What is SNEX's Intrinsic value?

Stonex Group Inc (SNEX) Intrinsic Value Analysis

Executive Summary

As of June 2, 2025, Stonex Group Inc's estimated intrinsic value ranges from $85.53 to $126.53 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $85.53 +1.0%
Dividend Discount Model (Stable) $126.53 +49.5%

Is Stonex Group Inc (SNEX) undervalued or overvalued?

With the current market price at $84.66, 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 Stonex Group Inc'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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.84 1.07
Cost of equity 7.7% 10.9%
Cost of debt 9.6% 23.9%
Tax rate 25.0% 25.6%
Debt/Equity ratio 2.68 2.68
After-tax WACC 7.3% 15.9%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.3%
  • Long-term growth rate: 4.0%
  • Fair value: $85.53 (1.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.9% (Low) to 7.7% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $54 to $199
  • Selected fair value: $126.53 (49.5% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $4141M
Enterprise Value $16366M
Trailing P/E 14.02
Forward P/E 53.22
Trailing EV/EBITDA 21.30
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 2.68

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% $17.11
Dividend Discount Model (Stable) 43% $18.98
Weighted Average 100% $103.10

Investment Conclusion

Based on our comprehensive valuation analysis, Stonex Group Inc's weighted average intrinsic value is $103.10, which is approximately 21.8% above the current market price of $84.66.

Key investment considerations:

  • Strong projected earnings growth (0% to 20% margin)
  • Consistent cash flow generation

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