What is MNKS.L's Intrinsic value?

Monks Investment Trust PLC (MNKS.L) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Monks Investment Trust PLC's estimated intrinsic value ranges from $6634.11 to $6634.11 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $6634.11 +450.1%

Is Monks Investment Trust PLC (MNKS.L) undervalued or overvalued?

With the current market price at $1206.00, 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 Monks Investment Trust PLC'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.72 0.74
Cost of equity 8.3% 10.2%
Cost of debt 4.0% 4.6%
Tax rate 0.5% 1.6%
Debt/Equity ratio 0.1 0.1
After-tax WACC 7.9% 9.7%

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: 0.7%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.2%
  • Long-term growth rate: 4.0%
  • Fair value: $-6282.17 (-620.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.2% (Low) to 8.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $3,483 to $9,786
  • Selected fair value: $6634.11 (450.1% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $2148M
Enterprise Value $2329M
Trailing P/E 3.37
Forward P/E 3.37
Trailing EV/EBITDA 7.00
Current Dividend Yield 20.35%
Dividend Growth Rate (5Y) 15.51%
Debt-to-Equity Ratio 0.10

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 (Stable) 100% $995.12
Weighted Average 100% $6634.11

Investment Conclusion

Based on our comprehensive valuation analysis, Monks Investment Trust PLC's weighted average intrinsic value is $6634.11, which is approximately 450.1% above the current market price of $1206.00.

Key investment considerations:

  • Strong projected earnings growth (95% to -98299% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.10)
  • Historical dividend growth of 15.51%

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