As of May 29, 2025, Pizza Pizza Royalty Corp's estimated intrinsic value ranges from $14.94 to $340.46 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $340.46 | +2201.9% |
| Discounted Cash Flow (5Y) | $311.96 | +2009.3% |
| Dividend Discount Model (Multi-Stage) | $263.17 | +1679.4% |
| Dividend Discount Model (Stable) | $14.94 | +1.0% |
| Earnings Power Value | $15.49 | +4.7% |
Is Pizza Pizza Royalty Corp (PZA.TO) undervalued or overvalued?
With the current market price at $14.79, 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 Pizza Pizza Royalty 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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.69 | 0.77 |
| Cost of equity | 6.7% | 8.9% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 19.8% | 20.0% |
| Debt/Equity ratio | 0.13 | 0.13 |
| After-tax WACC | 6.3% | 8.3% |
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 | $312 | $7,727M | 73.3% |
| 10-Year Growth | $340 | $8,429M | 54.2% |
| 5-Year EBITDA | $290 | $7,182M | 71.3% |
| 10-Year EBITDA | $323 | $7,989M | 51.7% |
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 | $31M |
| Discount Rate (WACC) | 8.3% - 6.3% |
| Enterprise Value | $369M - $487M |
| Net Debt | $47M |
| Equity Value | $323M - $440M |
| Outstanding Shares | 25M |
| Fair Value | $13 - $18 |
| Selected Fair Value | $15.49 |
| Metric | Value |
|---|---|
| Market Capitalization | $364M |
| Enterprise Value | $411M |
| Trailing P/E | 11.75 |
| Forward P/E | 0.79 |
| Trailing EV/EBITDA | 10.80 |
| Current Dividend Yield | 928.12% |
| Dividend Growth Rate (5Y) | 9.32% |
| Debt-to-Equity Ratio | 0.13 |
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% | $102.14 |
| Discounted Cash Flow (5Y) | 25% | $77.99 |
| Dividend Discount Model (Multi-Stage) | 20% | $52.63 |
| Dividend Discount Model (Stable) | 15% | $2.24 |
| Earnings Power Value | 10% | $1.55 |
| Weighted Average | 100% | $236.55 |
Based on our comprehensive valuation analysis, Pizza Pizza Royalty Corp's weighted average intrinsic value is $236.55, which is approximately 1499.4% above the current market price of $14.79.
Key investment considerations:
Given these factors, we believe Pizza Pizza Royalty Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.