What is SUGR.V's Intrinsic value?

SugarBud Craft Growers Corp (SUGR.V) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, SugarBud Craft Growers Corp's estimated intrinsic value ranges from $7.43 to $15.26 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $8.94 -31.0%
Discounted Cash Flow (5Y) $8.09 -37.6%
Dividend Discount Model (Multi-Stage) $7.43 -42.7%
Dividend Discount Model (Stable) $15.26 +17.8%

Is SugarBud Craft Growers Corp (SUGR.V) undervalued or overvalued?

With the current market price at $12.95, the stock appears to be significantly 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 SugarBud Craft Growers Corp'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

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 3.9% 4.4%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.97 1.34
Cost of equity 8.8% 13.0%
Cost of debt 5.6% 7.3%
Tax rate 16.9% 22.1%
Debt/Equity ratio 1.14 1.14
After-tax WACC 6.6% 9.1%

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: 7.9% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $654 (FY12-2024) to $792 (FY12-2034)
  • Net profit margin expansion from 4% to 4%
  • Capital expenditures maintained at approximately 7% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $8 $536M 75.9%
10-Year Growth $9 $556M 53.5%
5-Year EBITDA $19 $802M 83.9%
10-Year EBITDA $18 $772M 66.5%

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: 1.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 10.9%
  • Long-term growth rate: 0.5%
  • Fair value: $7.43 (-42.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.0% (Low) to 8.8% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $10 to $21
  • Selected fair value: $15.26 (17.8% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $307M
Enterprise Value $651M
Trailing P/E 7.17
Forward P/E 13.56
Trailing EV/EBITDA 9.50
Current Dividend Yield 14.58%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.14

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) 33% $2.68
Discounted Cash Flow (5Y) 28% $2.02
Dividend Discount Model (Multi-Stage) 22% $1.49
Dividend Discount Model (Stable) 17% $2.29
Weighted Average 100% $9.42

Investment Conclusion

Based on our comprehensive valuation analysis, SugarBud Craft Growers Corp's weighted average intrinsic value is $9.42, which is approximately 27.3% below the current market price of $12.95.

Key investment considerations:

  • Strong projected earnings growth (4% to 4% margin)
  • Consistent cash flow generation

Given these factors, we believe SugarBud Craft Growers Corp is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.