What is YRI.TO's Intrinsic value?

Yamana Gold Inc (YRI.TO) Intrinsic Value Analysis

Executive Summary

As of May 23, 2025, Yamana Gold Inc's estimated intrinsic value ranges from $11.74 to $11.74 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Earnings Power Value $11.74 +48.8%

Is Yamana Gold Inc (YRI.TO) undervalued or overvalued?

With the current market price at $7.89, 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 Yamana Gold Inc'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 3.2% 3.7%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.94 1.14
Cost of equity 7.9% 11.1%
Cost of debt 4.1% 4.7%
Tax rate 25.9% 26.5%
Debt/Equity ratio 0.16 0.16
After-tax WACC 7.3% 10.1%

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 $724M
Discount Rate (WACC) 10.1% - 7.3%
Enterprise Value $7,197M - $9,952M
Net Debt $485M
Equity Value $6,712M - $9,467M
Outstanding Shares 962M
Fair Value $7 - $10
Selected Fair Value $11.74

Key Financial Metrics

Metric Value
Market Capitalization $7592M
Enterprise Value $8269M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 5.05
Current Dividend Yield 210.84%
Dividend Growth Rate (5Y) 56.71%
Debt-to-Equity Ratio 0.16

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% $1.17
Weighted Average 100% $11.74

Investment Conclusion

Based on our comprehensive valuation analysis, Yamana Gold Inc's weighted average intrinsic value is $11.74, which is approximately 48.8% above the current market price of $7.89.

Key investment considerations:

  • Strong projected earnings growth (-77% to -65% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.16)
  • Historical dividend growth of 56.71%

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