What is ZDC.V's Intrinsic value?

Zedcor Inc (ZDC.V) Intrinsic Value Analysis

Executive Summary

As of December 15, 2025, Zedcor Inc's estimated intrinsic value ranges from $0.14 to $1.91 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $1.91 -67.0%
Discounted Cash Flow (5Y) $0.14 -97.5%
Dividend Discount Model (Multi-Stage) $1.66 -71.3%
Dividend Discount Model (Stable) $1.18 -79.7%

Is Zedcor Inc (ZDC.V) undervalued or overvalued?

With the current market price at $5.80, the stock appears to be significantly overvalued.

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 Zedcor 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 3.9% 4.4%
Equity market risk premium 5.1% 6.1%
Adjusted beta 0.35 0.43
Cost of equity 5.6% 7.5%
Cost of debt 4.0% 7.5%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.05 0.05
After-tax WACC 5.5% 7.4%

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: 6.5% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $33 (FY12-2024) to $124 (FY12-2034)
  • Net profit margin expansion from 5% to 12%
  • Capital expenditures maintained at approximately 46% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $0 $47M 94.8%
10-Year Growth $2 $234M 89.3%
5-Year EBITDA $4 $464M 99.5%
10-Year EBITDA $6 $660M 96.2%

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: 6.6%
  • Long-term growth rate: 4.0%
  • Fair value: $1.66 (-71.3% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 7.5% (Low) to 5.6% (High)
  • Long-term growth rate: 3.0% (Low) to 5.0% (High)
  • Fair value range: $0 to $2
  • Selected fair value: $1.18 (-79.7% from current price)

Key Financial Metrics

Metric Value
Market Capitalization $612M
Enterprise Value $644M
Trailing P/E 384.37
Forward P/E 298.31
Trailing EV/EBITDA 16.70
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 0.05

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% $0.57
Discounted Cash Flow (5Y) 28% $0.04
Dividend Discount Model (Multi-Stage) 22% $0.33
Dividend Discount Model (Stable) 17% $0.18
Weighted Average 100% $1.24

Investment Conclusion

Based on our comprehensive valuation analysis, Zedcor Inc's intrinsic value is $1.24, which is approximately 78.6% below the current market price of $5.80.

Key investment considerations:

  • Strong projected earnings growth (5% to 12% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.05)

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