What is ORL.WA's Intrinsic value?

Orzel SA (ORL.WA) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Orzel SA's estimated intrinsic value ranges from $0.10 to $2.30 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1.49 -58.4%
Discounted Cash Flow (5Y) $2.30 -35.8%
Dividend Discount Model (Multi-Stage) $0.10 -97.3%
Dividend Discount Model (Stable) $0.16 -95.6%

Is Orzel SA (ORL.WA) undervalued or overvalued?

With the current market price at $3.58, the stock appears to be significantly overvalued.

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 Orzel SA'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 5.5% 6.0%
Equity market risk premium 6.3% 7.3%
Adjusted beta 0.66 0.89
Cost of equity 9.7% 13.1%
Cost of debt 4.0% 7.2%
Tax rate 15.2% 15.6%
Debt/Equity ratio 0.61 0.61
After-tax WACC 7.3% 10.4%

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: 8.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $17 (FY12-2024) to $38 (FY12-2034)
  • Net profit margin expansion from 1% to 1%
  • Capital expenditures maintained at approximately 40% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2 $42M 69.9%
10-Year Growth $1 $34M 44.9%
5-Year EBITDA $9 $111M 88.6%
10-Year EBITDA $8 $103M 82.0%

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: 11.4%
  • Long-term growth rate: 2.0%
  • Fair value: $0.10 (-97.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.1% (Low) to 9.7% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $0.16 (-95.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $38M
Enterprise Value $56M
Trailing P/E 219.67
Forward P/E 335.65
Trailing EV/EBITDA 11.60
Current Dividend Yield 9.92%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.61

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) 33% $0.45
Discounted Cash Flow (5Y) 28% $0.57
Dividend Discount Model (Multi-Stage) 22% $0.02
Dividend Discount Model (Stable) 17% $0.02
Weighted Average 100% $1.18

Investment Conclusion

Based on our comprehensive valuation analysis, Orzel SA's weighted average intrinsic value is $1.18, which is approximately 67.0% below the current market price of $3.58.

Key investment considerations:

  • Strong projected earnings growth (1% to 1% margin)
  • Consistent cash flow generation

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