Calculating The Intrinsic Value Of Propel Funeral Partners Limited (ASX:PFP)

Propel Funeral Partners Limited (ASX:PFP) is a significant player in the funeral services industry, operating across Australia and New Zealand. To make informed investment decisions, it's crucial to understand the company's intrinsic value. This article explores the methodology used to calculate PFP's intrinsic value and the key factors influencing its valuation.

Propel Funeral Partners' intrinsic value is calculated using a normalized Free Cash Flow (FCF) and Book Value approach. This method smooths out the FCF over the past six to seven years, multiplies the results by a growth multiple, and adds a portion of Total Stockholders Equity (TSE). The formula is as follows:

Intrinsic Value: Projected FCF = (Growth Multiple * FCF (6 year avg) + 0.8 * TSE (most recent)) / Shares Outstanding (Diluted Average)

If TSE is negative, a different formula is used to account for this:

Intrinsic Value: Projected FCF = (Growth Multiple * FCF (6 year avg) + TSE (most recent) / 0.8) / Shares Outstanding (Diluted Average)

The growth multiple is capped between 8.35 and 17.74, and the TSE weighting is set at 80%. These values are subject to adjustment based on the company's specific circumstances and market conditions.


The cyclical nature of the funeral services industry is an essential factor in PFP's valuation. The intrinsic value calculation accounts for this by using a normalized FCF approach, which smooths out the fluctuations in cash flow over time. This helps to provide a more accurate representation of the company's long-term earning power.

Propel Funeral Partners' balance sheet and cash flow play a critical role in its intrinsic value calculation. The company's TSE is a significant component of the valuation formula, reflecting the importance of the company's financial health and stability. Additionally, the FCF component of the formula highlights the importance of the company's cash-generating ability.


Adjusting the growth multiple and TSE weighting can impact PFP's intrinsic value. A higher growth multiple may indicate greater confidence in the company's future prospects, leading to a higher intrinsic value. Similarly, a higher TSE weighting may reflect a greater emphasis on the company's financial strength, also potentially increasing the intrinsic value.

Different weighting methods for TSE can have implications for PFP's valuation. A higher weighting may place more emphasis on the company's financial health, while a lower weighting may focus more on the company's cash-generating ability. The choice of weighting method should be based on the company's specific circumstances and the investor's priorities.

Capping the growth multiple between 8.35 and 17.74 helps to prevent excessive optimism or pessimism in the valuation process. This range reflects a reasonable level of confidence in PFP's future growth prospects, while still allowing for some flexibility in the valuation.


While the normalized FCF and Book Value approach offers a useful framework for valuing PFP, it's essential to be aware of its potential limitations and biases. This method may not fully capture the company's unique competitive advantages or the specific risks and challenges it faces. Additionally, the use of historical data and average values may not accurately reflect the company's future performance.

In conclusion, understanding Propel Funeral Partners' intrinsic value is crucial for investors seeking to make informed decisions about the company's stock. The normalized FCF and Book Value approach offers a valuable framework for valuing PFP, but it's essential to be aware of the method's limitations and the key factors influencing the company's valuation. By considering these factors and adjusting the valuation inputs as appropriate, investors can gain a more accurate understanding of PFP's intrinsic value and make more informed investment decisions.