What is ORBT's Intrinsic value?

Orbit International Corp (ORBT) Intrinsic Value Analysis

Executive Summary

As of June 17, 2025, Orbit International Corp's estimated intrinsic value ranges from $7.42 to $10.16 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $10.16 +269.3%
Discounted Cash Flow (5Y) $7.44 +170.6%
Dividend Discount Model (Multi-Stage) $7.42 +169.8%

Is Orbit International Corp (ORBT) undervalued or overvalued?

With the current market price at $2.75, 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 Orbit International Corp's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.33 0.52
Cost of equity 5.4% 7.8%
Cost of debt 5.0% 5.0%
Tax rate 5.2% 6.8%
Debt/Equity ratio 0.12 0.12
After-tax WACC 5.3% 7.4%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $30 (FY12-2024) to $47 (FY12-2034)
  • Net profit margin expansion from -2% to 5%
  • Capital expenditures maintained at approximately 1% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $7 $25M 90.9%
10-Year Growth $10 $34M 76.6%
5-Year EBITDA $4 $13M 82.3%
10-Year EBITDA $6 $19M 59.0%

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: 6.6%
  • Long-term growth rate: 2.0%
  • Fair value: $7.42 (169.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.8% (Low) to 5.4% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $(2) to $(7)
  • Selected fair value: $-4.64 (-268.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $9M
Enterprise Value $9M
Trailing P/E 0.00
Forward P/E 40.78
Trailing EV/EBITDA 6.50
Current Dividend Yield 325.64%
Dividend Growth Rate (5Y) -1.64%
Debt-to-Equity Ratio 0.12

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
Discounted Cash Flow (10Y) 40% $3.05
Discounted Cash Flow (5Y) 33% $1.86
Dividend Discount Model (Multi-Stage) 27% $1.48
Weighted Average 100% $8.52

Investment Conclusion

Based on our comprehensive valuation analysis, Orbit International Corp's weighted average intrinsic value is $8.52, which is approximately 209.9% above the current market price of $2.75.

Key investment considerations:

  • Strong projected earnings growth (-2% to 5% margin)
  • Conservative capital structure (Debt/Equity of 0.12)

Given these factors, we believe Orbit International Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.