As of June 19, 2025, Laredo Petroleum Inc's estimated intrinsic value ranges from $128.66 to $471.60 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $471.60 | +880.7% |
| Discounted Cash Flow (5Y) | $459.50 | +855.5% |
| Dividend Discount Model (Multi-Stage) | $128.66 | +167.5% |
| Dividend Discount Model (Stable) | $250.51 | +420.9% |
| Earnings Power Value | $419.04 | +771.4% |
Is Laredo Petroleum Inc (LPI) undervalued or overvalued?
With the current market price at $48.09, 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 Laredo Petroleum Inc'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 | 4.2% | 4.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 1.59 | 2.1 |
| Cost of equity | 11.0% | 16.2% |
| Cost of debt | 5.3% | 8.6% |
| Tax rate | 0.8% | 1.2% |
| Debt/Equity ratio | 1.38 | 1.38 |
| After-tax WACC | 7.7% | 11.8% |
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 | $460 | $8,862M | 62.5% |
| 10-Year Growth | $472 | $9,065M | 40.5% |
| 5-Year EBITDA | $205 | $4,590M | 27.6% |
| 10-Year EBITDA | $304 | $6,253M | 13.7% |
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 | $759M |
| Discount Rate (WACC) | 11.8% - 7.7% |
| Enterprise Value | $6,450M - $9,913M |
| Net Debt | $1,136M |
| Equity Value | $5,314M - $8,777M |
| Outstanding Shares | 17M |
| Fair Value | $316 - $522 |
| Selected Fair Value | $419.04 |
| Metric | Value |
|---|---|
| Market Capitalization | $809M |
| Enterprise Value | $1945M |
| Trailing P/E | 1.28 |
| Forward P/E | 1.93 |
| Trailing EV/EBITDA | 1.95 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 1.38 |
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% | $141.48 |
| Discounted Cash Flow (5Y) | 25% | $114.88 |
| Dividend Discount Model (Multi-Stage) | 20% | $25.73 |
| Dividend Discount Model (Stable) | 15% | $37.58 |
| Earnings Power Value | 10% | $41.90 |
| Weighted Average | 100% | $361.57 |
Based on our comprehensive valuation analysis, Laredo Petroleum Inc's weighted average intrinsic value is $361.57, which is approximately 651.9% above the current market price of $48.09.
Key investment considerations:
Given these factors, we believe Laredo Petroleum Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.