As of May 23, 2025, Scotgems PLC has a Discounted Cash Flow (DCF) derived fair value of $183.62 per share. With the current market price at $78.50, this represents a potential upside of 133.9%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $152.80 |
| DCF Fair Value (10-year) | $183.62 |
| Potential Upside (5-year) | 94.7% |
| Potential Upside (10-year) | 133.9% |
| Discount Rate (WACC) | 5.8% - 7.2% |
Revenue is projected to grow from $5 million in 12-2021 to $8 million by 12-2031, representing a compound annual growth rate of approximately 4.8%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2021 | 5 | 1004% |
| 12-2022 | 5 | 5% |
| 12-2023 | 6 | 4% |
| 12-2024 | 6 | 3% |
| 12-2025 | 6 | 6% |
| 12-2026 | 6 | 4% |
| 12-2027 | 7 | 6% |
| 12-2028 | 7 | 5% |
| 12-2029 | 7 | 5% |
| 12-2030 | 8 | 8% |
| 12-2031 | 8 | 8% |
Net profit margin is expected to improve from 75% in 12-2021 to 83% by 12-2031, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2021 | 4 | 75% |
| 12-2022 | 4 | 83% |
| 12-2023 | 5 | 83% |
| 12-2024 | 5 | 83% |
| 12-2025 | 5 | 83% |
| 12-2026 | 5 | 83% |
| 12-2027 | 6 | 83% |
| 12-2028 | 6 | 83% |
| 12-2029 | 6 | 83% |
| 12-2030 | 7 | 83% |
| 12-2031 | 7 | 83% |
with a 5-year average of $0 million. Projected CapEx is expected to maintain at approximately 0% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2022 | 0 |
| 12-2023 | 0 |
| 12-2024 | 0 |
| 12-2025 | 0 |
| 12-2026 | 0 |
| 12-2027 | 0 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 4 |
| Days Inventory | 0 |
| Days Payables | 0 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2022 | 4 | 0 | 0 | 0 | 4 |
| 2023 | 5 | 0 | 0 | 0 | 5 |
| 2024 | 5 | 0 | 0 | (0) | 5 |
| 2025 | 5 | 0 | 0 | 0 | 5 |
| 2026 | 5 | 0 | 0 | 0 | 5 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 152.80 | 94.7% |
| 10-Year DCF (Growth) | 183.62 | 133.9% |
| 5-Year DCF (EBITDA) | 85.87 | 9.4% |
| 10-Year DCF (EBITDA) | 119.52 | 52.3% |
Is Scotgems PLC (SGEM.L) a buy or a sell? Scotgems PLC is definitely a buy. Based on our DCF analysis, Scotgems PLC (SGEM.L) appears to be significantly undervalued with upside potential of 133.9%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $78.50.