As of May 25, 2025, Snam SpA's estimated intrinsic value ranges from $0.80 to $7.11 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $3.66 | -30.3% |
| Discounted Cash Flow (5Y) | $3.10 | -41.0% |
| Dividend Discount Model (Multi-Stage) | $5.01 | -4.7% |
| Dividend Discount Model (Stable) | $7.11 | +35.4% |
| Earnings Power Value | $0.80 | -84.9% |
Is Snam SpA (SRG.MI) undervalued or overvalued?
With the current market price at $5.25, 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 Snam SpA'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 | 3.7% | 4.2% |
| Equity market risk premium | 8.3% | 9.3% |
| Adjusted beta | 0.53 | 0.63 |
| Cost of equity | 8.1% | 10.6% |
| Cost of debt | 4.0% | 4.7% |
| Tax rate | 25.1% | 25.2% |
| Debt/Equity ratio | 1.04 | 1.04 |
| After-tax WACC | 5.5% | 7.0% |
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 | $26,979M | 81.1% |
| 10-Year Growth | $4 | $28,866M | 67.3% |
| 5-Year EBITDA | $4 | $29,650M | 82.8% |
| 10-Year EBITDA | $5 | $33,319M | 71.6% |
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 | $1,182M |
| Discount Rate (WACC) | 7.0% - 5.5% |
| Enterprise Value | $16,935M - $21,520M |
| Net Debt | $16,555M |
| Equity Value | $380M - $4,965M |
| Outstanding Shares | 3,361M |
| Fair Value | $0 - $1 |
| Selected Fair Value | $0.80 |
| Metric | Value |
|---|---|
| Market Capitalization | $17658M |
| Enterprise Value | $34213M |
| Trailing P/E | 9.23 |
| Forward P/E | 13.27 |
| Trailing EV/EBITDA | 7.80 |
| Current Dividend Yield | 535.74% |
| Dividend Growth Rate (5Y) | 4.98% |
| Debt-to-Equity Ratio | 1.04 |
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% | $1.10 |
| Discounted Cash Flow (5Y) | 25% | $0.78 |
| Dividend Discount Model (Multi-Stage) | 20% | $1.00 |
| Dividend Discount Model (Stable) | 15% | $1.07 |
| Earnings Power Value | 10% | $0.08 |
| Weighted Average | 100% | $4.02 |
Based on our comprehensive valuation analysis, Snam SpA's weighted average intrinsic value is $4.02, which is approximately 23.4% below the current market price of $5.25.
Key investment considerations:
Given these factors, we believe Snam SpA is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.