What is VALPQ's Intrinsic value?

Valaris PLC (VALPQ) Intrinsic Value Analysis

Executive Summary

As of June 9, 2025, Valaris PLC's estimated intrinsic value ranges from $16.13 to $16.13 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $16.13 +23622.0%

Is Valaris PLC (VALPQ) undervalued or overvalued?

With the current market price at $0.07, 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 Valaris PLC'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 3.2% 3.7%
Equity market risk premium 4.2% 5.2%
Adjusted beta 1.07 1.31
Cost of equity 7.7% 11.0%
Cost of debt 5.0% 7.0%
Tax rate 15.6% 30.2%
Debt/Equity ratio 1 1
After-tax WACC 6.0% 8.0%

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 $198M
Discount Rate (WACC) 8.0% - 6.0%
Enterprise Value $2,482M - $3,308M
Net Debt $(326)M
Equity Value $2,807M - $3,634M
Outstanding Shares 200M
Fair Value $14 - $18
Selected Fair Value $16.13

Key Financial Metrics

Metric Value
Market Capitalization $14M
Enterprise Value $-312M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 3.10
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) -100.00%
Debt-to-Equity Ratio 0.80

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% $1.61
Weighted Average 100% $16.13

Investment Conclusion

Based on our comprehensive valuation analysis, Valaris PLC's weighted average intrinsic value is $16.13, which is approximately 23622.0% above the current market price of $0.07.

Key investment considerations:

  • Strong projected earnings growth (-349% to -269% margin)
  • Consistent cash flow generation

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