Calculating The Intrinsic Value Of Wagners Holding Company Limited (ASX:WGN)

Wagners Holding Company Limited (ASX:WGN) is an Australian construction materials producer with a market capitalization of AUD 265.48 million. As of January 16, 2025, the company's share price is AUD 1.42, with a 52-week high of AUD 1.47 and a low of AUD 0.70. To determine if WGN is overvalued or undervalued, we need to calculate its intrinsic value using key financial metrics and valuation ratios.



1. Earnings per Share (EPS): WGN's EPS is 0.05, which is a crucial metric for understanding the company's profitability and growth. The company's earnings grew by 229.2% over the past year, indicating strong earnings growth prospects.
2. Price-to-Earnings (P/E) Ratio: WGN's P/E ratio is 25.8x, which compares the company's stock price to its earnings per share. This ratio helps determine if the stock is overvalued or undervalued. WGN's P/E ratio is higher than the peer average of 16.5x and the Global Basic Materials industry average of 16.0x, suggesting that the stock may be overvalued.
3. Enterprise Value (EV) to Earnings (E): WGN's EV/Earnings ratio is 43.74, which measures the company's entire market value relative to its earnings. This metric helps assess the company's valuation compared to its earnings. WGN's EV/Earnings ratio is higher than the peer average and the industry average, indicating that the company may be overvalued.
4. Enterprise Value (EV) to Sales (S): WGN's EV/Sales ratio is 0.93, which compares the company's enterprise value to its revenue. This metric helps evaluate the company's valuation relative to its sales. WGN's EV/Sales ratio is lower than the peer average and the industry average, suggesting that the company may be undervalued based on this metric.
5. Enterprise Value (EV) to Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA): WGN's EV/EBITDA ratio is 7.27, which measures the company's enterprise value relative to its EBITDA. This metric helps assess the company's valuation compared to its operating cash flow. WGN's EV/EBITDA ratio is higher than the peer average and the industry average, indicating that the company may be overvalued based on this metric.
6. Return on Equity (ROE): WGN's ROE is 7.95%, which measures the company's profitability by comparing its net income to shareholder investments. This metric helps evaluate the company's efficiency in generating profits from shareholder investments. WGN's ROE is lower than the peer average and the industry average, suggesting that the company may not be as efficient in generating profits as its peers.
7. Return on Invested Capital (ROIC): WGN's ROIC is 6.10%, which measures the company's profitability by comparing its operating income to the capital invested in the company. This metric helps assess the company's ability to generate profits from its invested capital. WGN's ROIC is lower than the peer average and the industry average, indicating that the company may not be as effective in generating profits from its invested capital as its peers.



In conclusion, Wagners Holding Company Limited (ASX:WGN) may be overvalued based on its P/E ratio, EV/Earnings ratio, and EV/EBITDA ratio. However, the company's strong earnings growth prospects and lower EV/Sales ratio suggest that it may be undervalued based on these metrics. Additionally, WGN's lower ROE and ROIC compared to its peers indicate that the company may not be as efficient in generating profits as its competitors. Investors should carefully consider these factors when evaluating WGN's intrinsic value and make informed investment decisions based on their own analysis and risk tolerance.