As of June 10, 2025, Softcat PLC's estimated intrinsic value ranges from $715.56 to $1338.26 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1338.26 | -26.5% |
| Discounted Cash Flow (5Y) | $1232.38 | -32.3% |
| Dividend Discount Model (Multi-Stage) | $1207.34 | -33.7% |
| Dividend Discount Model (Stable) | $941.30 | -48.3% |
| Earnings Power Value | $715.56 | -60.7% |
Is Softcat PLC (SCT.L) undervalued or overvalued?
With the current market price at $1820.00, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Softcat 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 | 0.72 | 0.74 |
| Cost of equity | 8.3% | 10.2% |
| Cost of debt | 4.0% | 4.6% |
| Tax rate | 19.2% | 19.9% |
| Debt/Equity ratio | 0 | 0 |
| After-tax WACC | 8.3% | 10.1% |
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 | $1,232 | $2,316M | 76.6% |
| 10-Year Growth | $1,338 | $2,525M | 57.6% |
| 5-Year EBITDA | $1,039 | $1,934M | 72.0% |
| 10-Year EBITDA | $1,172 | $2,196M | 51.2% |
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 | $118M |
| Discount Rate (WACC) | 10.1% - 8.3% |
| Enterprise Value | $1,166M - $1,429M |
| Net Debt | $(113)M |
| Equity Value | $1,279M - $1,541M |
| Outstanding Shares | 2M |
| Fair Value | $649 - $782 |
| Selected Fair Value | $715.56 |
| Metric | Value |
|---|---|
| Market Capitalization | $3587M |
| Enterprise Value | $3474M |
| Trailing P/E | 28.61 |
| Forward P/E | 24.35 |
| Trailing EV/EBITDA | 8.85 |
| Current Dividend Yield | 264.55% |
| Dividend Growth Rate (5Y) | 9.79% |
| Debt-to-Equity Ratio | 0.00 |
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% | $401.48 |
| Discounted Cash Flow (5Y) | 25% | $308.09 |
| Dividend Discount Model (Multi-Stage) | 20% | $241.47 |
| Dividend Discount Model (Stable) | 15% | $141.19 |
| Earnings Power Value | 10% | $71.56 |
| Weighted Average | 100% | $1163.79 |
Based on our comprehensive valuation analysis, Softcat PLC's weighted average intrinsic value is $1163.79, which is approximately 36.1% below the current market price of $1820.00.
Key investment considerations:
Given these factors, we believe Softcat PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.