As of May 23, 2025, WM Morrison Supermarkets PLC's estimated intrinsic value ranges from $52.43 to $219.14 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $193.95 | -32.3% |
| Discounted Cash Flow (5Y) | $201.32 | -29.7% |
| Dividend Discount Model (Multi-Stage) | $119.85 | -58.2% |
| Dividend Discount Model (Stable) | $219.14 | -23.5% |
| Earnings Power Value | $52.43 | -81.7% |
Is WM Morrison Supermarkets PLC (MRW.L) undervalued or overvalued?
With the current market price at $286.40, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate WM Morrison Supermarkets 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 | 2.9% | 3.4% |
| Equity market risk premium | 5.3% | 6.3% |
| Adjusted beta | 0.68 | 0.75 |
| Cost of equity | 6.6% | 8.7% |
| Cost of debt | 4.2% | 5.7% |
| Tax rate | 19.3% | 21.2% |
| Debt/Equity ratio | 0.49 | 0.49 |
| After-tax WACC | 5.5% | 7.3% |
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 | $201 | $7,940M | 85.4% |
| 10-Year Growth | $194 | $7,762M | 71.9% |
| 5-Year EBITDA | $86 | $5,154M | 77.5% |
| 10-Year EBITDA | $104 | $5,576M | 60.9% |
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 | $273M |
| Discount Rate (WACC) | 7.3% - 5.5% |
| Enterprise Value | $3,736M - $4,939M |
| Net Debt | $3,069M |
| Equity Value | $667M - $1,870M |
| Outstanding Shares | 24M |
| Fair Value | $28 - $77 |
| Selected Fair Value | $52.43 |
| Metric | Value |
|---|---|
| Market Capitalization | $6930M |
| Enterprise Value | $9999M |
| Trailing P/E | 29.61 |
| Forward P/E | 51.28 |
| Trailing EV/EBITDA | 6.35 |
| Current Dividend Yield | 689.79% |
| Dividend Growth Rate (5Y) | 21.95% |
| Debt-to-Equity Ratio | 0.49 |
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% | $58.18 |
| Discounted Cash Flow (5Y) | 25% | $50.33 |
| Dividend Discount Model (Multi-Stage) | 20% | $23.97 |
| Dividend Discount Model (Stable) | 15% | $32.87 |
| Earnings Power Value | 10% | $5.24 |
| Weighted Average | 100% | $170.60 |
Based on our comprehensive valuation analysis, WM Morrison Supermarkets PLC's weighted average intrinsic value is $170.60, which is approximately 40.4% below the current market price of $286.40.
Key investment considerations:
Given these factors, we believe WM Morrison Supermarkets PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.