What is MCAP.ST's Intrinsic value?

MedCap AB (publ) (MCAP.ST) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, MedCap AB (publ)'s estimated intrinsic value ranges from $273.13 to $488.50 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $422.97 -5.1%
Discounted Cash Flow (5Y) $353.49 -20.7%
Dividend Discount Model (Multi-Stage) $315.94 -29.1%
Dividend Discount Model (Stable) $488.50 +9.7%
Earnings Power Value $273.13 -38.7%

Is MedCap AB (publ) (MCAP.ST) undervalued or overvalued?

With the current market price at $445.50, the stock appears to be moderately 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 MedCap AB (publ)'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
  3. 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 2.5% 3.0%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.68 0.92
Cost of equity 6.0% 9.1%
Cost of debt 4.0% 4.5%
Tax rate 20.5% 21.5%
Debt/Equity ratio 0.05 0.05
After-tax WACC 5.9% 8.8%

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: 7.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,807 (FY12-2024) to $3,652 (FY12-2034)
  • Net profit margin expansion from 12% to 11%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $353 $5,283M 83.9%
10-Year Growth $423 $6,324M 71.5%
5-Year EBITDA $331 $4,951M 82.8%
10-Year EBITDA $392 $5,867M 69.3%

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: 7.6%
  • Long-term growth rate: 3.5%
  • Fair value: $315.94 (-29.1% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.1% (Low) to 6.0% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $147 to $830
  • Selected fair value: $488.50 (9.7% from current price)

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 $287M
Discount Rate (WACC) 8.8% - 5.9%
Enterprise Value $3,254M - $4,904M
Net Debt $(12)M
Equity Value $3,267M - $4,916M
Outstanding Shares 15M
Fair Value $218 - $328
Selected Fair Value $273.13

Key Financial Metrics

Metric Value
Market Capitalization $6674M
Enterprise Value $6661M
Trailing P/E 32.18
Forward P/E 30.76
Trailing EV/EBITDA 12.95
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.05

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) 30% $126.89
Discounted Cash Flow (5Y) 25% $88.37
Dividend Discount Model (Multi-Stage) 20% $63.19
Dividend Discount Model (Stable) 15% $73.28
Earnings Power Value 10% $27.31
Weighted Average 100% $379.04

Investment Conclusion

Based on our comprehensive valuation analysis, MedCap AB (publ)'s weighted average intrinsic value is $379.04, which is approximately 14.9% below the current market price of $445.50.

Key investment considerations:

  • Strong projected earnings growth (12% to 11% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.05)

Given these factors, we believe MedCap AB (publ) is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.