As of May 25, 2025, Standard Motor Products Inc's estimated intrinsic value ranges from $29.50 to $144.74 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $144.74 | +402.4% |
| Discounted Cash Flow (5Y) | $92.89 | +222.4% |
| Dividend Discount Model (Multi-Stage) | $137.50 | +377.3% |
| Dividend Discount Model (Stable) | $33.65 | +16.8% |
| Earnings Power Value | $29.50 | +2.4% |
Is Standard Motor Products Inc (SMP) undervalued or overvalued?
With the current market price at $28.81, 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 Standard Motor Products 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 | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.33 | 0.39 |
| Cost of equity | 5.4% | 7.0% |
| Cost of debt | 5.1% | 9.9% |
| Tax rate | 24.6% | 25.3% |
| Debt/Equity ratio | 0.86 | 0.86 |
| After-tax WACC | 4.7% | 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 | $93 | $2,713M | 85.7% |
| 10-Year Growth | $145 | $3,892M | 74.7% |
| 5-Year EBITDA | $38 | $1,469M | 73.5% |
| 10-Year EBITDA | $72 | $2,236M | 55.9% |
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 | $72M |
| Discount Rate (WACC) | 7.2% - 4.7% |
| Enterprise Value | $1,000M - $1,542M |
| Net Debt | $600M |
| Equity Value | $400M - $942M |
| Outstanding Shares | 23M |
| Fair Value | $18 - $41 |
| Selected Fair Value | $29.50 |
| Metric | Value |
|---|---|
| Market Capitalization | $655M |
| Enterprise Value | $1255M |
| Trailing P/E | 20.97 |
| Forward P/E | 7.68 |
| Trailing EV/EBITDA | 5.25 |
| Current Dividend Yield | 392.68% |
| Dividend Growth Rate (5Y) | 22.65% |
| Debt-to-Equity Ratio | 0.86 |
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% | $43.42 |
| Discounted Cash Flow (5Y) | 25% | $23.22 |
| Dividend Discount Model (Multi-Stage) | 20% | $27.50 |
| Dividend Discount Model (Stable) | 15% | $5.05 |
| Earnings Power Value | 10% | $2.95 |
| Weighted Average | 100% | $102.14 |
Based on our comprehensive valuation analysis, Standard Motor Products Inc's weighted average intrinsic value is $102.14, which is approximately 254.5% above the current market price of $28.81.
Key investment considerations:
Given these factors, we believe Standard Motor Products Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.