What is PVAC's Intrinsic value?

Penn Virginia Corp (PVAC) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Penn Virginia Corp's estimated intrinsic value ranges from $41.22 to $41.22 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $41.22 +34.5%

Is Penn Virginia Corp (PVAC) undervalued or overvalued?

With the current market price at $30.66, 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 Penn Virginia Corp's intrinsic value, including:

  1. 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 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 0.94 1.34
Cost of equity 7.2% 11.2%
Cost of debt 4.5% 9.0%
Tax rate 0.5% 1.6%
Debt/Equity ratio 0.38 0.38
After-tax WACC 6.4% 10.6%

Valuation Methods

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 $170M
Discount Rate (WACC) 10.6% - 6.4%
Enterprise Value $1,608M - $2,649M
Net Debt $330M
Equity Value $1,279M - $2,319M
Outstanding Shares 44M
Fair Value $29 - $53
Selected Fair Value $41.22

Key Financial Metrics

Metric Value
Market Capitalization $1338M
Enterprise Value $1668M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 3.80
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.38

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
Earnings Power Value 100% $4.12
Weighted Average 100% $41.22

Investment Conclusion

Based on our comprehensive valuation analysis, Penn Virginia Corp's weighted average intrinsic value is $41.22, which is approximately 34.5% above the current market price of $30.66.

Key investment considerations:

  • Strong projected earnings growth (-114% to -106% margin)
  • Consistent cash flow generation

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