RDI Reit PLC (RDI.L) Intrinsic Value Analysis

Executive Summary

As of June 24, 2025, RDI Reit PLC's estimated intrinsic value ranges from $94.78 to $165.07 per share, depending on the valuation methodology applied.

Valuation Method	Fair Value (USD)	Implied Upside/Downside
Discounted Cash Flow (10Y)	$165.07	+36.2%
Discounted Cash Flow (5Y)	$155.10	+28.0%
Earnings Power Value	$94.78	-21.8%

Is RDI Reit PLC (RDI.L) undervalued or overvalued?

With the current market price at $121.20, 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 RDI Reit PLC's intrinsic value, including:

1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
2. 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	2.9%	3.4%
Equity market risk premium	5.3%	6.3%
Adjusted beta	0.81	0.97
Cost of equity	7.3%	10.1%
Cost of debt	4.0%	7.0%
Tax rate	0.9%	2.9%
Debt/Equity ratio	1.42	1.42
After-tax WACC	5.3%	8.2%

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: 6.7% (range: 0.0% - 9.3%)

Key Projections:

• Revenue growth from $68 (FY08-2020) to $104 (FY08-2030)
• Net profit margin expansion from -145% to -143%
• Capital expenditures maintained at approximately 0% of revenue

DCF Model	Fair Value	Enterprise Value	% from Terminal Value
5-Year Growth	$155	$1,178M	83.4%
10-Year Growth	$165	$1,216M	69.5%
5-Year EBITDA	$49	$774M	74.7%
10-Year EBITDA	$74	$869M	57.3%

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	$61M
Discount Rate (WACC)	8.2% - 5.3%
Enterprise Value	$749M - $1,148M
Net Debt	$588M
Equity Value	$161M - $559M
Outstanding Shares	4M
Fair Value	$42 - $147
Selected Fair Value	$94.78

Key Financial Metrics

Metric	Value
Market Capitalization	$461M
Enterprise Value	$1049M
Trailing P/E	0.00
Forward P/E	0.00
Trailing EV/EBITDA	16.65
Current Dividend Yield	1383.24%
Dividend Growth Rate (5Y)	-6.16%
Debt-to-Equity Ratio	1.42

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)	46%	$49.52
Discounted Cash Flow (5Y)	38%	$38.77
Earnings Power Value	15%	$9.48
Weighted Average	100%	$150.42

Investment Conclusion

Based on our comprehensive valuation analysis, RDI Reit PLC's weighted average intrinsic value is $150.42, which is approximately 24.1% above the current market price of $121.20.

Key investment considerations:

• Strong projected earnings growth (-145% to -143% margin)
• Consistent cash flow generation

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