What is LSPD.TO's Intrinsic value?

Lightspeed POS Inc (LSPD.TO) Intrinsic Value Analysis

Executive Summary

As of June 12, 2025, Lightspeed POS Inc's estimated intrinsic value ranges from $3.15 to $3.15 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $3.15 -81.0%

Is Lightspeed POS Inc (LSPD.TO) undervalued or overvalued?

With the current market price at $16.57, 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 Lightspeed POS Inc's intrinsic value, including:

  1. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.81 0.96
Cost of equity 7.3% 10.0%
Cost of debt 5.0% 5.0%
Tax rate 1.8% 3.1%
Debt/Equity ratio 0.01 0.01
After-tax WACC 7.3% 10.0%

Valuation Methods

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $(19)M
Discount Rate (WACC) 10.0% - 7.3%
Enterprise Value $(191)M - $(261)M
Net Debt $(541)M
Equity Value $351M - $281M
Outstanding Shares 137M
Fair Value $3 - $2
Selected Fair Value $3.15

Key Financial Metrics

Metric Value
Market Capitalization $2277M
Enterprise Value $1535M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 21.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.01

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
Earnings Power Value 100% $0.31
Weighted Average 100% $3.15

Investment Conclusion

Based on our comprehensive valuation analysis, Lightspeed POS Inc's weighted average intrinsic value is $3.15, which is approximately 81.0% below the current market price of $16.57.

Key investment considerations:

  • Strong projected earnings growth (-62% to -45% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.01)

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