What is PZC.L's Intrinsic value?

PZ Cussons PLC (PZC.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, PZ Cussons PLC's estimated intrinsic value ranges from $200.02 to $200.02 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $200.02 +127.8%

Is PZ Cussons PLC (PZC.L) undervalued or overvalued?

With the current market price at $87.80, 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 PZ Cussons PLC'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.36 0.44
Cost of equity 6.1% 8.1%
Cost of debt 4.8% 7.1%
Tax rate 25.0% 31.5%
Debt/Equity ratio 0.51 0.51
After-tax WACC 5.3% 7.0%

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 $57M
Discount Rate (WACC) 7.0% - 5.3%
Enterprise Value $812M - $1,076M
Net Debt $117M
Equity Value $695M - $959M
Outstanding Shares 4M
Fair Value $168 - $232
Selected Fair Value $200.02

Key Financial Metrics

Metric Value
Market Capitalization $363M
Enterprise Value $480M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.40
Current Dividend Yield 180.29%
Dividend Growth Rate (5Y) -10.80%
Debt-to-Equity Ratio 0.51

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% $20.00
Weighted Average 100% $200.02

Investment Conclusion

Based on our comprehensive valuation analysis, PZ Cussons PLC's weighted average intrinsic value is $200.02, which is approximately 127.8% above the current market price of $87.80.

Key investment considerations:

  • Strong projected earnings growth (-14% to -2% margin)
  • Consistent cash flow generation

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