What is PED's Intrinsic value?

PEDEVCO Corp (PED) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, PEDEVCO Corp's estimated intrinsic value ranges from $1.02 to $8.73 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $1.46 +101.8%
Dividend Discount Model (Stable) $8.73 +1111.1%
Earnings Power Value $1.02 +42.0%

Is PEDEVCO Corp (PED) undervalued or overvalued?

With the current market price at $0.72, the stock appears to be significantly undervalued.

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 PEDEVCO Corp's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  2. 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.33 0.8
Cost of equity 5.4% 9.4%
Cost of debt 5.0% 5.0%
Tax rate 26.2% 27.0%
Debt/Equity ratio 1 1
After-tax WACC 4.5% 6.5%

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: 7.4%
  • Long-term growth rate: 3.6%
  • Fair value: $1.46 (101.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.4% (Low) to 5.4% (High)
  • Long-term growth rate: 3.0% (Low) to 4.3% (High)
  • Fair value range: $2 to $15
  • Selected fair value: $8.73 (1111.1% 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 $4M
Discount Rate (WACC) 6.5% - 4.5%
Enterprise Value $68M - $98M
Net Debt $(10)M
Equity Value $79M - $108M
Outstanding Shares 91M
Fair Value $1 - $1
Selected Fair Value $1.02

Key Financial Metrics

Metric Value
Market Capitalization $66M
Enterprise Value $55M
Trailing P/E 3.84
Forward P/E 17.36
Trailing EV/EBITDA 5.60
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.93

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) 44% $0.29
Dividend Discount Model (Stable) 33% $1.31
Earnings Power Value 22% $0.10
Weighted Average 100% $3.78

Investment Conclusion

Based on our comprehensive valuation analysis, PEDEVCO Corp's weighted average intrinsic value is $3.78, which is approximately 424.9% above the current market price of $0.72.

Key investment considerations:

  • Strong projected earnings growth (45% to 15% margin)

Given these factors, we believe PEDEVCO Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.