What is VTNR's Intrinsic value?

Vertex Energy Inc (VTNR) Intrinsic Value Analysis

Executive Summary

As of June 27, 2025, Vertex Energy Inc's estimated intrinsic value ranges from $15.00 to $204.07 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $204.07 +391592.9%
Discounted Cash Flow (5Y) $28.43 +54470.1%
Dividend Discount Model (Multi-Stage) $15.00 +28689.9%

Is Vertex Energy Inc (VTNR) undervalued or overvalued?

With the current market price at $0.05, 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 Vertex Energy Inc'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 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.33 2.51
Cost of equity 5.4% 18.9%
Cost of debt 7.0% 23.4%
Tax rate 26.2% 27.0%
Debt/Equity ratio 72.03 72.03
After-tax WACC 5.2% 17.1%

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: 11.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $3,177 (FY12-2023) to $74,549 (FY12-2033)
  • Net profit margin expansion from -4% to 3%
  • Capital expenditures maintained at approximately 3% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $28 $2,198M 76.2%
10-Year Growth $204 $14,166M 72.9%
5-Year EBITDA $29 $2,241M 76.6%
10-Year EBITDA $210 $14,570M 73.7%

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: 12.1%
  • Long-term growth rate: 3.5%
  • Fair value: $15.00 (28689.9% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 18.9% (Low) to 5.4% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $(7) to $(176)
  • Selected fair value: $-91.71 (-176120.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $4M
Enterprise Value $264M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.85
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 72.03

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% $61.22
Discounted Cash Flow (5Y) 33% $7.11
Dividend Discount Model (Multi-Stage) 27% $3.00
Weighted Average 100% $95.11

Investment Conclusion

Based on our comprehensive valuation analysis, Vertex Energy Inc's weighted average intrinsic value is $95.11, which is approximately 182444.5% above the current market price of $0.05.

Key investment considerations:

  • Strong projected earnings growth (-4% to 3% margin)
  • Consistent cash flow generation

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