PZ Cussons: A Hidden Gem in the Consumer Packaged Goods Industry

PZ Cussons plc (LON:PZC), a leading consumer packaged goods company, has been flying under the radar of many investors despite its strong fundamentals and undervalued status. An intrinsic value calculation based on the company's projected free cash flow suggests that PZ Cussons is 49% undervalued, presenting an attractive opportunity for investors seeking value in the consumer goods sector.

PZ Cussons' current Price-to-Intrinsic-Value-Projected-FCF of 0.6 is at the lower end of its historical range (0.6 to 1.92) and ranks better than 75.92% of companies in the Consumer Packaged Goods industry. Its current valuation is 49% lower than its median historical valuation, suggesting it may be undervalued. This undervaluation can be attributed to the company's strong earnings and cash flow projections, which are key factors contributing to its perceived undervaluation.

The intrinsic value calculation method used for PZ Cussons is based on normalized Free Cash Flow and Book Value, which smooths out free cash flow over the past 6-7 years, multiplies the results by a growth multiple, and adds a portion of Total Stockholders Equity. This method differs from Discounted Cash Flow (DCF) or Discounted Earnings Intrinsic Value, which require consistent revenue and earnings, and from P/E, EV/EBITDA, and other valuation multiples that focus on earnings or cash flow.

The intrinsic value calculation for PZ Cussons is sensitive to changes in key assumptions, such as the growth multiple and share count. A 10% increase in the growth multiple or a 10% decrease in the share count leads to a 9.52% increase in the intrinsic value, while a 10% decrease in the growth multiple or a 10% increase in the share count results in a 9.52% decrease in the intrinsic value.

In conclusion, PZ Cussons plc (LON:PZC) appears to be an undervalued opportunity in the consumer packaged goods industry, with a strong intrinsic value calculation suggesting a 49% undervaluation. Investors seeking value in the consumer goods sector should consider PZ Cussons as a potential addition to their portfolios.