Examining the True Worth of Mission Group plc (LON:TMG)
Valuation Overview: The projected fair value for Mission Group is UK£0.21, with the current share price at UK£0.23, indicating it is trading close to its fair value. The company’s peers are trading at an average discount of 56%.
Discounted Cash Flow (DCF) Method: The DCF model estimates future cash flows and discounts them to present value, using a 10% cost of equity. The total equity value calculated is UK£19 million, suggesting the company is around fair value.
Strengths and Weaknesses: Mission Group has a net debt to equity ratio below 40%, but its interest payments on debt are not well covered. Future earnings are expected to grow faster than the British market, presenting an opportunity.
Investment Considerations: The DCF is just one valuation method; investors should also consider risks, future earnings growth compared to peers, and other solid businesses with strong fundamentals before making investment decisions.
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