As of June 1, 2025, Peyto Exploration & Development Corp's estimated intrinsic value ranges from $6.43 to $55.24 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $6.43 | -65.3% |
| Discounted Cash Flow (5Y) | $7.35 | -60.3% |
| Dividend Discount Model (Multi-Stage) | $34.39 | +85.9% |
| Dividend Discount Model (Stable) | $55.24 | +198.6% |
| Earnings Power Value | $33.40 | +80.5% |
Is Peyto Exploration & Development Corp (PEY.TO) undervalued or overvalued?
With the current market price at $18.50, 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 Peyto Exploration & Development 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 | 0.64 | 0.83 |
| Cost of equity | 6.4% | 9.2% |
| Cost of debt | 5.4% | 5.5% |
| Tax rate | 22.1% | 23.5% |
| Debt/Equity ratio | 0.37 | 0.37 |
| After-tax WACC | 5.8% | 7.9% |
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 | $7 | $2,748M | 86.7% |
| 10-Year Growth | $6 | $2,564M | 74.3% |
| 5-Year EBITDA | $6 | $2,556M | 85.7% |
| 10-Year EBITDA | $6 | $2,516M | 73.8% |
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 | $532M |
| Discount Rate (WACC) | 7.9% - 5.8% |
| Enterprise Value | $6,734M - $9,142M |
| Net Debt | $1,283M |
| Equity Value | $5,451M - $7,859M |
| Outstanding Shares | 199M |
| Fair Value | $27 - $39 |
| Selected Fair Value | $33.40 |
| Metric | Value |
|---|---|
| Market Capitalization | $3686M |
| Enterprise Value | $4969M |
| Trailing P/E | 12.50 |
| Forward P/E | 12.16 |
| Trailing EV/EBITDA | 4.60 |
| Current Dividend Yield | 703.74% |
| Dividend Growth Rate (5Y) | 98.84% |
| Debt-to-Equity Ratio | 0.37 |
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% | $1.93 |
| Discounted Cash Flow (5Y) | 25% | $1.84 |
| Dividend Discount Model (Multi-Stage) | 20% | $6.88 |
| Dividend Discount Model (Stable) | 15% | $8.29 |
| Earnings Power Value | 10% | $3.34 |
| Weighted Average | 100% | $22.27 |
Based on our comprehensive valuation analysis, Peyto Exploration & Development Corp's weighted average intrinsic value is $22.27, which is approximately 20.4% above the current market price of $18.50.
Key investment considerations:
Given these factors, we believe Peyto Exploration & Development Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.