What is PZQA.IR's Intrinsic value?

Providence Resources PLC (PZQA.IR) Intrinsic Value Analysis

Executive Summary

As of June 22, 2025, Providence Resources PLC's estimated intrinsic value ranges from $0.03 to $0.04 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $0.03 -18.0%
Dividend Discount Model (Stable) $0.04 +25.8%

Is Providence Resources PLC (PZQA.IR) undervalued or overvalued?

With the current market price at $0.03, the stock appears to be fairly valued.

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 Providence Resources PLC'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 3.0% 3.5%
Equity market risk premium 6.4% 7.4%
Adjusted beta 0.71 1.59
Cost of equity 7.5% 15.7%
Cost of debt 5.0% 5.0%
Tax rate 12.5% 12.5%
Debt/Equity ratio 1 1
After-tax WACC 5.9% 10.0%

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: 11.6%
  • Long-term growth rate: 1.0%
  • Fair value: $0.03 (-18.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 15.7% (Low) to 7.5% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $0.04 (25.8% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $27M
Enterprise Value $25M
Trailing P/E 7.78
Forward P/E 7.70
Trailing EV/EBITDA 0.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.06

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% $0.01
Dividend Discount Model (Stable) 43% $0.01
Weighted Average 100% $0.03

Investment Conclusion

Based on our comprehensive valuation analysis, Providence Resources PLC's weighted average intrinsic value is $0.03, which is approximately 0.7% above the current market price of $0.03.

Key investment considerations:

  • Overall financial health and market position

Given these factors, we believe Providence Resources PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.