As of May 23, 2025, Pendragon PLC's estimated intrinsic value ranges from $20.06 to $161.90 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $51.81 | +35.6% |
| Discounted Cash Flow (5Y) | $44.38 | +16.2% |
| Dividend Discount Model (Multi-Stage) | $20.80 | -45.6% |
| Dividend Discount Model (Stable) | $20.06 | -47.5% |
| Earnings Power Value | $161.90 | +323.8% |
Is Pendragon PLC (PDG.L) undervalued or overvalued?
With the current market price at $38.20, 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 Pendragon PLC'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 | 3.7% | 4.2% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 1.09 | 1.22 |
| Cost of equity | 10.3% | 13.3% |
| Cost of debt | 8.1% | 12.9% |
| Tax rate | 12.0% | 15.8% |
| Debt/Equity ratio | 0.67 | 0.67 |
| After-tax WACC | 9.0% | 12.3% |
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 | $44 | $930M | 64.7% |
| 10-Year Growth | $52 | $1,058M | 42.1% |
| 5-Year EBITDA | $36 | $794M | 58.7% |
| 10-Year EBITDA | $45 | $944M | 35.1% |
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 | $307M |
| Discount Rate (WACC) | 12.3% - 9.0% |
| Enterprise Value | $2,492M - $3,399M |
| Net Debt | $169M |
| Equity Value | $2,323M - $3,229M |
| Outstanding Shares | 17M |
| Fair Value | $135 - $188 |
| Selected Fair Value | $161.90 |
| Metric | Value |
|---|---|
| Market Capitalization | $655M |
| Enterprise Value | $824M |
| Trailing P/E | 14.24 |
| Forward P/E | 12.50 |
| Trailing EV/EBITDA | 3.90 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | -100.00% |
| Debt-to-Equity Ratio | 0.67 |
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% | $15.54 |
| Discounted Cash Flow (5Y) | 25% | $11.09 |
| Dividend Discount Model (Multi-Stage) | 20% | $4.16 |
| Dividend Discount Model (Stable) | 15% | $3.01 |
| Earnings Power Value | 10% | $16.19 |
| Weighted Average | 100% | $50.00 |
Based on our comprehensive valuation analysis, Pendragon PLC's weighted average intrinsic value is $50.00, which is approximately 30.9% above the current market price of $38.20.
Key investment considerations:
Given these factors, we believe Pendragon PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.