What is PFG.L's Intrinsic value?

Provident Financial PLC (PFG.L) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, Provident Financial PLC's estimated intrinsic value ranges from $94.35 to $109.81 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $94.35 -10.7%
Dividend Discount Model (Stable) $109.81 +4.0%

Is Provident Financial PLC (PFG.L) undervalued or overvalued?

With the current market price at $105.60, the stock appears to be fairly valued.

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 Provident Financial PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 4.4% 4.9%
Equity market risk premium 6.4% 7.4%
Adjusted beta 1.47 2.66
Cost of equity 13.9% 25.2%
Cost of debt 5.0% 5.0%
Tax rate 4.3% 9.3%
Debt/Equity ratio 5.22 5.22
After-tax WACC 6.2% 7.8%

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: 55.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 19.5%
  • Long-term growth rate: 1.0%
  • Fair value: $94.35 (-10.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 25.2% (Low) to 13.9% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $62 to $158
  • Selected fair value: $109.81 (4.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $376M
Enterprise Value $2126M
Trailing P/E 4.86
Forward P/E 4.81
Trailing EV/EBITDA 0.00
Current Dividend Yield 1137.59%
Dividend Growth Rate (5Y) 6.27%
Debt-to-Equity Ratio 5.22

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) 57% $18.87
Dividend Discount Model (Stable) 43% $16.47
Weighted Average 100% $100.97

Investment Conclusion

Based on our comprehensive valuation analysis, Provident Financial PLC's intrinsic value is $100.97, which is approximately 4.4% below the current market price of $105.60.

Key investment considerations:

  • Historical dividend growth of 6.27%

Given these factors, we believe Provident Financial PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.