As of June 4, 2025, Major Drilling Group International Inc's estimated intrinsic value ranges from $5.46 to $22.37 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $22.37 | +180.0% |
| Discounted Cash Flow (5Y) | $16.88 | +111.3% |
| Dividend Discount Model (Multi-Stage) | $15.13 | +89.4% |
| Dividend Discount Model (Stable) | $5.46 | -31.6% |
| Earnings Power Value | $10.02 | +25.4% |
Is Major Drilling Group International Inc (MDI.TO) undervalued or overvalued?
With the current market price at $7.99, 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 Major Drilling Group International 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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.93 | 1.07 |
| Cost of equity | 7.9% | 10.7% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 24.4% | 25.7% |
| Debt/Equity ratio | 0.01 | 0.01 |
| After-tax WACC | 7.9% | 10.6% |
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 | $17 | $1,303M | 76.7% |
| 10-Year Growth | $22 | $1,752M | 58.6% |
| 5-Year EBITDA | $11 | $836M | 63.7% |
| 10-Year EBITDA | $16 | $1,221M | 40.5% |
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 | $67M |
| Discount Rate (WACC) | 10.6% - 7.9% |
| Enterprise Value | $631M - $851M |
| Net Debt | $(79)M |
| Equity Value | $710M - $930M |
| Outstanding Shares | 82M |
| Fair Value | $9 - $11 |
| Selected Fair Value | $10.02 |
| Metric | Value |
|---|---|
| Market Capitalization | $654M |
| Enterprise Value | $575M |
| Trailing P/E | 18.76 |
| Forward P/E | 10.29 |
| Trailing EV/EBITDA | 3.15 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.01 |
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% | $6.71 |
| Discounted Cash Flow (5Y) | 25% | $4.22 |
| Dividend Discount Model (Multi-Stage) | 20% | $3.03 |
| Dividend Discount Model (Stable) | 15% | $0.82 |
| Earnings Power Value | 10% | $1.00 |
| Weighted Average | 100% | $15.78 |
Based on our comprehensive valuation analysis, Major Drilling Group International Inc's weighted average intrinsic value is $15.78, which is approximately 97.5% above the current market price of $7.99.
Key investment considerations:
Given these factors, we believe Major Drilling Group International Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.