What is SPO.L's Intrinsic value?

Sportech PLC (SPO.L) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Sportech PLC's estimated intrinsic value ranges from $25.50 to $291.27 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $25.50 -69.6%
Dividend Discount Model (Stable) $145.45 +73.2%
Earnings Power Value $291.27 +246.8%

Is Sportech PLC (SPO.L) undervalued or overvalued?

With the current market price at $84.00, 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 Sportech 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 0.55 1.05
Cost of equity 7.3% 12.3%
Cost of debt 6.2% 6.2%
Tax rate 19.0% 19.0%
Debt/Equity ratio 0.96 0.96
After-tax WACC 6.2% 8.7%

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: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.4% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $26 (FY12-2022) to $35 (FY12-2032)
  • Net profit margin expansion from -4% to 1%
  • Capital expenditures maintained at approximately 7% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(8)M 74.8%
10-Year Growth $26 $1M 338.0%
5-Year EBITDA $45 $2M 182.6%
10-Year EBITDA $51 $3M 149.7%

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: 9.8%
  • Long-term growth rate: 3.5%
  • Fair value: $-1.43 (-101.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 12.3% (Low) to 7.3% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $53 to $238
  • Selected fair value: $145.45 (73.2% 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 $2M
Discount Rate (WACC) 8.7% - 6.2%
Enterprise Value $20M - $29M
Net Debt $(2)M
Equity Value $22M - $31M
Outstanding Shares 0M
Fair Value $245 - $338
Selected Fair Value $291.27

Key Financial Metrics

Metric Value
Market Capitalization $8M
Enterprise Value $6M
Trailing P/E 11.43
Forward P/E 11.43
Trailing EV/EBITDA 3.45
Current Dividend Yield 10225.60%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.96

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) 55% $7.65
Dividend Discount Model (Stable) 27% $21.82
Earnings Power Value 18% $29.13
Weighted Average 100% $106.54

Investment Conclusion

Based on our comprehensive valuation analysis, Sportech PLC's weighted average intrinsic value is $106.54, which is approximately 26.8% above the current market price of $84.00.

Key investment considerations:

  • Strong projected earnings growth (-4% to 1% margin)

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