What is TISI's Intrinsic value?

Team Inc (TISI) Intrinsic Value Analysis

Executive Summary

As of May 24, 2025, Team Inc's estimated intrinsic value ranges from $36.19 to $49.50 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $49.50 +149.2%
Discounted Cash Flow (5Y) $36.19 +82.2%
Dividend Discount Model (Multi-Stage) $48.00 +141.7%

Is Team Inc (TISI) undervalued or overvalued?

With the current market price at $19.86, 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 Team Inc'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 4.6% 5.6%
Adjusted beta 0.51 0.83
Cost of equity 6.2% 9.5%
Cost of debt 7.8% 23.9%
Tax rate 5.0% 6.4%
Debt/Equity ratio 3.65 3.65
After-tax WACC 7.1% 19.6%

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: 13.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $852 (FY12-2024) to $1,048 (FY12-2034)
  • Net profit margin expansion from -4% to 3%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $36 $499M 68.2%
10-Year Growth $50 $559M 43.6%
5-Year EBITDA $49 $555M 71.4%
10-Year EBITDA $57 $593M 46.8%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.9%
  • Long-term growth rate: 3.5%
  • Fair value: $48.00 (141.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.5% (Low) to 6.2% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $(113) to $(590)
  • Selected fair value: $-351.08 (-1867.8% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $89M
Enterprise Value $426M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 8.90
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 3.65

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) 40% $14.85
Discounted Cash Flow (5Y) 33% $9.05
Dividend Discount Model (Multi-Stage) 27% $9.60
Weighted Average 100% $44.66

Investment Conclusion

Based on our comprehensive valuation analysis, Team Inc's weighted average intrinsic value is $44.66, which is approximately 124.9% above the current market price of $19.86.

Key investment considerations:

  • Strong projected earnings growth (-4% to 3% margin)
  • Consistent cash flow generation

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