As of September 8, 2025, Serco Group PLC's estimated intrinsic value ranges from $79.18 to $878.15 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $878.15 | +295.6% |
| Discounted Cash Flow (5Y) | $615.45 | +177.2% |
| Dividend Discount Model (Multi-Stage) | $506.85 | +128.3% |
| Dividend Discount Model (Stable) | $79.18 | -64.3% |
| Earnings Power Value | $394.59 | +77.7% |
Is Serco Group PLC (SRP.L) undervalued or overvalued?
With the current market price at $222.00, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Serco Group 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 | 0.45 | 0.71 |
| Cost of equity | 6.7% | 10.0% |
| Cost of debt | 4.0% | 5.2% |
| Tax rate | 20.0% | 34.4% |
| Debt/Equity ratio | 0.37 | 0.37 |
| After-tax WACC | 5.7% | 8.2% |
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 | $615 | $6,877M | 82.7% |
| 10-Year Growth | $878 | $9,477M | 68.9% |
| 5-Year EBITDA | $290 | $3,651M | 67.5% |
| 10-Year EBITDA | $504 | $5,776M | 49.0% |
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 | $317M |
| Discount Rate (WACC) | 8.2% - 5.7% |
| Enterprise Value | $3,861M - $5,519M |
| Net Debt | $783M |
| Equity Value | $3,078M - $4,735M |
| Outstanding Shares | 10M |
| Fair Value | $311 - $478 |
| Selected Fair Value | $394.59 |
| Metric | Value |
|---|---|
| Market Capitalization | $2198M |
| Enterprise Value | $2981M |
| Trailing P/E | 45.22 |
| Forward P/E | 14.56 |
| Trailing EV/EBITDA | 6.05 |
| Current Dividend Yield | 192.85% |
| Dividend Growth Rate (5Y) | -15.46% |
| Debt-to-Equity Ratio | 0.37 |
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% | $263.44 |
| Discounted Cash Flow (5Y) | 25% | $153.86 |
| Dividend Discount Model (Multi-Stage) | 20% | $101.37 |
| Dividend Discount Model (Stable) | 15% | $11.88 |
| Earnings Power Value | 10% | $39.46 |
| Weighted Average | 100% | $570.01 |
Based on our comprehensive valuation analysis, Serco Group PLC's intrinsic value is $570.01, which is approximately 156.8% above the current market price of $222.00.
Key investment considerations:
Given these factors, we believe Serco Group PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.