What is SNR.L's Intrinsic value?

Senior PLC (SNR.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Senior PLC's estimated intrinsic value ranges from $97.99 to $467.12 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $467.12 +184.8%
Discounted Cash Flow (5Y) $376.98 +129.9%
Dividend Discount Model (Multi-Stage) $309.66 +88.8%
Dividend Discount Model (Stable) $97.99 -40.3%
Earnings Power Value $101.67 -38.0%

Is Senior PLC (SNR.L) undervalued or overvalued?

With the current market price at $164.00, 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 Senior PLC'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
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.75 0.78
Cost of equity 8.5% 10.4%
Cost of debt 6.1% 9.2%
Tax rate 8.6% 12.8%
Debt/Equity ratio 0.42 0.42
After-tax WACC 7.6% 9.7%

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: 8.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $977 (FY12-2024) to $1,788 (FY12-2034)
  • Net profit margin expansion from 3% to 10%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $377 $1,789M 81.8%
10-Year Growth $467 $2,161M 66.0%
5-Year EBITDA $397 $1,871M 82.6%
10-Year EBITDA $477 $2,202M 66.6%

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: 39.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.5%
  • Long-term growth rate: 3.5%
  • Fair value: $309.66 (88.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.4% (Low) to 8.5% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $55 to $141
  • Selected fair value: $97.99 (-40.3% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $56M
Discount Rate (WACC) 9.7% - 7.6%
Enterprise Value $572M - $728M
Net Debt $230M
Equity Value $342M - $499M
Outstanding Shares 4M
Fair Value $83 - $121
Selected Fair Value $101.67

Key Financial Metrics

Metric Value
Market Capitalization $678M
Enterprise Value $908M
Trailing P/E 26.18
Forward P/E 15.38
Trailing EV/EBITDA 12.70
Current Dividend Yield 152.65%
Dividend Growth Rate (5Y) -19.34%
Debt-to-Equity Ratio 0.42

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) 30% $140.14
Discounted Cash Flow (5Y) 25% $94.24
Dividend Discount Model (Multi-Stage) 20% $61.93
Dividend Discount Model (Stable) 15% $14.70
Earnings Power Value 10% $10.17
Weighted Average 100% $321.18

Investment Conclusion

Based on our comprehensive valuation analysis, Senior PLC's weighted average intrinsic value is $321.18, which is approximately 95.8% above the current market price of $164.00.

Key investment considerations:

  • Strong projected earnings growth (3% to 10% margin)
  • Consistent cash flow generation

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