What is RE.PA's Intrinsic value?

Colas SA (RE.PA) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Colas SA's estimated intrinsic value ranges from $145.73 to $327.08 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $309.11 +76.6%
Discounted Cash Flow (5Y) $239.68 +37.0%
Dividend Discount Model (Multi-Stage) $327.08 +86.9%
Dividend Discount Model (Stable) $156.59 -10.5%
Earnings Power Value $145.73 -16.7%

Is Colas SA (RE.PA) undervalued or overvalued?

With the current market price at $175.00, 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 Colas SA'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
  3. 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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.78 0.88
Cost of equity 7.5% 10.0%
Cost of debt 11.5% 13.4%
Tax rate 37.3% 38.5%
Debt/Equity ratio 0.25 0.25
After-tax WACC 7.5% 9.6%

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: 8.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $15,529 (FY12-2022) to $23,245 (FY12-2032)
  • Net profit margin expansion from 2% to 5%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $240 $9,880M 80.3%
10-Year Growth $309 $12,146M 63.0%
5-Year EBITDA $223 $9,323M 79.2%
10-Year EBITDA $277 $11,109M 59.5%

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: 155.7%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.8%
  • Long-term growth rate: 3.0%
  • Fair value: $327.08 (86.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.0% (Low) to 7.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $80 to $233
  • Selected fair value: $156.59 (-10.5% from current price)

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 $573M
Discount Rate (WACC) 9.6% - 7.5%
Enterprise Value $5,948M - $7,678M
Net Debt $2,056M
Equity Value $3,892M - $5,622M
Outstanding Shares 33M
Fair Value $119 - $172
Selected Fair Value $145.73

Key Financial Metrics

Metric Value
Market Capitalization $5712M
Enterprise Value $7768M
Trailing P/E 19.17
Forward P/E 16.10
Trailing EV/EBITDA 6.20
Current Dividend Yield 812.29%
Dividend Growth Rate (5Y) -4.38%
Debt-to-Equity Ratio 0.25

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) 30% $92.73
Discounted Cash Flow (5Y) 25% $59.92
Dividend Discount Model (Multi-Stage) 20% $65.42
Dividend Discount Model (Stable) 15% $23.49
Earnings Power Value 10% $14.57
Weighted Average 100% $256.13

Investment Conclusion

Based on our comprehensive valuation analysis, Colas SA's weighted average intrinsic value is $256.13, which is approximately 46.4% above the current market price of $175.00.

Key investment considerations:

  • Strong projected earnings growth (2% to 5% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.25)

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