What is RAI.L's Intrinsic value?

RA International Group PLC (RAI.L) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, RA International Group PLC's estimated intrinsic value ranges from $17.23 to $46.28 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $40.13 +5250.5%
Discounted Cash Flow (5Y) $17.23 +2196.7%
Dividend Discount Model (Multi-Stage) $46.28 +6070.8%

Is RA International Group PLC (RAI.L) undervalued or overvalued?

With the current market price at $0.75, 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 RA International Group PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.34 0.87
Cost of equity 6.0% 11.1%
Cost of debt 4.7% 18.2%
Tax rate 1.1% 1.9%
Debt/Equity ratio 13.71 13.71
After-tax WACC 4.7% 17.4%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 11.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $58 (FY12-2023) to $158 (FY12-2033)
  • Net profit margin expansion from 0% to 8%
  • Capital expenditures maintained at approximately 13% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $23 $46M 85.7%
10-Year Growth $53 $93M 64.7%
5-Year EBITDA $42 $76M 91.3%
10-Year EBITDA $60 $104M 68.4%

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: 8.5%
  • Long-term growth rate: 3.5%
  • Fair value: $46.28 (6070.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.1% (Low) to 6.0% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $(9) to $(65)
  • Selected fair value: $-28.10 (-3847.1% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $1M
Enterprise Value $9M
Trailing P/E 0.00
Forward P/E 1.00
Trailing EV/EBITDA 5.70
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 13.71

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
Discounted Cash Flow (10Y) 40% $12.04
Discounted Cash Flow (5Y) 33% $4.31
Dividend Discount Model (Multi-Stage) 27% $9.26
Weighted Average 100% $34.13

Investment Conclusion

Based on our comprehensive valuation analysis, RA International Group PLC's weighted average intrinsic value is $34.13, which is approximately 4451.3% above the current market price of $0.75.

Key investment considerations:

  • Strong projected earnings growth (0% to 8% margin)
  • Consistent cash flow generation

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