As of June 5, 2025, Precision Drilling Corp's estimated intrinsic value ranges from $55.79 to $423.37 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $149.22 | +131.7% |
| Discounted Cash Flow (5Y) | $132.72 | +106.1% |
| Dividend Discount Model (Multi-Stage) | $59.74 | -7.3% |
| Dividend Discount Model (Stable) | $55.79 | -13.4% |
| Earnings Power Value | $423.37 | +557.3% |
Is Precision Drilling Corp (PD.TO) undervalued or overvalued?
With the current market price at $64.41, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Precision Drilling Corp'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 | 1.5 | 1.8 |
| Cost of equity | 10.8% | 15.2% |
| Cost of debt | 5.4% | 6.8% |
| Tax rate | 9.6% | 17.2% |
| Debt/Equity ratio | 1.11 | 1.11 |
| After-tax WACC | 7.7% | 10.1% |
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 | $133 | $2,636M | 67.4% |
| 10-Year Growth | $149 | $2,859M | 46.6% |
| 5-Year EBITDA | $72 | $1,811M | 52.5% |
| 10-Year EBITDA | $104 | $2,251M | 32.3% |
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 | $573M |
| Discount Rate (WACC) | 10.1% - 7.7% |
| Enterprise Value | $5,657M - $7,474M |
| Net Debt | $841M |
| Equity Value | $4,816M - $6,632M |
| Outstanding Shares | 14M |
| Fair Value | $356 - $491 |
| Selected Fair Value | $423.37 |
| Metric | Value |
|---|---|
| Market Capitalization | $871M |
| Enterprise Value | $1712M |
| Trailing P/E | 7.98 |
| Forward P/E | 6.16 |
| Trailing EV/EBITDA | 3.15 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 1.11 |
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% | $44.77 |
| Discounted Cash Flow (5Y) | 25% | $33.18 |
| Dividend Discount Model (Multi-Stage) | 20% | $11.95 |
| Dividend Discount Model (Stable) | 15% | $8.37 |
| Earnings Power Value | 10% | $42.34 |
| Weighted Average | 100% | $140.60 |
Based on our comprehensive valuation analysis, Precision Drilling Corp's weighted average intrinsic value is $140.60, which is approximately 118.3% above the current market price of $64.41.
Key investment considerations:
Given these factors, we believe Precision Drilling Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.