As of June 22, 2025, Ricardo PLC's estimated intrinsic value ranges from $874.23 to $1688.69 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1688.69 | +289.1% |
| Discounted Cash Flow (5Y) | $1194.61 | +175.3% |
| Dividend Discount Model (Multi-Stage) | $874.23 | +101.4% |
| Dividend Discount Model (Stable) | $1395.69 | +221.6% |
| Earnings Power Value | $1462.34 | +236.9% |
Is Ricardo PLC (RCDO.L) undervalued or overvalued?
With the current market price at $434.00, 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 | 0.38 | 0.43 |
| Cost of equity | 6.3% | 8.0% |
| Cost of debt | 4.7% | 6.2% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 0.72 | 0.72 |
| After-tax WACC | 5.2% | 6.7% |
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 | $1,195 | $542M | 86.4% |
| 10-Year Growth | $1,689 | $751M | 74.0% |
| 5-Year EBITDA | $1,022 | $469M | 84.3% |
| 10-Year EBITDA | $1,355 | $610M | 68.0% |
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) | 6.7% - 5.2% |
| Enterprise Value | $572M - $738M |
| Net Debt | $39M |
| Equity Value | $534M - $699M |
| Outstanding Shares | 0M |
| Fair Value | $1,266 - $1,659 |
| Selected Fair Value | $1462.34 |
| Metric | Value |
|---|---|
| Market Capitalization | $183M |
| Enterprise Value | $222M |
| Trailing P/E | 5.83 |
| Forward P/E | 25.64 |
| Trailing EV/EBITDA | 9.00 |
| Current Dividend Yield | 432.33% |
| Dividend Growth Rate (5Y) | -9.74% |
| Debt-to-Equity Ratio | 0.72 |
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% | $506.61 |
| Discounted Cash Flow (5Y) | 25% | $298.65 |
| Dividend Discount Model (Multi-Stage) | 20% | $174.85 |
| Dividend Discount Model (Stable) | 15% | $209.35 |
| Earnings Power Value | 10% | $146.23 |
| Weighted Average | 100% | $1335.69 |
Based on our comprehensive valuation analysis, Ricardo PLC's weighted average intrinsic value is $1335.69, which is approximately 207.8% above the current market price of $434.00.
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.