As of September 18, 2025, West Fraser Timber Co Ltd's estimated intrinsic value ranges from $96.13 to $182.96 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $161.17 | +57.3% |
| Discounted Cash Flow (5Y) | $124.30 | +21.3% |
| Dividend Discount Model (Multi-Stage) | $96.13 | -6.2% |
| Earnings Power Value | $182.96 | +78.6% |
Is West Fraser Timber Co Ltd (WFG.TO) undervalued or overvalued?
With the current market price at $102.45, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate West Fraser Timber Co Ltd's intrinsic value, including:
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 | 0.71 | 0.82 |
| Cost of equity | 6.8% | 9.1% |
| Cost of debt | 5.3% | 7.0% |
| Tax rate | 25.1% | 26.0% |
| Debt/Equity ratio | 0.03 | 0.03 |
| After-tax WACC | 6.7% | 9.0% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $124 | $9,500M | 79.2% |
| 10-Year Growth | $161 | $12,412M | 63.5% |
| 5-Year EBITDA | $142 | $10,861M | 81.8% |
| 10-Year EBITDA | $172 | $13,277M | 65.9% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $1,086M |
| Discount Rate (WACC) | 9.0% - 6.7% |
| Enterprise Value | $12,010M - $16,255M |
| Net Debt | $(317)M |
| Equity Value | $12,327M - $16,572M |
| Outstanding Shares | 79M |
| Fair Value | $156 - $210 |
| Selected Fair Value | $182.96 |
| Metric | Value |
|---|---|
| Market Capitalization | $8092M |
| Enterprise Value | $7775M |
| Trailing P/E | 0.00 |
| Forward P/E | 46.04 |
| Trailing EV/EBITDA | 10.45 |
| Current Dividend Yield | 93.29% |
| Dividend Growth Rate (5Y) | 25.28% |
| Debt-to-Equity Ratio | 0.03 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 35% | $48.35 |
| Discounted Cash Flow (5Y) | 29% | $31.07 |
| Dividend Discount Model (Multi-Stage) | 24% | $19.23 |
| Earnings Power Value | 12% | $18.30 |
| Weighted Average | 100% | $137.58 |
Based on our comprehensive valuation analysis, West Fraser Timber Co Ltd's intrinsic value is $137.58, which is approximately 34.3% above the current market price of $102.45.
Key investment considerations:
Given these factors, we believe West Fraser Timber Co Ltd is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.