What is TSL.L's Intrinsic value?

Thinksmart Ltd (TSL.L) Intrinsic Value Analysis

Executive Summary

As of May 27, 2025, Thinksmart Ltd's estimated intrinsic value ranges from $63.30 to $63.30 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $63.30 +122.1%

Is Thinksmart Ltd (TSL.L) undervalued or overvalued?

With the current market price at $28.50, 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 Thinksmart Ltd'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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.35 0.41
Cost of equity 6.1% 7.8%
Cost of debt 4.0% 4.6%
Tax rate 0.1% 4.8%
Debt/Equity ratio 0 0
After-tax WACC 6.1% 7.8%

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 $4M
Discount Rate (WACC) 7.8% - 6.1%
Enterprise Value $54M - $70M
Net Debt $(5)M
Equity Value $60M - $76M
Outstanding Shares 1M
Fair Value $56 - $71
Selected Fair Value $63.30

Key Financial Metrics

Metric Value
Market Capitalization $30M
Enterprise Value $25M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.00
Current Dividend Yield 150.19%
Dividend Growth Rate (5Y) 148.55%
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
Earnings Power Value 100% $6.33
Weighted Average 100% $63.30

Investment Conclusion

Based on our comprehensive valuation analysis, Thinksmart Ltd's weighted average intrinsic value is $63.30, which is approximately 122.1% above the current market price of $28.50.

Key investment considerations:

  • Strong projected earnings growth (-2707% to -2703% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)
  • Historical dividend growth of 148.55%

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