What is VSS1R.RG's Intrinsic value?

Valmieras Stikla Skiedra AS (VSS1R.RG) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, Valmieras Stikla Skiedra AS's estimated intrinsic value ranges from $0.46 to $2.19 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $2.19 +277.1%
Discounted Cash Flow (5Y) $0.78 +34.3%
Dividend Discount Model (Multi-Stage) $0.46 -20.3%

Is Valmieras Stikla Skiedra AS (VSS1R.RG) undervalued or overvalued?

With the current market price at $0.58, 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 Valmieras Stikla Skiedra AS'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

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 1.0% 1.5%
Equity market risk premium 5.9% 6.9%
Adjusted beta 2.52 3.35
Cost of equity 16.0% 25.3%
Cost of debt 4.0% 14.1%
Tax rate 2.8% 11.6%
Debt/Equity ratio 5.1 5.1
After-tax WACC 5.9% 14.6%

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: 10.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $96 (FY12-2020) to $113 (FY12-2030)
  • Net profit margin expansion from -2% to 9%
  • Capital expenditures maintained at approximately 17% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $1 $115M 68.9%
10-Year Growth $2 $161M 54.7%
5-Year EBITDA $1 $132M 72.9%
10-Year EBITDA $2 $156M 53.4%

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: 0.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 20.6%
  • Long-term growth rate: 3.0%
  • Fair value: $0.46 (-20.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 25.3% (Low) to 16.0% (High)
  • Long-term growth rate: 2.0% (Low) to 4.0% (High)
  • Fair value range: $(0) to $(0)
  • Selected fair value: $-0.18 (-131.0% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $19M
Enterprise Value $108M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 6.10
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 5.10

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) 40% $0.66
Discounted Cash Flow (5Y) 33% $0.19
Dividend Discount Model (Multi-Stage) 27% $0.09
Weighted Average 100% $1.26

Investment Conclusion

Based on our comprehensive valuation analysis, Valmieras Stikla Skiedra AS's intrinsic value is $1.26, which is approximately 116.9% above the current market price of $0.58.

Key investment considerations:

  • Strong projected earnings growth (-2% to 9% margin)
  • Consistent cash flow generation

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