What is PRT.MI's Intrinsic value?

Esprinet SpA (PRT.MI) Intrinsic Value Analysis

Executive Summary

As of June 14, 2025, Esprinet SpA's estimated intrinsic value ranges from $1.75 to $10.33 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $8.25 +122.4%
Discounted Cash Flow (5Y) $7.30 +96.9%
Dividend Discount Model (Multi-Stage) $1.75 -52.9%
Dividend Discount Model (Stable) $1.90 -48.8%
Earnings Power Value $10.33 +178.5%

Is Esprinet SpA (PRT.MI) undervalued or overvalued?

With the current market price at $3.71, 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 Esprinet SpA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. 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 3.7% 4.2%
Equity market risk premium 8.3% 9.3%
Adjusted beta 1.32 1.61
Cost of equity 14.6% 19.6%
Cost of debt 4.0% 5.4%
Tax rate 25.4% 26.3%
Debt/Equity ratio 1.36 1.36
After-tax WACC 7.9% 10.6%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 9.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $4,142 (FY12-2024) to $5,696 (FY12-2034)
  • Net profit margin expansion from 1% to 1%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $7 $414M 65.4%
10-Year Growth $8 $462M 45.4%
5-Year EBITDA $6 $368M 61.0%
10-Year EBITDA $7 $421M 40.1%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 17.1%
  • Long-term growth rate: 0.5%
  • Fair value: $1.75 (-52.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 19.6% (Low) to 14.6% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $1 to $2
  • Selected fair value: $1.90 (-48.8% from current price)

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 $51M
Discount Rate (WACC) 10.6% - 7.9%
Enterprise Value $484M - $650M
Net Debt $46M
Equity Value $438M - $604M
Outstanding Shares 50M
Fair Value $9 - $12
Selected Fair Value $10.33

Key Financial Metrics

Metric Value
Market Capitalization $187M
Enterprise Value $233M
Trailing P/E 9.94
Forward P/E 8.29
Trailing EV/EBITDA 5.75
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 33.04%
Debt-to-Equity Ratio 1.36

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
Discounted Cash Flow (10Y) 30% $2.48
Discounted Cash Flow (5Y) 25% $1.83
Dividend Discount Model (Multi-Stage) 20% $0.35
Dividend Discount Model (Stable) 15% $0.28
Earnings Power Value 10% $1.03
Weighted Average 100% $5.97

Investment Conclusion

Based on our comprehensive valuation analysis, Esprinet SpA's weighted average intrinsic value is $5.97, which is approximately 60.9% above the current market price of $3.71.

Key investment considerations:

  • Strong projected earnings growth (1% to 1% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 33.04%

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