What is TCS's Intrinsic value?

Container Store Group Inc (TCS) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, Container Store Group Inc's estimated intrinsic value ranges from $4097.29 to $4097.29 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $4097.29 +154514.7%

Is Container Store Group Inc (TCS) undervalued or overvalued?

With the current market price at $2.65, 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 Container Store Group Inc's intrinsic value, including:

  1. 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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 11.77 62.24
Cost of equity 58.0% 353.4%
Cost of debt 7.0% 7.8%
Tax rate 23.6% 27.7%
Debt/Equity ratio 256.2 256.2
After-tax WACC 5.6% 7.0%

Valuation Methods

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 $76M
Discount Rate (WACC) 7.0% - 5.6%
Enterprise Value $1,094M - $1,372M
Net Debt $166M
Equity Value $928M - $1,206M
Outstanding Shares 0M
Fair Value $3,563 - $4,631
Selected Fair Value $4097.29

Key Financial Metrics

Metric Value
Market Capitalization $1M
Enterprise Value $167M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 7.10
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 256.20

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
Earnings Power Value 100% $409.73
Weighted Average 100% $4097.29

Investment Conclusion

Based on our comprehensive valuation analysis, Container Store Group Inc's weighted average intrinsic value is $4097.29, which is approximately 154514.7% above the current market price of $2.65.

Key investment considerations:

  • Strong projected earnings growth (-12% to -3% margin)
  • Consistent cash flow generation

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