What is PSH.V's Intrinsic value?

PetroShale Inc (PSH.V) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, PetroShale Inc's estimated intrinsic value ranges from $0.75 to $8.47 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $0.75 -3.8%
Dividend Discount Model (Stable) $8.47 +985.5%

Is PetroShale Inc (PSH.V) undervalued or overvalued?

With the current market price at $0.78, 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 PetroShale Inc'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 3.2% 3.7%
Equity market risk premium 4.7% 5.7%
Adjusted beta 0.46 0.75
Cost of equity 5.3% 8.5%
Cost of debt 4.5% 4.9%
Tax rate 5.4% 16.0%
Debt/Equity ratio 0.48 0.48
After-tax WACC 5.0% 7.1%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 6.9%
  • Long-term growth rate: 3.9%
  • Fair value: $0.75 (-3.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.5% (Low) to 5.3% (High)
  • Long-term growth rate: 3.0% (Low) to 4.7% (High)
  • Fair value range: $1 to $16
  • Selected fair value: $8.47 (985.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $378M
Enterprise Value $490M
Trailing P/E 7.64
Forward P/E 228.82
Trailing EV/EBITDA 3.10
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.48

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% $0.15
Dividend Discount Model (Stable) 43% $1.27
Weighted Average 100% $4.06

Investment Conclusion

Based on our comprehensive valuation analysis, PetroShale Inc's weighted average intrinsic value is $4.06, which is approximately 420.2% above the current market price of $0.78.

Key investment considerations:

  • Strong projected earnings growth (-1% to 8% margin)
  • Consistent cash flow generation

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