What is YRB.TO's Intrinsic value?

Les Ressources Yorbeau Inc (YRB.TO) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Les Ressources Yorbeau Inc's estimated intrinsic value ranges from $0.12 to $0.18 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $0.18 +359.8%
Discounted Cash Flow (5Y) $0.17 +312.9%
Dividend Discount Model (Multi-Stage) $0.12 +192.3%
Dividend Discount Model (Stable) $0.18 +354.3%

Is Les Ressources Yorbeau Inc (YRB.TO) undervalued or overvalued?

With the current market price at $0.04, 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 Les Ressources Yorbeau 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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.79 1.12
Cost of equity 7.2% 11.0%
Cost of debt 7.0% 46.6%
Tax rate 25.9% 26.5%
Debt/Equity ratio 0 0
After-tax WACC 7.2% 11.0%

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: 9.1% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $0 (FY12-2024) to $1 (FY12-2034)
  • Net profit margin expansion from 1913% to 815%
  • Capital expenditures maintained at approximately 170% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $76M 65.8%
10-Year Growth $0 $85M 45.7%
5-Year EBITDA $0 $48M 46.1%
10-Year EBITDA $0 $63M 27.2%

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: 9.1%
  • Long-term growth rate: 0.5%
  • Fair value: $0.12 (192.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 11.0% (Low) to 7.2% (High)
  • Long-term growth rate: 0.0% (Low) to 1.0% (High)
  • Fair value range: $0 to $0
  • Selected fair value: $0.18 (354.3% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $18M
Enterprise Value $18M
Trailing P/E 2.30
Forward P/E 2.99
Trailing EV/EBITDA 3.50
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.00

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) 33% $0.06
Discounted Cash Flow (5Y) 28% $0.04
Dividend Discount Model (Multi-Stage) 22% $0.02
Dividend Discount Model (Stable) 17% $0.03
Weighted Average 100% $0.16

Investment Conclusion

Based on our comprehensive valuation analysis, Les Ressources Yorbeau Inc's weighted average intrinsic value is $0.16, which is approximately 308.7% above the current market price of $0.04.

Key investment considerations:

  • Strong projected earnings growth (1913% to 815% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.00)

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