What is NRGX's Intrinsic value?

Pimco Energy and Tactical Credit Opportunities Fund (NRGX) Intrinsic Value Analysis

Executive Summary

As of May 28, 2025, Pimco Energy and Tactical Credit Opportunities Fund's estimated intrinsic value ranges from $18.18 to $59.70 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $18.18 -10.3%
Dividend Discount Model (Stable) $59.70 +194.7%

Is Pimco Energy and Tactical Credit Opportunities Fund (NRGX) undervalued or overvalued?

With the current market price at $20.26, 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 Pimco Energy and Tactical Credit Opportunities Fund'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 4.2% 4.7%
Equity market risk premium 5.0% 6.0%
Adjusted beta 0.83 1.03
Cost of equity 8.3% 11.4%
Cost of debt 5.5% 5.5%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.27 0.27
After-tax WACC 7.4% 9.8%

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: 24.6%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.8%
  • Long-term growth rate: 4.0%
  • Fair value: $18.18 (-10.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.4% (Low) to 8.3% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $28 to $91
  • Selected fair value: $59.70 (194.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $906M
Enterprise Value $1193M
Trailing P/E 6.01
Forward P/E 15.07
Trailing EV/EBITDA 22.65
Current Dividend Yield 409.64%
Dividend Growth Rate (5Y) 93.56%
Debt-to-Equity Ratio 0.27

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 (Multi-Stage) 57% $3.64
Dividend Discount Model (Stable) 43% $8.95
Weighted Average 100% $35.97

Investment Conclusion

Based on our comprehensive valuation analysis, Pimco Energy and Tactical Credit Opportunities Fund's weighted average intrinsic value is $35.97, which is approximately 77.6% above the current market price of $20.26.

Key investment considerations:

  • Strong projected earnings growth (249% to 190% margin)
  • Conservative capital structure (Debt/Equity of 0.27)
  • Historical dividend growth of 93.56%

Given these factors, we believe Pimco Energy and Tactical Credit Opportunities Fund is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.