market Capitalization | $22M |
| Enterprise Value | $-1M |
| Trailing P/E | 5.55 |
| Forward P/E | 5.53 |
| Trailing EV/EBITDA | 8.95 |
| Current Dividend Yield | 171.20% |
| Dividend Growth Rate (5Y) | 1.03% |
| Debt-to-Equity Ratio | 0.90 |
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% | $95.62 |
| Discounted Cash Flow (5Y) | 25% | $68.16 |
| Dividend Discount Model (Multi-Stage) | 20% | $23.03 |
| Dividend Discount Model (Stable) | 15% | $17.65 |
| Earnings Power Value | 10% | $12.25 |
| Weighted Average | 100% | $216.71 |
Based on our comprehensive valuation analysis, London Finance & Investment Group PLC's weighted average intrinsic value is $216.71, which is approximately 209.6% above the current market price of $70.00.
Key investment considerations:
Given these factors, we believe London Finance & Investment Group PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.