As of May 28, 2025, Spirax-Sarco Engineering PLC's estimated intrinsic value ranges from $2687.72 to $8997.00 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $4062.75 | -28.9% |
| Discounted Cash Flow (5Y) | $3844.30 | -32.7% |
| Dividend Discount Model (Multi-Stage) | $2687.72 | -53.0% |
| Dividend Discount Model (Stable) | $2692.37 | -52.9% |
| Earnings Power Value | $8997.00 | +57.4% |
Is Spirax-Sarco Engineering PLC (SPX.L) undervalued or overvalued?
With the current market price at $5715.00, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Spirax-Sarco Engineering 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 | 1 | 1.21 |
| Cost of equity | 9.9% | 13.4% |
| Cost of debt | 4.0% | 5.2% |
| Tax rate | 25.8% | 26.4% |
| Debt/Equity ratio | 0.24 | 0.24 |
| After-tax WACC | 8.6% | 11.6% |
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 | $3,844 | $3,594M | 65.9% |
| 10-Year Growth | $4,063 | $3,759M | 47.4% |
| 5-Year EBITDA | $4,919 | $4,406M | 72.2% |
| 10-Year EBITDA | $4,938 | $4,420M | 55.3% |
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 | $739M |
| Discount Rate (WACC) | 11.6% - 8.6% |
| Enterprise Value | $6,377M - $8,592M |
| Net Debt | $691M |
| Equity Value | $5,686M - $7,900M |
| Outstanding Shares | 1M |
| Fair Value | $7,531 - $10,463 |
| Selected Fair Value | $8997.00 |
| Metric | Value |
|---|---|
| Market Capitalization | $4315M |
| Enterprise Value | $5006M |
| Trailing P/E | 22.57 |
| Forward P/E | 21.49 |
| Trailing EV/EBITDA | 10.85 |
| Current Dividend Yield | 276.47% |
| Dividend Growth Rate (5Y) | 9.66% |
| Debt-to-Equity Ratio | 0.24 |
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% | $1218.83 |
| Discounted Cash Flow (5Y) | 25% | $961.08 |
| Dividend Discount Model (Multi-Stage) | 20% | $537.54 |
| Dividend Discount Model (Stable) | 15% | $403.86 |
| Earnings Power Value | 10% | $899.70 |
| Weighted Average | 100% | $4021.00 |
Based on our comprehensive valuation analysis, Spirax-Sarco Engineering PLC's weighted average intrinsic value is $4021.00, which is approximately 29.6% below the current market price of $5715.00.
Key investment considerations:
Given these factors, we believe Spirax-Sarco Engineering PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.