As of May 29, 2025, Melcor Developments Ltd's estimated intrinsic value ranges from $12.22 to $60.44 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $60.44 | +341.2% |
| Discounted Cash Flow (5Y) | $49.47 | +261.1% |
| Dividend Discount Model (Multi-Stage) | $13.07 | -4.6% |
| Dividend Discount Model (Stable) | $12.22 | -10.8% |
| Earnings Power Value | $22.78 | +66.3% |
Is Melcor Developments Ltd (MRD.TO) undervalued or overvalued?
With the current market price at $13.70, 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 Melcor Developments Ltd'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 | 0.72 | 1.03 |
| Cost of equity | 6.9% | 10.5% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 19.1% | 23.8% |
| Debt/Equity ratio | 1.48 | 1.48 |
| After-tax WACC | 5.2% | 6.5% |
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 | $49 | $2,055M | 77.1% |
| 10-Year Growth | $60 | $2,387M | 62.0% |
| 5-Year EBITDA | $26 | $1,339M | 64.8% |
| 10-Year EBITDA | $38 | $1,717M | 47.2% |
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 | $72M |
| Discount Rate (WACC) | 6.5% - 5.2% |
| Enterprise Value | $1,107M - $1,387M |
| Net Debt | $557M |
| Equity Value | $550M - $830M |
| Outstanding Shares | 30M |
| Fair Value | $18 - $27 |
| Selected Fair Value | $22.78 |
| Metric | Value |
|---|---|
| Market Capitalization | $415M |
| Enterprise Value | $972M |
| Trailing P/E | 12.37 |
| Forward P/E | 11.07 |
| Trailing EV/EBITDA | 7.85 |
| Current Dividend Yield | 325.16% |
| Dividend Growth Rate (5Y) | 4.42% |
| Debt-to-Equity Ratio | 1.48 |
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% | $18.13 |
| Discounted Cash Flow (5Y) | 25% | $12.37 |
| Dividend Discount Model (Multi-Stage) | 20% | $2.61 |
| Dividend Discount Model (Stable) | 15% | $1.83 |
| Earnings Power Value | 10% | $2.28 |
| Weighted Average | 100% | $37.23 |
Based on our comprehensive valuation analysis, Melcor Developments Ltd's weighted average intrinsic value is $37.23, which is approximately 171.7% above the current market price of $13.70.
Key investment considerations:
Given these factors, we believe Melcor Developments Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.