What is XLY.TO's Intrinsic value?

Auxly Cannabis Group Inc (XLY.TO) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Auxly Cannabis Group Inc's estimated intrinsic value ranges from $0.03 to $0.30 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.30 +254.8%
Discounted Cash Flow (5Y) $0.03 -60.3%

Is Auxly Cannabis Group Inc (XLY.TO) undervalued or overvalued?

With the current market price at $0.09, 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 Auxly Cannabis Group Inc's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.88 1.32
Cost of equity 7.7% 12.2%
Cost of debt 5.0% 5.0%
Tax rate 5.9% 7.5%
Debt/Equity ratio 0.58 0.58
After-tax WACC 6.6% 9.4%

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: 8.0% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $122 (FY12-2024) to $447 (FY12-2034)
  • Net profit margin expansion from -13% to 0%
  • Capital expenditures maintained at approximately 12% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $94M 95.8%
10-Year Growth $0 $447M 81.1%
5-Year EBITDA $0 $484M 99.2%
10-Year EBITDA $0 $661M 87.2%

Key Financial Metrics

Metric Value
Market Capitalization $112M
Enterprise Value $162M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 13.00
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.58

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) 55% $0.09
Discounted Cash Flow (5Y) 45% $0.01
Weighted Average 100% $0.18

Investment Conclusion

Based on our comprehensive valuation analysis, Auxly Cannabis Group Inc's weighted average intrinsic value is $0.18, which is approximately 111.6% above the current market price of $0.09.

Key investment considerations:

  • Strong projected earnings growth (-13% to 0% margin)
  • Consistent cash flow generation

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