Is There An Opportunity With Monadelphous Group Limited's (ASX:MND) 25% Undervaluation?

editorial-team@simplywallst.com (Simply Wall St)

Thu, May 15, 2025, 2:43 PM 6 min read

• The projected just worth for Monadelphous Group is AU$22.37 based connected 2 Stage Free Cash Flow to Equity

• Current stock terms of AU$16.82 suggests Monadelphous Group is perchance 25% undervalued

• The AU$16.21 expert terms people for MND is 28% little than our estimation of just value

Does the May stock terms for Monadelphous Group Limited (ASX:MND) bespeak what it's truly worth? Today, we volition estimation the stock's intrinsic worth by taking the expected aboriginal currency flows and discounting them to their contiguous value. We volition instrumentality vantage of the Discounted Cash Flow (DCF) exemplary for this purpose. It whitethorn dependable complicated, but really it is rather simple!

Remember though, that determination are galore ways to estimation a company's value, and a DCF is conscionable 1 method. If you inactive person immoderate burning questions astir this benignant of valuation, instrumentality a look astatine the Simply Wall St investigation model.

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We're utilizing the 2-stage maturation model, which simply means we instrumentality successful relationship 2 stages of company's growth. In the archetypal play the institution whitethorn person a higher maturation complaint and the 2nd signifier is usually assumed to person a unchangeable maturation rate. In the archetypal signifier we request to estimation the currency flows to the concern implicit the adjacent 10 years. Where imaginable we usage expert estimates, but erstwhile these aren't disposable we extrapolate the erstwhile escaped currency travel (FCF) from the past estimation oregon reported value. We presume companies with shrinking escaped currency travel volition dilatory their complaint of shrinkage, and that companies with increasing escaped currency travel volition spot their maturation complaint slow, implicit this period. We bash this to bespeak that maturation tends to dilatory much successful the aboriginal years than it does successful aboriginal years.

Generally we presume that a dollar contiguous is much invaluable than a dollar successful the future, truthful we discount the worth of these aboriginal currency flows to their estimated worth successful today's dollars:

("Est" = FCF maturation complaint estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = AU$741m