What is SMRTQ's Intrinsic value?

Stein Mart Inc (SMRTQ) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, Stein Mart Inc's estimated intrinsic value ranges from $0.01 to $10.48 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $10.48 +67514.0%
Discounted Cash Flow (5Y) $8.22 +52930.4%
Dividend Discount Model (Multi-Stage) $0.01 -38.6%

Is Stein Mart Inc (SMRTQ) undervalued or overvalued?

With the current market price at $0.02, 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 Stein Mart Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. 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 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 61.73 86.25
Cost of equity 264.9% 456.1%
Cost of debt 4.1% 7.0%
Tax rate 22.1% 34.7%
Debt/Equity ratio 188.09 188.09
After-tax WACC 4.6% 7.0%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 5.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $1,236 (FY02-2020) to $688 (FY02-2030)
  • Net profit margin expansion from -1% to 4%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $8 $594M 75.6%
10-Year Growth $10 $703M 65.6%
5-Year EBITDA $3 $327M 55.8%
10-Year EBITDA $5 $430M 43.8%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 360.5%
  • Long-term growth rate: 2.0%
  • Fair value: $0.01 (-38.6% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 456.1% (Low) to 264.9% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $(0) to $(1)
  • Selected fair value: $-0.41 (-2751.1% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $1M
Enterprise Value $196M
Trailing P/E 0.00
Forward P/E 0.31
Trailing EV/EBITDA 5.65
Current Dividend Yield 678.22%
Dividend Growth Rate (5Y) -85.81%
Debt-to-Equity Ratio 188.09

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
Discounted Cash Flow (10Y) 40% $3.14
Discounted Cash Flow (5Y) 33% $2.05
Dividend Discount Model (Multi-Stage) 27% $0.00
Weighted Average 100% $6.93

Investment Conclusion

Based on our comprehensive valuation analysis, Stein Mart Inc's intrinsic value is $6.93, which is approximately 44638.8% above the current market price of $0.02.

Key investment considerations:

  • Strong projected earnings growth (-1% to 4% margin)
  • Consistent cash flow generation

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