What is VGAS.L's Intrinsic value?

Volga Gas PLC (VGAS.L) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Volga Gas PLC's estimated intrinsic value ranges from $36.58 to $36.58 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $36.58 +55.6%

Is Volga Gas PLC (VGAS.L) undervalued or overvalued?

With the current market price at $23.50, 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 Volga Gas 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 2.9% 3.4%
Equity market risk premium 5.3% 6.3%
Adjusted beta 0.94 1.04
Cost of equity 7.9% 10.5%
Cost of debt 5.0% 5.0%
Tax rate 17.1% 27.6%
Debt/Equity ratio 1 1
After-tax WACC 6.0% 7.1%

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 $2M
Discount Rate (WACC) 7.1% - 6.0%
Enterprise Value $23M - $27M
Net Debt $(11)M
Equity Value $34M - $38M
Outstanding Shares 1M
Fair Value $42 - $47
Selected Fair Value $36.58

Key Financial Metrics

Metric Value
Market Capitalization $19M
Enterprise Value $11M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 2.35
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 50.79%
Debt-to-Equity Ratio 0.87

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% $3.66
Weighted Average 100% $36.58

Investment Conclusion

Based on our comprehensive valuation analysis, Volga Gas PLC's weighted average intrinsic value is $36.58, which is approximately 55.6% above the current market price of $23.50.

Key investment considerations:

  • Strong projected earnings growth (-22% to -2% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 50.79%

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