What is QBAK's Intrinsic value?

Qualstar Corp (QBAK) Intrinsic Value Analysis

Executive Summary

As of June 18, 2025, Qualstar Corp's estimated intrinsic value ranges from $0.79 to $0.79 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $0.79 -90.2%

Is Qualstar Corp (QBAK) undervalued or overvalued?

With the current market price at $8.00, the stock appears to be significantly overvalued.

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 Qualstar 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.79 1.02
Cost of equity 7.5% 10.6%
Cost of debt 5.0% 5.0%
Tax rate 0.7% 1.0%
Debt/Equity ratio 1 1
After-tax WACC 6.2% 7.8%

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 $(0)M
Discount Rate (WACC) 7.8% - 6.2%
Enterprise Value $(1)M - $(1)M
Net Debt $(2)M
Equity Value $2M - $1M
Outstanding Shares 2M
Fair Value $1 - $1
Selected Fair Value $0.79

Key Financial Metrics

Metric Value
Market Capitalization $15M
Enterprise Value $13M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 4.90
Current Dividend Yield 62.96%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.02

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% $0.08
Weighted Average 100% $0.79

Investment Conclusion

Based on our comprehensive valuation analysis, Qualstar Corp's weighted average intrinsic value is $0.79, which is approximately 90.2% below the current market price of $8.00.

Key investment considerations:

  • Strong projected earnings growth (-6% to 1% margin)
  • Consistent cash flow generation

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