As of May 22, 2025, WH Smith PLC's estimated intrinsic value ranges from $53.88 to $1580.22 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1237.31 | +17.6% |
| Discounted Cash Flow (5Y) | $936.13 | -11.0% |
| Dividend Discount Model (Multi-Stage) | $1580.22 | +50.2% |
| Dividend Discount Model (Stable) | $53.88 | -94.9% |
| Earnings Power Value | $1131.75 | +7.6% |
Is WH Smith PLC (SMWH.L) undervalued or overvalued?
With the current market price at $1052.00, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate WH Smith 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 | 0.96 | 1.14 |
| Cost of equity | 9.7% | 12.9% |
| Cost of debt | 4.0% | 5.2% |
| Tax rate | 18.3% | 22.9% |
| Debt/Equity ratio | 0.82 | 0.82 |
| After-tax WACC | 6.8% | 8.9% |
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 | $936 | $2,224M | 77.4% |
| 10-Year Growth | $1,237 | $2,600M | 60.8% |
| 5-Year EBITDA | $636 | $1,850M | 72.8% |
| 10-Year EBITDA | $992 | $2,293M | 55.6% |
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 | $191M |
| Discount Rate (WACC) | 8.9% - 6.8% |
| Enterprise Value | $2,139M - $2,798M |
| Net Debt | $1,055M |
| Equity Value | $1,084M - $1,743M |
| Outstanding Shares | 1M |
| Fair Value | $868 - $1,395 |
| Selected Fair Value | $1131.75 |
| Metric | Value |
|---|---|
| Market Capitalization | $1314M |
| Enterprise Value | $2369M |
| Trailing P/E | 187.69 |
| Forward P/E | 15.09 |
| Trailing EV/EBITDA | 5.75 |
| Current Dividend Yield | 334.93% |
| Dividend Growth Rate (5Y) | -3.36% |
| Debt-to-Equity Ratio | 0.82 |
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% | $371.19 |
| Discounted Cash Flow (5Y) | 25% | $234.03 |
| Dividend Discount Model (Multi-Stage) | 20% | $316.04 |
| Dividend Discount Model (Stable) | 15% | $8.08 |
| Earnings Power Value | 10% | $113.18 |
| Weighted Average | 100% | $1042.53 |
Based on our comprehensive valuation analysis, WH Smith PLC's weighted average intrinsic value is $1042.53, which is approximately 0.9% below the current market price of $1052.00.
Key investment considerations:
Given these factors, we believe WH Smith PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.