As of May 22, 2025, Perpetual Energy Inc's estimated intrinsic value ranges from $0.51 to $5.63 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $2.09 | +428.7% |
| Discounted Cash Flow (5Y) | $2.12 | +435.5% |
| Dividend Discount Model (Multi-Stage) | $0.51 | +30.2% |
| Earnings Power Value | $5.63 | +1324.9% |
Is Perpetual Energy Inc (PMT.TO) undervalued or overvalued?
With the current market price at $0.40, 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 Perpetual Energy Inc'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 | 1.1 | 1.75 |
| Cost of equity | 8.8% | 14.9% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 25.9% | 26.5% |
| Debt/Equity ratio | 1.48 | 1.48 |
| After-tax WACC | 5.8% | 8.2% |
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 | $2 | $178M | 74.5% |
| 10-Year Growth | $2 | $176M | 54.5% |
| 5-Year EBITDA | $2 | $185M | 75.5% |
| 10-Year EBITDA | $2 | $192M | 58.4% |
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 | $28M |
| Discount Rate (WACC) | 8.2% - 5.8% |
| Enterprise Value | $346M - $492M |
| Net Debt | $33M |
| Equity Value | $313M - $459M |
| Outstanding Shares | 69M |
| Fair Value | $5 - $7 |
| Selected Fair Value | $5.63 |
| Metric | Value |
|---|---|
| Market Capitalization | $27M |
| Enterprise Value | $60M |
| Trailing P/E | 0.00 |
| Forward P/E | 4.99 |
| Trailing EV/EBITDA | 4.80 |
| Current Dividend Yield | 2474.15% |
| Dividend Growth Rate (5Y) | -39.21% |
| Debt-to-Equity Ratio | 1.48 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $0.63 |
| Discounted Cash Flow (5Y) | 29% | $0.53 |
| Dividend Discount Model (Multi-Stage) | 24% | $0.10 |
| Earnings Power Value | 12% | $0.56 |
| Weighted Average | 100% | $2.14 |
Based on our comprehensive valuation analysis, Perpetual Energy Inc's weighted average intrinsic value is $2.14, which is approximately 442.4% above the current market price of $0.40.
Key investment considerations:
Given these factors, we believe Perpetual Energy Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.