What is VCT.PA's Intrinsic value?

Vicat SA (VCT.PA) Intrinsic Value Analysis

Executive Summary

As of June 9, 2025, Vicat SA's estimated intrinsic value ranges from $56.81 to $142.46 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $96.75 +68.5%
Discounted Cash Flow (5Y) $81.84 +42.6%
Dividend Discount Model (Multi-Stage) $59.41 +3.5%
Dividend Discount Model (Stable) $56.81 -1.0%
Earnings Power Value $142.46 +148.2%

Is Vicat SA (VCT.PA) undervalued or overvalued?

With the current market price at $57.40, 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 Vicat SA'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
  3. 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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.91 1.02
Cost of equity 8.3% 11.0%
Cost of debt 4.0% 4.5%
Tax rate 26.1% 27.7%
Debt/Equity ratio 0.69 0.69
After-tax WACC 6.1% 7.8%

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 $3,884 (FY12-2024) to $6,001 (FY12-2034)
  • Net profit margin expansion from 7% to 7%
  • Capital expenditures maintained at approximately 11% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $82 $4,911M 73.4%
10-Year Growth $97 $5,580M 56.4%
5-Year EBITDA $62 $4,024M 67.5%
10-Year EBITDA $83 $4,981M 51.1%

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: 37.5%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 9.6%
  • Long-term growth rate: 0.5%
  • Fair value: $59.41 (3.5% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.0% (Low) to 8.3% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $39 to $75
  • Selected fair value: $56.81 (-1.0% from current price)

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 $524M
Discount Rate (WACC) 7.8% - 6.1%
Enterprise Value $6,697M - $8,569M
Net Debt $1,237M
Equity Value $5,461M - $7,333M
Outstanding Shares 45M
Fair Value $122 - $163
Selected Fair Value $142.46

Key Financial Metrics

Metric Value
Market Capitalization $2577M
Enterprise Value $3814M
Trailing P/E 9.45
Forward P/E 8.78
Trailing EV/EBITDA 4.15
Current Dividend Yield 397.09%
Dividend Growth Rate (5Y) 8.34%
Debt-to-Equity Ratio 0.69

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) 30% $29.02
Discounted Cash Flow (5Y) 25% $20.46
Dividend Discount Model (Multi-Stage) 20% $11.88
Dividend Discount Model (Stable) 15% $8.52
Earnings Power Value 10% $14.25
Weighted Average 100% $84.13

Investment Conclusion

Based on our comprehensive valuation analysis, Vicat SA's weighted average intrinsic value is $84.13, which is approximately 46.6% above the current market price of $57.40.

Key investment considerations:

  • Strong projected earnings growth (7% to 7% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 8.34%

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