As of June 7, 2025, Pennantpark Investment Corp's estimated intrinsic value ranges from $0.61 to $12.19 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $8.69 | +28.1% |
| Discounted Cash Flow (5Y) | $6.93 | +2.2% |
| Dividend Discount Model (Multi-Stage) | $12.19 | +79.8% |
| Dividend Discount Model (Stable) | $11.22 | +65.4% |
| Earnings Power Value | $0.61 | -91.0% |
Is Pennantpark Investment Corp (PNNT) undervalued or overvalued?
With the current market price at $6.78, 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 Pennantpark Investment 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 | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.88 | 1.11 |
| Cost of equity | 7.9% | 11.1% |
| Cost of debt | 4.9% | 12.4% |
| Tax rate | 4.4% | 6.3% |
| Debt/Equity ratio | 2.01 | 2.01 |
| After-tax WACC | 5.8% | 11.4% |
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 | $1,169M | 78.1% |
| 10-Year Growth | $9 | $1,283M | 60.8% |
| 5-Year EBITDA | $5 | $1,070M | 76.0% |
| 10-Year EBITDA | $7 | $1,197M | 58.0% |
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 | $58M |
| Discount Rate (WACC) | 11.4% - 5.8% |
| Enterprise Value | $506M - $1,005M |
| Net Debt | $716M |
| Equity Value | $(210)M - $289M |
| Outstanding Shares | 65M |
| Fair Value | $(3) - $4 |
| Selected Fair Value | $0.61 |
| Metric | Value |
|---|---|
| Market Capitalization | $443M |
| Enterprise Value | $1159M |
| Trailing P/E | 9.29 |
| Forward P/E | 8.90 |
| Trailing EV/EBITDA | 15.70 |
| Current Dividend Yield | 1396.21% |
| Dividend Growth Rate (5Y) | 10.50% |
| Debt-to-Equity Ratio | 2.01 |
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% | $2.61 |
| Discounted Cash Flow (5Y) | 25% | $1.73 |
| Dividend Discount Model (Multi-Stage) | 20% | $2.44 |
| Dividend Discount Model (Stable) | 15% | $1.68 |
| Earnings Power Value | 10% | $0.06 |
| Weighted Average | 100% | $8.52 |
Based on our comprehensive valuation analysis, Pennantpark Investment Corp's weighted average intrinsic value is $8.52, which is approximately 25.7% above the current market price of $6.78.
Key investment considerations:
Given these factors, we believe Pennantpark Investment Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.