What is TRB.L's Intrinsic value?

Tribal Group PLC (TRB.L) Intrinsic Value Analysis

Executive Summary

As of June 14, 2025, Tribal Group PLC's estimated intrinsic value ranges from $38.52 to $54.41 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $50.67 +17.3%
Discounted Cash Flow (5Y) $45.58 +5.5%
Dividend Discount Model (Multi-Stage) $38.52 -10.8%
Dividend Discount Model (Stable) $54.41 +26.0%

Is Tribal Group PLC (TRB.L) undervalued or overvalued?

With the current market price at $43.20, the stock appears to be fairly valued.

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 Tribal Group 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 0.36 0.46
Cost of equity 6.2% 8.2%
Cost of debt 5.1% 8.6%
Tax rate 19.6% 22.2%
Debt/Equity ratio 0.12 0.12
After-tax WACC 6.0% 8.1%

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: 7.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $90 (FY12-2024) to $122 (FY12-2034)
  • Net profit margin expansion from 6% to 5%
  • Capital expenditures maintained at approximately 10% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $46 $92M 77.5%
10-Year Growth $51 $101M 61.8%
5-Year EBITDA $41 $82M 74.9%
10-Year EBITDA $46 $92M 57.6%

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: 25.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.2%
  • Long-term growth rate: 2.0%
  • Fair value: $38.52 (-10.8% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.2% (Low) to 6.2% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $28 to $81
  • Selected fair value: $54.41 (26.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $83M
Enterprise Value $87M
Trailing P/E 15.09
Forward P/E 17.15
Trailing EV/EBITDA 5.05
Current Dividend Yield 167.68%
Dividend Growth Rate (5Y) -11.40%
Debt-to-Equity Ratio 0.12

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% $15.20
Discounted Cash Flow (5Y) 28% $11.40
Dividend Discount Model (Multi-Stage) 22% $7.70
Dividend Discount Model (Stable) 17% $8.16
Weighted Average 100% $47.18

Investment Conclusion

Based on our comprehensive valuation analysis, Tribal Group PLC's weighted average intrinsic value is $47.18, which is approximately 9.2% above the current market price of $43.20.

Key investment considerations:

  • Strong projected earnings growth (6% to 5% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.12)

Given these factors, we believe Tribal Group PLC is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.