What is SLA.L's Intrinsic value?

Standard Life Aberdeen PLC (SLA.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Standard Life Aberdeen PLC's estimated intrinsic value ranges from $419.21 to $530.04 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $530.04 +127.1%
Dividend Discount Model (Stable) $419.21 +79.6%

Is Standard Life Aberdeen PLC (SLA.L) undervalued or overvalued?

With the current market price at $233.40, the stock appears to be significantly undervalued.

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 Standard Life Aberdeen PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 1.09 1.16
Cost of equity 8.8% 11.3%
Cost of debt 5.0% 5.0%
Tax rate 6.0% 8.4%
Debt/Equity ratio 0.21 0.21
After-tax WACC 8.1% 10.1%

Valuation Methods

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 94.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.0%
  • Long-term growth rate: 0.5%
  • Fair value: $530.04 (127.1% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.3% (Low) to 8.8% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $293 to $546
  • Selected fair value: $419.21 (79.6% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $5288M
Enterprise Value $4369M
Trailing P/E 4.81
Forward P/E 5.57
Trailing EV/EBITDA 0.00
Current Dividend Yield 1904.17%
Dividend Growth Rate (5Y) 6.95%
Debt-to-Equity Ratio 0.21

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
Dividend Discount Model (Multi-Stage) 57% $106.01
Dividend Discount Model (Stable) 43% $62.88
Weighted Average 100% $482.54

Investment Conclusion

Based on our comprehensive valuation analysis, Standard Life Aberdeen PLC's weighted average intrinsic value is $482.54, which is approximately 106.7% above the current market price of $233.40.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.21)
  • Historical dividend growth of 6.95%

Given these factors, we believe Standard Life Aberdeen PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.