As of May 23, 2025, Scotgems PLC's estimated intrinsic value ranges from $22.16 to $183.62 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $183.62 | +133.9% |
| Discounted Cash Flow (5Y) | $152.80 | +94.7% |
| Dividend Discount Model (Multi-Stage) | $84.75 | +8.0% |
| Dividend Discount Model (Stable) | $79.56 | +1.4% |
| Earnings Power Value | $22.16 | -71.8% |
Is Scotgems PLC (SGEM.L) undervalued or overvalued?
With the current market price at $78.50, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Scotgems 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 | 0.47 | 0.67 |
| Cost of equity | 6.8% | 9.7% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 2.5% | 6.6% |
| Debt/Equity ratio | 1 | 1 |
| After-tax WACC | 5.8% | 7.2% |
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 | $153 | $81M | 75.0% |
| 10-Year Growth | $184 | $97M | 59.6% |
| 5-Year EBITDA | $86 | $45M | 54.8% |
| 10-Year EBITDA | $120 | $63M | 37.4% |
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 | $1M |
| Discount Rate (WACC) | 7.2% - 5.8% |
| Enterprise Value | $9M - $12M |
| Net Debt | $(1)M |
| Equity Value | $11M - $13M |
| Outstanding Shares | 1M |
| Fair Value | $20 - $24 |
| Selected Fair Value | $22.16 |
| Metric | Value |
|---|---|
| Market Capitalization | $42M |
| Enterprise Value | $41M |
| Trailing P/E | 11.22 |
| Forward P/E | 9.68 |
| Trailing EV/EBITDA | 6.60 |
| Current Dividend Yield | 177.21% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 1.05 |
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% | $55.08 |
| Discounted Cash Flow (5Y) | 25% | $38.20 |
| Dividend Discount Model (Multi-Stage) | 20% | $16.95 |
| Dividend Discount Model (Stable) | 15% | $11.93 |
| Earnings Power Value | 10% | $2.22 |
| Weighted Average | 100% | $124.38 |
Based on our comprehensive valuation analysis, Scotgems PLC's weighted average intrinsic value is $124.38, which is approximately 58.5% above the current market price of $78.50.
Key investment considerations:
Given these factors, we believe Scotgems PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.