What is PBIP's Intrinsic value?

Prudential Bancorp Inc (PBIP) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Prudential Bancorp Inc's estimated intrinsic value ranges from $15.16 to $15.16 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $15.16 +0.2%

Is Prudential Bancorp Inc (PBIP) undervalued or overvalued?

With the current market price at $15.13, 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 Prudential Bancorp Inc'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 4.2% 5.2%
Adjusted beta 1.01 1.07
Cost of equity 7.5% 9.8%
Cost of debt 5.0% 5.0%
Tax rate 16.6% 18.2%
Debt/Equity ratio 1 1
After-tax WACC 5.8% 6.9%

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: 8.6%
  • Long-term growth rate: 1.0%
  • Fair value: $15.16 (0.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.8% (Low) to 7.5% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $(0) to $(1)
  • Selected fair value: $-0.64 (-104.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $118M
Enterprise Value $118M
Trailing P/E 0.00
Forward P/E 13.49
Trailing EV/EBITDA 0.00
Current Dividend Yield 185.29%
Dividend Growth Rate (5Y) 20.87%
Debt-to-Equity Ratio 1.01

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) 100% $3.03
Weighted Average 100% $15.16

Investment Conclusion

Based on our comprehensive valuation analysis, Prudential Bancorp Inc's weighted average intrinsic value is $15.16, which is approximately 0.2% above the current market price of $15.13.

Key investment considerations:

  • Historical dividend growth of 20.87%

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