What is THRG.L's Intrinsic value?

BlackRock Throgmorton Trust plc (THRG.L) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, BlackRock Throgmorton Trust plc's estimated intrinsic value ranges from $854.03 to $1390.98 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1390.98 +141.1%
Discounted Cash Flow (5Y) $1272.39 +120.5%
Dividend Discount Model (Multi-Stage) $854.03 +48.0%
Dividend Discount Model (Stable) $915.54 +58.7%

Is BlackRock Throgmorton Trust plc (THRG.L) undervalued or overvalued?

With the current market price at $577.00, 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 BlackRock Throgmorton Trust plc'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.98 1.12
Cost of equity 9.9% 12.8%
Cost of debt 4.6% 4.6%
Tax rate 0.0% 0.0%
Debt/Equity ratio 0 0
After-tax WACC 9.9% 12.8%

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: 11.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $92 (FY11-2024) to $126 (FY11-2034)
  • Net profit margin expansion from 94% to 94%
  • Capital expenditures maintained at approximately 0% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $1,272 $893M 58.8%
10-Year Growth $1,391 $980M 37.1%
5-Year EBITDA $963 $666M 44.7%
10-Year EBITDA $1,175 $822M 25.0%

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: 16.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 11.4%
  • Long-term growth rate: 0.5%
  • Fair value: $854.03 (48.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 12.8% (Low) to 9.9% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $640 to $1,191
  • Selected fair value: $915.54 (58.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $424M
Enterprise Value $382M
Trailing P/E 4.91
Forward P/E 4.70
Trailing EV/EBITDA 5.25
Current Dividend Yield 335.15%
Dividend Growth Rate (5Y) 14.65%
Debt-to-Equity Ratio 0.00

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% $417.29
Discounted Cash Flow (5Y) 28% $318.10
Dividend Discount Model (Multi-Stage) 22% $170.81
Dividend Discount Model (Stable) 17% $137.33
Weighted Average 100% $1159.47

Investment Conclusion

Based on our comprehensive valuation analysis, BlackRock Throgmorton Trust plc's weighted average intrinsic value is $1159.47, which is approximately 100.9% above the current market price of $577.00.

Key investment considerations:

  • Strong projected earnings growth (94% to 94% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)
  • Historical dividend growth of 14.65%

Given these factors, we believe BlackRock Throgmorton Trust plc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.