What is UMI.BR's Intrinsic value?

Umicore SA (UMI.BR) Intrinsic Value Analysis

Executive Summary

As of June 21, 2025, Umicore SA's estimated intrinsic value ranges from $31.10 to $31.10 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $31.10 +151.0%

Is Umicore SA (UMI.BR) undervalued or overvalued?

With the current market price at $12.39, 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 Umicore SA'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 2.9% 3.4%
Equity market risk premium 6.0% 7.0%
Adjusted beta 1.33 1.55
Cost of equity 10.8% 14.7%
Cost of debt 4.0% 4.5%
Tax rate 20.8% 21.9%
Debt/Equity ratio 1.22 1.22
After-tax WACC 6.6% 8.5%

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 $663M
Discount Rate (WACC) 8.5% - 6.6%
Enterprise Value $7,772M - $10,021M
Net Debt $1,233M
Equity Value $6,540M - $8,789M
Outstanding Shares 246M
Fair Value $27 - $36
Selected Fair Value $31.10

Key Financial Metrics

Metric Value
Market Capitalization $3053M
Enterprise Value $4286M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.50
Current Dividend Yield 683.08%
Dividend Growth Rate (5Y) 33.76%
Debt-to-Equity Ratio 1.22

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% $3.11
Weighted Average 100% $31.10

Investment Conclusion

Based on our comprehensive valuation analysis, Umicore SA's weighted average intrinsic value is $31.10, which is approximately 151.0% above the current market price of $12.39.

Key investment considerations:

  • Strong projected earnings growth (-10% to -1% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 33.76%

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