As of May 31, 2025, Stella-Jones Inc's estimated intrinsic value ranges from $67.64 to $130.73 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $130.73 | +71.8% |
| Discounted Cash Flow (5Y) | $95.92 | +26.0% |
| Dividend Discount Model (Multi-Stage) | $92.25 | +21.2% |
| Dividend Discount Model (Stable) | $105.60 | +38.7% |
| Earnings Power Value | $67.64 | -11.1% |
Is Stella-Jones Inc (SJ.TO) undervalued or overvalued?
With the current market price at $76.11, 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 Stella-Jones Inc'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 | 3.2% | 3.7% |
| Equity market risk premium | 5.1% | 6.1% |
| Adjusted beta | 0.64 | 0.79 |
| Cost of equity | 6.4% | 9.0% |
| Cost of debt | 4.4% | 4.5% |
| Tax rate | 24.8% | 25.5% |
| Debt/Equity ratio | 0.41 | 0.41 |
| After-tax WACC | 5.5% | 7.4% |
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 | $96 | $7,052M | 81.3% |
| 10-Year Growth | $131 | $8,989M | 68.9% |
| 5-Year EBITDA | $95 | $7,018M | 81.2% |
| 10-Year EBITDA | $124 | $8,629M | 67.6% |
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 | $345M |
| Discount Rate (WACC) | 7.4% - 5.5% |
| Enterprise Value | $4,695M - $6,262M |
| Net Debt | $1,716M |
| Equity Value | $2,979M - $4,546M |
| Outstanding Shares | 56M |
| Fair Value | $54 - $82 |
| Selected Fair Value | $67.64 |
| Metric | Value |
|---|---|
| Market Capitalization | $4234M |
| Enterprise Value | $5950M |
| Trailing P/E | 12.64 |
| Forward P/E | 12.66 |
| Trailing EV/EBITDA | 9.50 |
| Current Dividend Yield | 150.82% |
| Dividend Growth Rate (5Y) | 12.03% |
| Debt-to-Equity Ratio | 0.41 |
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% | $39.22 |
| Discounted Cash Flow (5Y) | 25% | $23.98 |
| Dividend Discount Model (Multi-Stage) | 20% | $18.45 |
| Dividend Discount Model (Stable) | 15% | $15.84 |
| Earnings Power Value | 10% | $6.76 |
| Weighted Average | 100% | $104.25 |
Based on our comprehensive valuation analysis, Stella-Jones Inc's weighted average intrinsic value is $104.25, which is approximately 37.0% above the current market price of $76.11.
Key investment considerations:
Given these factors, we believe Stella-Jones Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.