What is MFNC's Intrinsic value?

Mackinac Financial Corp (MFNC) Intrinsic Value Analysis

Executive Summary

As of June 15, 2025, Mackinac Financial Corp's estimated intrinsic value ranges from $18.11 to $19.01 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $18.11 -15.8%
Dividend Discount Model (Stable) $19.01 -11.6%

Is Mackinac Financial Corp (MFNC) undervalued or overvalued?

With the current market price at $21.50, 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 Mackinac Financial Corp's intrinsic value, including:

  1. 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 4.2% 5.2%
Adjusted beta 0.66 0.8
Cost of equity 6.0% 8.4%
Cost of debt 5.0% 5.0%
Tax rate 21.5% 25.8%
Debt/Equity ratio 0 0
After-tax WACC 6.0% 8.4%

Valuation Methods

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: 42.8%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.2%
  • Long-term growth rate: 1.0%
  • Fair value: $18.11 (-15.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.4% (Low) to 6.0% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $12 to $26
  • Selected fair value: $19.01 (-11.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $227M
Enterprise Value $227M
Trailing P/E 16.46
Forward P/E 16.51
Trailing EV/EBITDA 0.00
Current Dividend Yield 260.28%
Dividend Growth Rate (5Y) 23.94%
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
Dividend Discount Model (Multi-Stage) 57% $3.62
Dividend Discount Model (Stable) 43% $2.85
Weighted Average 100% $18.49

Investment Conclusion

Based on our comprehensive valuation analysis, Mackinac Financial Corp's weighted average intrinsic value is $18.49, which is approximately 14.0% below the current market price of $21.50.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.00)
  • Historical dividend growth of 23.94%

Given these factors, we believe Mackinac Financial Corp is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.