What is UCG.MI's Intrinsic value?

UniCredit SpA (UCG.MI) Intrinsic Value Analysis

Executive Summary

As of June 6, 2025, UniCredit SpA's estimated intrinsic value ranges from $54.36 to $61.38 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Dividend Discount Model (Multi-Stage) $54.36 -6.0%
Dividend Discount Model (Stable) $61.38 +6.2%

Is UniCredit SpA (UCG.MI) undervalued or overvalued?

With the current market price at $57.81, 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 UniCredit SpA's intrinsic value, including:

  1. 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 3.7% 4.2%
Equity market risk premium 8.3% 9.3%
Adjusted beta 1.06 1.32
Cost of equity 12.5% 16.9%
Cost of debt 5.0% 5.0%
Tax rate 15.2% 19.6%
Debt/Equity ratio 2.07 2.07
After-tax WACC 6.9% 8.2%

Valuation Methods

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: 39.6%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 14.7%
  • Long-term growth rate: 3.0%
  • Fair value: $54.36 (-6.0% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 16.9% (Low) to 12.5% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $38 to $85
  • Selected fair value: $61.38 (6.2% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $90049M
Enterprise Value $199435M
Trailing P/E 7.21
Forward P/E 8.41
Trailing EV/EBITDA 0.00
Current Dividend Yield 561.85%
Dividend Growth Rate (5Y) 70.99%
Debt-to-Equity Ratio 2.07

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
Dividend Discount Model (Multi-Stage) 57% $10.87
Dividend Discount Model (Stable) 43% $9.21
Weighted Average 100% $57.37

Investment Conclusion

Based on our comprehensive valuation analysis, UniCredit SpA's weighted average intrinsic value is $57.37, which is approximately 0.8% below the current market price of $57.81.

Key investment considerations:

  • Historical dividend growth of 70.99%

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