What is PCX.WA's Intrinsic value?

PCC Exol SA (PCX.WA) Intrinsic Value Analysis

Executive Summary

As of June 12, 2025, PCC Exol SA's estimated intrinsic value ranges from $2.05 to $3.41 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $3.41 +26.4%
Discounted Cash Flow (5Y) $2.96 +9.5%
Dividend Discount Model (Multi-Stage) $2.05 -24.0%
Dividend Discount Model (Stable) $2.54 -6.0%
Earnings Power Value $2.16 -20.0%

Is PCC Exol SA (PCX.WA) undervalued or overvalued?

With the current market price at $2.70, 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 PCC Exol 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
  3. 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 5.5% 6.0%
Equity market risk premium 6.3% 7.3%
Adjusted beta 0.47 0.63
Cost of equity 8.5% 11.1%
Cost of debt 7.1% 8.6%
Tax rate 17.7% 18.7%
Debt/Equity ratio 0.6 0.6
After-tax WACC 7.5% 9.6%

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: 8.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $948 (FY12-2024) to $1,447 (FY12-2034)
  • Net profit margin expansion from 4% to 4%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $3 $754M 73.9%
10-Year Growth $3 $834M 55.9%
5-Year EBITDA $4 $858M 77.0%
10-Year EBITDA $4 $911M 59.6%

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: 9.8%
  • Long-term growth rate: 2.0%
  • Fair value: $2.05 (-24.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.1% (Low) to 8.5% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $2 to $4
  • Selected fair value: $2.54 (-6.0% 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 $52M
Discount Rate (WACC) 9.6% - 7.5%
Enterprise Value $541M - $690M
Net Debt $239M
Equity Value $302M - $451M
Outstanding Shares 174M
Fair Value $2 - $3
Selected Fair Value $2.16

Key Financial Metrics

Metric Value
Market Capitalization $470M
Enterprise Value $710M
Trailing P/E 12.36
Forward P/E 12.70
Trailing EV/EBITDA 8.25
Current Dividend Yield 267.16%
Dividend Growth Rate (5Y) 9.01%
Debt-to-Equity Ratio 0.60

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) 30% $1.02
Discounted Cash Flow (5Y) 25% $0.74
Dividend Discount Model (Multi-Stage) 20% $0.41
Dividend Discount Model (Stable) 15% $0.38
Earnings Power Value 10% $0.22
Weighted Average 100% $2.77

Investment Conclusion

Based on our comprehensive valuation analysis, PCC Exol SA's weighted average intrinsic value is $2.77, which is approximately 2.6% above the current market price of $2.70.

Key investment considerations:

  • Strong projected earnings growth (4% to 4% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 9.01%

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