What is LXE.V's Intrinsic value?

Leucrotta Exploration Inc (LXE.V) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Leucrotta Exploration Inc's estimated intrinsic value ranges from $4.04 to $13.02 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $13.02 +488.9%
Discounted Cash Flow (5Y) $7.17 +224.5%
Dividend Discount Model (Multi-Stage) $7.08 +220.3%
Dividend Discount Model (Stable) $4.04 +82.8%

Is Leucrotta Exploration Inc (LXE.V) undervalued or overvalued?

With the current market price at $2.21, the stock appears to be significantly undervalued.

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 Leucrotta Exploration Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 4.7% 5.7%
Adjusted beta 0.98 1.05
Cost of equity 7.8% 10.2%
Cost of debt 4.0% 4.5%
Tax rate 27.0% 27.0%
Debt/Equity ratio 0 0
After-tax WACC 7.8% 10.2%

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: 9.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $36 (FY12-2021) to $230 (FY12-2031)
  • Net profit margin expansion from 262% to 191%
  • Capital expenditures maintained at approximately 139% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $7 $1,761M 72.2%
10-Year Growth $13 $3,220M 58.2%
5-Year EBITDA $9 $2,266M 78.4%
10-Year EBITDA $15 $3,721M 63.8%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.0%
  • Long-term growth rate: 0.5%
  • Fair value: $7.08 (220.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.2% (Low) to 7.8% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $3 to $5
  • Selected fair value: $4.04 (82.8% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $552M
Enterprise Value $522M
Trailing P/E 5.49
Forward P/E 5.51
Trailing EV/EBITDA 6.75
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.00

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) 33% $3.90
Discounted Cash Flow (5Y) 28% $1.79
Dividend Discount Model (Multi-Stage) 22% $1.42
Dividend Discount Model (Stable) 17% $0.61
Weighted Average 100% $8.58

Investment Conclusion

Based on our comprehensive valuation analysis, Leucrotta Exploration Inc's weighted average intrinsic value is $8.58, which is approximately 288.1% above the current market price of $2.21.

Key investment considerations:

  • Strong projected earnings growth (262% to 191% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)

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