What is WSG.L's Intrinsic value?

Westminster Group PLC (WSG.L) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Westminster Group PLC's estimated intrinsic value ranges from $4.13 to $4.13 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $4.13 +101.3%

Is Westminster Group PLC (WSG.L) undervalued or overvalued?

With the current market price at $2.05, 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 Westminster Group PLC's intrinsic value, including:

  1. 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 4.0% 4.5%
Equity market risk premium 6.0% 7.0%
Adjusted beta 0.28 0.4
Cost of equity 5.6% 7.8%
Cost of debt 5.0% 5.0%
Tax rate 1.7% 2.8%
Debt/Equity ratio 0.23 0.23
After-tax WACC 5.5% 7.3%

Valuation Methods

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 $1M
Discount Rate (WACC) 7.3% - 5.5%
Enterprise Value $17M - $22M
Net Debt $1M
Equity Value $16M - $21M
Outstanding Shares 5M
Fair Value $4 - $5
Selected Fair Value $4.13

Key Financial Metrics

Metric Value
Market Capitalization $9M
Enterprise Value $10M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 9.05
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.23

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
Earnings Power Value 100% $0.41
Weighted Average 100% $4.13

Investment Conclusion

Based on our comprehensive valuation analysis, Westminster Group PLC's weighted average intrinsic value is $4.13, which is approximately 101.3% above the current market price of $2.05.

Key investment considerations:

  • Strong projected earnings growth (-34% to -24% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.23)

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