What is OLA.TO's Intrinsic value?

Orla Mining Ltd (OLA.TO) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Orla Mining Ltd's estimated intrinsic value ranges from $3.44 to $18.99 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $18.99 +42.9%
Dividend Discount Model (Stable) $8.38 -37.0%
Earnings Power Value $3.44 -74.1%

Is Orla Mining Ltd (OLA.TO) undervalued or overvalued?

With the current market price at $13.29, 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 Orla Mining Ltd's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  2. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

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 0.88 1.02
Cost of equity 7.7% 10.4%
Cost of debt 4.0% 9.0%
Tax rate 24.9% 44.8%
Debt/Equity ratio 0 0
After-tax WACC 7.6% 10.4%

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: 9.0%
  • Long-term growth rate: 4.0%
  • Fair value: $18.99 (42.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.4% (Low) to 7.7% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $3 to $9
  • Selected fair value: $8.38 (-37.0% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $56M
Discount Rate (WACC) 10.4% - 7.6%
Enterprise Value $540M - $731M
Net Debt $(159)M
Equity Value $699M - $889M
Outstanding Shares 322M
Fair Value $2 - $3
Selected Fair Value $3.44

Key Financial Metrics

Metric Value
Market Capitalization $4284M
Enterprise Value $4062M
Trailing P/E 34.47
Forward P/E 11.73
Trailing EV/EBITDA 10.60
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.00

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) 44% $3.80
Dividend Discount Model (Stable) 33% $1.26
Earnings Power Value 22% $0.34
Weighted Average 100% $12.00

Investment Conclusion

Based on our comprehensive valuation analysis, Orla Mining Ltd's weighted average intrinsic value is $12.00, which is approximately 9.7% below the current market price of $13.29.

Key investment considerations:

  • Strong projected earnings growth (26% to 36% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)

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