What is LPHM's Intrinsic value?

Lee Pharmaceuticals (LPHM) Intrinsic Value Analysis

Executive Summary

As of May 28, 2025, Lee Pharmaceuticals's estimated intrinsic value ranges from $0.00 to $0.01 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.01 -92.9%
Discounted Cash Flow (5Y) $0.00 -97.3%

Is Lee Pharmaceuticals (LPHM) undervalued or overvalued?

With the current market price at $0.07, 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 Lee Pharmaceuticals's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.34 0.41
Cost of equity 5.4% 7.2%
Cost of debt 7.0% 9.9%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.29 0.29
After-tax WACC 5.4% 7.2%

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: 6.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $9 (FY09-2004) to $11 (FY09-2014)
  • Net profit margin expansion from -14% to -6%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $8M 89.2%
10-Year Growth $0 $9M 77.0%
5-Year EBITDA $0 $9M 90.5%
10-Year EBITDA $0 $10M 80.4%

Key Financial Metrics

Metric Value
Market Capitalization $26M
Enterprise Value $33M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 28.35
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.29

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) 55% $0.00
Discounted Cash Flow (5Y) 45% $0.00
Weighted Average 100% $0.00

Investment Conclusion

Based on our comprehensive valuation analysis, Lee Pharmaceuticals's weighted average intrinsic value is $0.00, which is approximately 94.9% below the current market price of $0.07.

Key investment considerations:

  • Strong projected earnings growth (-14% to -6% margin)
  • Conservative capital structure (Debt/Equity of 0.29)

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