A Look At The Intrinsic Value Of Almadex Minerals Ltd. (CVE:DEX)

In This Article:

Key Insights

  • The projected fair value for Almadex Minerals is CA$0.24 based on 2 Stage Free Cash Flow to Equity

  • Almadex Minerals' CA$0.24 share price indicates it is trading at similar levels as its fair value estimate

  • Industry average of 30% suggests Almadex Minerals' peers are currently trading at a higher premium to fair value

In this article we are going to estimate the intrinsic value of Almadex Minerals Ltd. (CVE:DEX) by estimating the company's future cash flows and discounting them to their present value. We will take advantage of the Discounted Cash Flow (DCF) model for this purpose. Don't get put off by the jargon, the math behind it is actually quite straightforward.

We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.

Check out our latest analysis for Almadex Minerals

Crunching The Numbers

We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. To start off with, we need to estimate the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company's last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.

Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value:

10-year free cash flow (FCF) estimate

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

Levered FCF (CA$, Millions)

CA$330.0k

CA$455.3k

CA$579.0k

CA$692.2k

CA$790.9k

CA$874.2k

CA$943.6k

CA$1.00m

CA$1.05m

CA$1.09m

Growth Rate Estimate Source

Est @ 53.47%

Est @ 37.99%

Est @ 27.15%

Est @ 19.56%

Est @ 14.25%

Est @ 10.53%

Est @ 7.93%

Est @ 6.11%

Est @ 4.84%

Est @ 3.94%

Present Value (CA$, Millions) Discounted @ 7.4%

CA$0.3

CA$0.4

CA$0.5

CA$0.5

CA$0.6

CA$0.6

CA$0.6

CA$0.6

CA$0.6

CA$0.5

("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = CA$5.0m