As of June 8, 2025, Securities Trust Of Scotland PLC's estimated intrinsic value ranges from $113.14 to $249.85 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $129.43 | -46.5% |
| Discounted Cash Flow (5Y) | $117.57 | -51.4% |
| Dividend Discount Model (Multi-Stage) | $113.14 | -53.2% |
| Dividend Discount Model (Stable) | $249.85 | +3.2% |
| Earnings Power Value | $180.12 | -25.6% |
Is Securities Trust Of Scotland PLC (STS.L) undervalued or overvalued?
With the current market price at $242.00, 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 Securities Trust Of Scotland 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 | 0.83 | 0.97 |
| Cost of equity | 9.0% | 11.8% |
| Cost of debt | 4.0% | 4.6% |
| Tax rate | 3.8% | 5.5% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 8.7% | 11.4% |
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 | $118 | $157M | 76.0% |
| 10-Year Growth | $129 | $171M | 57.3% |
| 5-Year EBITDA | $60 | $87M | 56.6% |
| 10-Year EBITDA | $79 | $110M | 33.3% |
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 | $23M |
| Discount Rate (WACC) | 11.4% - 8.7% |
| Enterprise Value | $202M - $264M |
| Net Debt | $14M |
| Equity Value | $188M - $250M |
| Outstanding Shares | 1M |
| Fair Value | $155 - $206 |
| Selected Fair Value | $180.12 |
| Metric | Value |
|---|---|
| Market Capitalization | $294M |
| Enterprise Value | $308M |
| Trailing P/E | 14.83 |
| Forward P/E | 26.37 |
| Trailing EV/EBITDA | 5.80 |
| Current Dividend Yield | 223.97% |
| Dividend Growth Rate (5Y) | -1.86% |
| Debt-to-Equity Ratio | 0.05 |
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% | $38.83 |
| Discounted Cash Flow (5Y) | 25% | $29.39 |
| Dividend Discount Model (Multi-Stage) | 20% | $22.63 |
| Dividend Discount Model (Stable) | 15% | $37.48 |
| Earnings Power Value | 10% | $18.01 |
| Weighted Average | 100% | $146.34 |
Based on our comprehensive valuation analysis, Securities Trust Of Scotland PLC's weighted average intrinsic value is $146.34, which is approximately 39.5% below the current market price of $242.00.
Key investment considerations:
Given these factors, we believe Securities Trust Of Scotland PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.