What is VREO.CN's Intrinsic value?

Vireo Health International Inc (VREO.CN) Intrinsic Value Analysis

Executive Summary

As of May 22, 2025, Vireo Health International Inc's estimated intrinsic value ranges from $0.56 to $0.64 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.64 +28.5%
Discounted Cash Flow (5Y) $0.56 +12.3%

Is Vireo Health International Inc (VREO.CN) undervalued or overvalued?

With the current market price at $0.49, 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 Vireo Health International Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 5.1% 6.1%
Adjusted beta 1.42 1.59
Cost of equity 10.4% 13.9%
Cost of debt 16.7% 20.2%
Tax rate 25.9% 26.5%
Debt/Equity ratio 0.69 0.69
After-tax WACC 11.2% 14.3%

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: 12.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $99 (FY12-2024) to $156 (FY12-2034)
  • Net profit margin expansion from -28% to -12%
  • Capital expenditures maintained at approximately 15% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $145M 57.5%
10-Year Growth $0 $166M 35.0%
5-Year EBITDA $1 $205M 70.1%
10-Year EBITDA $1 $210M 48.8%

Key Financial Metrics

Metric Value
Market Capitalization $182M
Enterprise Value $180M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 8.20
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
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) 55% $0.19
Discounted Cash Flow (5Y) 45% $0.14
Weighted Average 100% $0.60

Investment Conclusion

Based on our comprehensive valuation analysis, Vireo Health International Inc's weighted average intrinsic value is $0.60, which is approximately 21.1% above the current market price of $0.49.

Key investment considerations:

  • Strong projected earnings growth (-28% to -12% margin)
  • Consistent cash flow generation

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