What is PEG.L's Intrinsic value?

Petards Group PLC (PEG.L) Intrinsic Value Analysis

Executive Summary

As of June 13, 2025, Petards Group PLC's estimated intrinsic value ranges from $22.45 to $22.45 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $22.45 +176.3%

Is Petards Group PLC (PEG.L) undervalued or overvalued?

With the current market price at $8.12, 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 Petards Group PLC's intrinsic value, including:

  1. 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.65 0.88
Cost of equity 7.9% 11.1%
Cost of debt 5.8% 7.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 0.16 0.16
After-tax WACC 7.5% 10.4%

Valuation Methods

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 $1M
Discount Rate (WACC) 10.4% - 7.5%
Enterprise Value $12M - $17M
Net Debt $2M
Equity Value $11M - $16M
Outstanding Shares 1M
Fair Value $18 - $27
Selected Fair Value $22.45

Key Financial Metrics

Metric Value
Market Capitalization $5M
Enterprise Value $6M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 10.05
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.16

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
Earnings Power Value 100% $2.25
Weighted Average 100% $22.45

Investment Conclusion

Based on our comprehensive valuation analysis, Petards Group PLC's weighted average intrinsic value is $22.45, which is approximately 176.3% above the current market price of $8.12.

Key investment considerations:

  • Strong projected earnings growth (-11% to 0% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.16)

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