What is STJ.L's Intrinsic value?

St. James's Place PLC (STJ.L) Intrinsic Value Analysis

Executive Summary

As of June 5, 2025, St. James's Place PLC's estimated intrinsic value ranges from $823.06 to $1090.76 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $1090.76 -3.2%
Dividend Discount Model (Stable) $823.06 -27.0%

Is St. James's Place PLC (STJ.L) undervalued or overvalued?

With the current market price at $1127.00, the stock appears to be moderately overvalued.

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 St. James's Place PLC's intrinsic value, including:

  1. Dividend Discount Model (DDM): Values the company based on expected future dividend payments

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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.8 1.09
Cost of equity 8.8% 12.6%
Cost of debt 5.0% 5.0%
Tax rate 19.0% 19.0%
Debt/Equity ratio 0.11 0.11
After-tax WACC 8.3% 11.8%

Valuation Methods

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: 19.2%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.7%
  • Long-term growth rate: 2.0%
  • Fair value: $1090.76 (-3.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 12.6% (Low) to 8.8% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $459 to $1,188
  • Selected fair value: $823.06 (-27.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $5913M
Enterprise Value $873M
Trailing P/E 14.84
Forward P/E 12.79
Trailing EV/EBITDA 0.00
Current Dividend Yield 131.00%
Dividend Growth Rate (5Y) -8.04%
Debt-to-Equity Ratio 0.11

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
Dividend Discount Model (Multi-Stage) 57% $218.15
Dividend Discount Model (Stable) 43% $123.46
Weighted Average 100% $976.03

Investment Conclusion

Based on our comprehensive valuation analysis, St. James's Place PLC's weighted average intrinsic value is $976.03, which is approximately 13.4% below the current market price of $1127.00.

Key investment considerations:

  • Conservative capital structure (Debt/Equity of 0.11)

Given these factors, we believe St. James's Place PLC is currently moderately overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.