What is WBD.MI's Intrinsic value?

Webuild SpA (WBD.MI) Intrinsic Value Analysis

Executive Summary

As of June 18, 2025, Webuild SpA's estimated intrinsic value ranges from $1.65 to $8.45 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $8.45 +146.2%
Discounted Cash Flow (5Y) $2.20 -35.8%
Dividend Discount Model (Multi-Stage) $5.98 +74.3%
Dividend Discount Model (Stable) $1.65 -51.9%
Earnings Power Value $4.60 +33.9%

Is Webuild SpA (WBD.MI) undervalued or overvalued?

With the current market price at $3.43, 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 Webuild SpA'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 3.7% 4.2%
Equity market risk premium 8.3% 9.3%
Adjusted beta 0.85 0.93
Cost of equity 10.7% 13.3%
Cost of debt 5.2% 6.8%
Tax rate 24.0% 24.0%
Debt/Equity ratio 0.82 0.82
After-tax WACC 7.7% 9.6%

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: 8.7% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $11,027 (FY12-2024) to $24,197 (FY12-2034)
  • Net profit margin expansion from 2% to 6%
  • Capital expenditures maintained at approximately 5% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $2 $1,972M 112.9%
10-Year Growth $8 $8,339M 76.3%
5-Year EBITDA $4 $3,935M 106.4%
10-Year EBITDA $6 $6,163M 67.9%

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: 38.3%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 12.0%
  • Long-term growth rate: 2.0%
  • Fair value: $5.98 (74.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 13.3% (Low) to 10.7% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $1 to $2
  • Selected fair value: $1.65 (-51.9% 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 $377M
Discount Rate (WACC) 9.6% - 7.7%
Enterprise Value $3,906M - $4,916M
Net Debt $(274)M
Equity Value $4,180M - $5,190M
Outstanding Shares 1,019M
Fair Value $4 - $5
Selected Fair Value $4.60

Key Financial Metrics

Metric Value
Market Capitalization $3498M
Enterprise Value $3224M
Trailing P/E 17.99
Forward P/E 8.56
Trailing EV/EBITDA 3.30
Current Dividend Yield 208.66%
Dividend Growth Rate (5Y) 25.80%
Debt-to-Equity Ratio 0.82

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% $2.54
Discounted Cash Flow (5Y) 25% $0.55
Dividend Discount Model (Multi-Stage) 20% $1.20
Dividend Discount Model (Stable) 15% $0.25
Earnings Power Value 10% $0.46
Weighted Average 100% $4.99

Investment Conclusion

Based on our comprehensive valuation analysis, Webuild SpA's weighted average intrinsic value is $4.99, which is approximately 45.4% above the current market price of $3.43.

Key investment considerations:

  • Strong projected earnings growth (2% to 6% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 25.80%

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