What is TED.L's Intrinsic value?

Ted Baker PLC (TED.L) Intrinsic Value Analysis

Executive Summary

As of June 20, 2025, Ted Baker PLC's estimated intrinsic value ranges from $94.36 to $94.36 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $94.36 -14.1%

Is Ted Baker PLC (TED.L) undervalued or overvalued?

With the current market price at $109.80, 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 Ted Baker PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 0.41 0.48
Cost of equity 6.4% 8.4%
Cost of debt 4.0% 7.0%
Tax rate 19.5% 19.9%
Debt/Equity ratio 0.67 0.67
After-tax WACC 5.2% 7.3%

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: 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $428 (FY01-2022) to $1,581 (FY01-2032)
  • Net profit margin expansion from -8% to 1%
  • Capital expenditures maintained at approximately 4% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $(1,234) $(913)M 84.2%
10-Year Growth $94 $296M 140.3%
5-Year EBITDA $(1,234) $(59)M 142.4%
10-Year EBITDA $1 $125M 196.0%

Key Financial Metrics

Metric Value
Market Capitalization $203M
Enterprise Value $325M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 4.85
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 0.67

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) 100% $28.31
Weighted Average 100% $94.36

Investment Conclusion

Based on our comprehensive valuation analysis, Ted Baker PLC's weighted average intrinsic value is $94.36, which is approximately 14.1% below the current market price of $109.80.

Key investment considerations:

  • Strong projected earnings growth (-8% to 1% margin)
  • Consistent cash flow generation

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