What is NCF.TO's Intrinsic value?

Northcliff Resources Ltd (NCF.TO) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Northcliff Resources Ltd's estimated intrinsic value ranges from $0.06 to $0.06 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Stable) $0.06 -1.2%

Is Northcliff Resources Ltd (NCF.TO) undervalued or overvalued?

With the current market price at $0.06, the stock appears to be fairly valued.

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 Northcliff Resources Ltd'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 5.1% 6.1%
Adjusted beta -0.13 0.32
Cost of equity 3.0% 6.6%
Cost of debt 5.0% 5.0%
Tax rate 25.9% 26.5%
Debt/Equity ratio 1 1
After-tax WACC 3.4% 5.2%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 4.8%
  • Long-term growth rate: 4.0%
  • Fair value: $-0.29 (-590.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 6.6% (Low) to 3.0% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $(0) to $0
  • Selected fair value: $0.06 (-1.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $36M
Enterprise Value $35M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 0.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.99

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% $0.01
Weighted Average 100% $0.06

Investment Conclusion

Based on our comprehensive valuation analysis, Northcliff Resources Ltd's weighted average intrinsic value is $0.06, which is approximately 1.2% below the current market price of $0.06.

Key investment considerations:

  • Overall financial health and market position

Given these factors, we believe Northcliff Resources Ltd is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.