As of May 23, 2025, Scottish Oriental Smaller Companies Trust PLC's estimated intrinsic value ranges from $300.57 to $694.21 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $694.21 | +136.9% |
| Discounted Cash Flow (5Y) | $642.16 | +119.2% |
| Dividend Discount Model (Multi-Stage) | $407.35 | +39.0% |
| Dividend Discount Model (Stable) | $414.26 | +41.4% |
| Earnings Power Value | $300.57 | +2.6% |
Is Scottish Oriental Smaller Companies Trust PLC (SST.L) undervalued or overvalued?
With the current market price at $293.00, 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 Scottish Oriental Smaller Companies Trust 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 | 1.16 |
| Cost of equity | 10.0% | 13.1% |
| Cost of debt | 4.6% | 4.6% |
| Tax rate | 8.8% | 11.3% |
| Debt/Equity ratio | 0.09 | 0.09 |
| After-tax WACC | 9.5% | 12.4% |
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 | $642 | $733M | 60.7% |
| 10-Year Growth | $694 | $793M | 38.4% |
| 5-Year EBITDA | $457 | $519M | 44.5% |
| 10-Year EBITDA | $568 | $647M | 24.5% |
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 | $36M |
| Discount Rate (WACC) | 12.4% - 9.5% |
| Enterprise Value | $294M - $383M |
| Net Debt | $(8)M |
| Equity Value | $303M - $391M |
| Outstanding Shares | 1M |
| Fair Value | $262 - $339 |
| Selected Fair Value | $300.57 |
| Metric | Value |
|---|---|
| Market Capitalization | $338M |
| Enterprise Value | $330M |
| Trailing P/E | 5.44 |
| Forward P/E | 4.74 |
| Trailing EV/EBITDA | 4.35 |
| Current Dividend Yield | 93.75% |
| Dividend Growth Rate (5Y) | -2.24% |
| Debt-to-Equity Ratio | 0.09 |
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% | $208.26 |
| Discounted Cash Flow (5Y) | 25% | $160.54 |
| Dividend Discount Model (Multi-Stage) | 20% | $81.47 |
| Dividend Discount Model (Stable) | 15% | $62.14 |
| Earnings Power Value | 10% | $30.06 |
| Weighted Average | 100% | $542.47 |
Based on our comprehensive valuation analysis, Scottish Oriental Smaller Companies Trust PLC's weighted average intrinsic value is $542.47, which is approximately 85.1% above the current market price of $293.00.
Key investment considerations:
Given these factors, we believe Scottish Oriental Smaller Companies Trust PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.