What is SCPA.L's Intrinsic value?

Scapa Group PLC (SCPA.L) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Scapa Group PLC's estimated intrinsic value ranges from $197.75 to $197.75 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $197.75 -7.8%

Is Scapa Group PLC (SCPA.L) undervalued or overvalued?

With the current market price at $214.50, the stock appears to be fairly valued.

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 Scapa Group PLC's intrinsic value, including:

  1. 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 0.75 0.95
Cost of equity 7.0% 10.0%
Cost of debt 4.1% 5.4%
Tax rate 18.9% 26.7%
Debt/Equity ratio 0.23 0.23
After-tax WACC 6.3% 8.9%

Valuation Methods

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 $30M
Discount Rate (WACC) 8.9% - 6.3%
Enterprise Value $343M - $482M
Net Debt $41M
Equity Value $302M - $441M
Outstanding Shares 2M
Fair Value $161 - $235
Selected Fair Value $197.75

Key Financial Metrics

Metric Value
Market Capitalization $403M
Enterprise Value $444M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.50
Current Dividend Yield 111.67%
Dividend Growth Rate (5Y) 19.59%
Debt-to-Equity Ratio 0.23

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
Earnings Power Value 100% $19.78
Weighted Average 100% $197.75

Investment Conclusion

Based on our comprehensive valuation analysis, Scapa Group PLC's weighted average intrinsic value is $197.75, which is approximately 7.8% below the current market price of $214.50.

Key investment considerations:

  • Strong projected earnings growth (-15% to 1% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.23)
  • Historical dividend growth of 19.59%

Given these factors, we believe Scapa Group PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.