As of May 31, 2025, Merchants Trust PLC's estimated intrinsic value ranges from $455.03 to $1490.42 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1490.42 | +162.9% |
| Discounted Cash Flow (5Y) | $1366.70 | +141.0% |
| Dividend Discount Model (Multi-Stage) | $1013.92 | +78.8% |
| Dividend Discount Model (Stable) | $559.34 | -1.4% |
| Earnings Power Value | $455.03 | -19.7% |
Is Merchants Trust PLC (MRCH.L) undervalued or overvalued?
With the current market price at $567.00, 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 Merchants Trust PLC'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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.06 | 1.18 |
| Cost of equity | 10.3% | 13.2% |
| Cost of debt | 4.0% | 4.6% |
| Tax rate | 0.2% | 0.7% |
| Debt/Equity ratio | 0.13 | 0.13 |
| After-tax WACC | 9.6% | 12.2% |
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 | $1,367 | $2,050M | 63.3% |
| 10-Year Growth | $1,490 | $2,229M | 40.1% |
| 5-Year EBITDA | $1,149 | $1,733M | 56.5% |
| 10-Year EBITDA | $1,341 | $2,012M | 33.6% |
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 | $78M |
| Discount Rate (WACC) | 12.2% - 9.6% |
| Enterprise Value | $640M - $814M |
| Net Debt | $67M |
| Equity Value | $573M - $748M |
| Outstanding Shares | 1M |
| Fair Value | $395 - $515 |
| Selected Fair Value | $455.03 |
| Metric | Value |
|---|---|
| Market Capitalization | $823M |
| Enterprise Value | $889M |
| Trailing P/E | 7.56 |
| Forward P/E | 4.16 |
| Trailing EV/EBITDA | 7.30 |
| Current Dividend Yield | 514.66% |
| Dividend Growth Rate (5Y) | 8.64% |
| Debt-to-Equity Ratio | 0.13 |
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% | $447.13 |
| Discounted Cash Flow (5Y) | 25% | $341.67 |
| Dividend Discount Model (Multi-Stage) | 20% | $202.78 |
| Dividend Discount Model (Stable) | 15% | $83.90 |
| Earnings Power Value | 10% | $45.50 |
| Weighted Average | 100% | $1120.99 |
Based on our comprehensive valuation analysis, Merchants Trust PLC's weighted average intrinsic value is $1120.99, which is approximately 97.7% above the current market price of $567.00.
Key investment considerations:
Given these factors, we believe Merchants Trust PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.