As of May 27, 2025, Canso Credit Income Fund's estimated intrinsic value ranges from $0.50 to $8.70 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $3.26 | -79.4% |
| Discounted Cash Flow (5Y) | $3.42 | -78.4% |
| Dividend Discount Model (Multi-Stage) | $7.57 | -52.1% |
| Dividend Discount Model (Stable) | $8.70 | -45.0% |
| Earnings Power Value | $0.50 | -96.8% |
Is Canso Credit Income Fund (PBY.UN.TO) undervalued or overvalued?
With the current market price at $15.80, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Canso Credit Income Fund's intrinsic value, including:
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 | 0.67 | 0.78 |
| Cost of equity | 6.6% | 8.9% |
| Cost of debt | 4.0% | 8.4% |
| Tax rate | 25.9% | 26.5% |
| Debt/Equity ratio | 0.35 | 0.35 |
| After-tax WACC | 5.6% | 8.2% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $3 | $81M | 78.7% |
| 10-Year Growth | $3 | $80M | 58.2% |
| 5-Year EBITDA | $5 | $92M | 81.1% |
| 10-Year EBITDA | $5 | $95M | 64.9% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $4M |
| Discount Rate (WACC) | 8.2% - 5.6% |
| Enterprise Value | $44M - $65M |
| Net Debt | $50M |
| Equity Value | $(6)M - $15M |
| Outstanding Shares | 9M |
| Fair Value | $(1) - $2 |
| Selected Fair Value | $0.50 |
| Metric | Value |
|---|---|
| Market Capitalization | $145M |
| Enterprise Value | $195M |
| Trailing P/E | 23.69 |
| Forward P/E | 30.59 |
| Trailing EV/EBITDA | 14.95 |
| Current Dividend Yield | 504.06% |
| Dividend Growth Rate (5Y) | 0.89% |
| Debt-to-Equity Ratio | 0.35 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $0.98 |
| Discounted Cash Flow (5Y) | 25% | $0.85 |
| Dividend Discount Model (Multi-Stage) | 20% | $1.51 |
| Dividend Discount Model (Stable) | 15% | $1.30 |
| Earnings Power Value | 10% | $0.05 |
| Weighted Average | 100% | $4.70 |
Based on our comprehensive valuation analysis, Canso Credit Income Fund's weighted average intrinsic value is $4.70, which is approximately 70.2% below the current market price of $15.80.
Key investment considerations:
Given these factors, we believe Canso Credit Income Fund is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.