What is SQBG's Intrinsic value?

Sequential Brands Group Inc (SQBG) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Sequential Brands Group Inc's estimated intrinsic value ranges from $217.95 to $217.95 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $217.95 +3392.7%

Is Sequential Brands Group Inc (SQBG) undervalued or overvalued?

With the current market price at $6.24, 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 Sequential Brands Group Inc's intrinsic value, including:

  1. 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 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 9.47 18.62
Cost of equity 43.3% 101.8%
Cost of debt 9.2% 16.3%
Tax rate 16.1% 21.3%
Debt/Equity ratio 43.76 43.76
After-tax WACC 8.5% 14.8%

Valuation Methods

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 $86M
Discount Rate (WACC) 14.8% - 8.5%
Enterprise Value $582M - $1,014M
Net Debt $437M
Equity Value $145M - $577M
Outstanding Shares 2M
Fair Value $87 - $348
Selected Fair Value $217.95

Key Financial Metrics

Metric Value
Market Capitalization $10M
Enterprise Value $447M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.85
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 43.76

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
Earnings Power Value 100% $21.79
Weighted Average 100% $217.95

Investment Conclusion

Based on our comprehensive valuation analysis, Sequential Brands Group Inc's weighted average intrinsic value is $217.95, which is approximately 3392.7% above the current market price of $6.24.

Key investment considerations:

  • Strong projected earnings growth (-107% to -91% margin)
  • Consistent cash flow generation

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