As of December 15, 2025, Ricardo PLC's estimated intrinsic value ranges from $470.14 to $876.44 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $876.44 | +103.8% |
| Discounted Cash Flow (5Y) | $621.78 | +44.6% |
| Dividend Discount Model (Multi-Stage) | $470.14 | +9.3% |
| Dividend Discount Model (Stable) | $731.71 | +70.2% |
| Earnings Power Value | $830.89 | +93.2% |
Is Ricardo PLC (RCDO.L) undervalued or overvalued?
With the current market price at $430.00, 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 Ricardo PLC'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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.57 | 0.62 |
| Cost of equity | 7.4% | 9.3% |
| Cost of debt | 4.7% | 6.2% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 0.49 | 0.49 |
| After-tax WACC | 6.2% | 7.9% |
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 | $622 | $426M | 83.1% |
| 10-Year Growth | $876 | $584M | 68.3% |
| 5-Year EBITDA | $597 | $410M | 82.4% |
| 10-Year EBITDA | $778 | $523M | 64.5% |
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 | $39M |
| Discount Rate (WACC) | 7.9% - 6.2% |
| Enterprise Value | $488M - $623M |
| Net Debt | $39M |
| Equity Value | $449M - $584M |
| Outstanding Shares | 1M |
| Fair Value | $722 - $939 |
| Selected Fair Value | $830.89 |
| Metric | Value |
|---|---|
| Market Capitalization | $268M |
| Enterprise Value | $306M |
| Trailing P/E | 8.52 |
| Forward P/E | 37.49 |
| Trailing EV/EBITDA | 8.05 |
| Current Dividend Yield | 291.57% |
| Dividend Growth Rate (5Y) | -9.74% |
| Debt-to-Equity Ratio | 0.49 |
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% | $262.93 |
| Discounted Cash Flow (5Y) | 25% | $155.45 |
| Dividend Discount Model (Multi-Stage) | 20% | $94.03 |
| Dividend Discount Model (Stable) | 15% | $109.76 |
| Earnings Power Value | 10% | $83.09 |
| Weighted Average | 100% | $705.25 |
Based on our comprehensive valuation analysis, Ricardo PLC's intrinsic value is $705.25, which is approximately 64.0% above the current market price of $430.00.
Key investment considerations:
Given these factors, we believe Ricardo PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.