What is SSL.MI's Intrinsic value?

SS Lazio SpA (SSL.MI) Intrinsic Value Analysis

Executive Summary

As of July 2, 2025, SS Lazio SpA's estimated intrinsic value ranges from $2.78 to $9.37 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $5.94 +636.6%
Discounted Cash Flow (5Y) $4.74 +487.7%
Dividend Discount Model (Multi-Stage) $2.78 +244.3%
Earnings Power Value $9.37 +1061.9%

Is SS Lazio SpA (SSL.MI) undervalued or overvalued?

With the current market price at $0.81, 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 SS Lazio SpA'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 3.7% 4.2%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.47 0.92
Cost of equity 7.5% 13.2%
Cost of debt 5.0% 5.0%
Tax rate 9.5% 12.3%
Debt/Equity ratio 0.98 0.98
After-tax WACC 6.1% 8.9%

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: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 7.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $196 (FY06-2024) to $207 (FY06-2034)
  • Net profit margin expansion from 20% to 18%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $5 $369M 73.7%
10-Year Growth $6 $451M 56.5%
5-Year EBITDA $4 $292M 66.7%
10-Year EBITDA $5 $378M 48.1%

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: 10.4%
  • Long-term growth rate: 0.5%
  • Fair value: $2.78 (244.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.2% (Low) to 7.5% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $(0) to $(0)
  • Selected fair value: $-0.14 (-117.1% 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 $49M
Discount Rate (WACC) 8.9% - 6.1%
Enterprise Value $554M - $811M
Net Debt $49M
Equity Value $506M - $763M
Outstanding Shares 68M
Fair Value $7 - $11
Selected Fair Value $9.37

Key Financial Metrics

Metric Value
Market Capitalization $55M
Enterprise Value $103M
Trailing P/E 0.00
Forward P/E 2.33
Trailing EV/EBITDA 8.20
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.98

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) 35% $1.78
Discounted Cash Flow (5Y) 29% $1.18
Dividend Discount Model (Multi-Stage) 24% $0.56
Earnings Power Value 12% $0.94
Weighted Average 100% $5.24

Investment Conclusion

Based on our comprehensive valuation analysis, SS Lazio SpA's weighted average intrinsic value is $5.24, which is approximately 550.5% above the current market price of $0.81.

Key investment considerations:

  • Strong projected earnings growth (20% to 18% margin)
  • Consistent cash flow generation

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