As of June 6, 2025, Real Estate Credit Investments Ltd's estimated intrinsic value ranges from $73.64 to $150.94 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $150.94 | +21.7% |
| Discounted Cash Flow (5Y) | $138.42 | +11.6% |
| Dividend Discount Model (Multi-Stage) | $116.21 | -6.3% |
| Earnings Power Value | $73.64 | -40.6% |
Is Real Estate Credit Investments Ltd (RECI.L) undervalued or overvalued?
With the current market price at $124.00, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Real Estate Credit Investments Ltd'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 | 0.82 | 0.91 |
| Cost of equity | 8.9% | 11.4% |
| Cost of debt | 4.0% | 4.9% |
| Tax rate | 19.0% | 19.0% |
| Debt/Equity ratio | 0.09 | 0.09 |
| After-tax WACC | 8.5% | 10.8% |
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 | $138 | $362M | 67.8% |
| 10-Year Growth | $151 | $389M | 45.0% |
| 5-Year EBITDA | $195 | $485M | 76.0% |
| 10-Year EBITDA | $191 | $476M | 55.0% |
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 | $21M |
| Discount Rate (WACC) | 10.8% - 8.5% |
| Enterprise Value | $196M - $249M |
| Net Debt | $63M |
| Equity Value | $133M - $186M |
| Outstanding Shares | 2M |
| Fair Value | $61 - $86 |
| Selected Fair Value | $73.64 |
| Metric | Value |
|---|---|
| Market Capitalization | $268M |
| Enterprise Value | $331M |
| Trailing P/E | 0.00 |
| Forward P/E | 10.94 |
| Trailing EV/EBITDA | 13.25 |
| Current Dividend Yield | 1002.99% |
| Dividend Growth Rate (5Y) | 2.22% |
| Debt-to-Equity Ratio | 0.09 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $45.28 |
| Discounted Cash Flow (5Y) | 29% | $34.61 |
| Dividend Discount Model (Multi-Stage) | 24% | $23.24 |
| Earnings Power Value | 12% | $7.36 |
| Weighted Average | 100% | $129.99 |
Based on our comprehensive valuation analysis, Real Estate Credit Investments Ltd's weighted average intrinsic value is $129.99, which is approximately 4.8% above the current market price of $124.00.
Key investment considerations:
Given these factors, we believe Real Estate Credit Investments Ltd is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.