Trainline Plc (LON:TRN) Shares Could Be 26% Below Their Intrinsic Value Estimate

Trainline Plc (LON:TRN), the world's leading independent rail and coach travel platform, has seen its share price soar in recent months, but is it justified? Let's delve into the numbers and find out if Trainline's shares could indeed be 26% below their intrinsic value estimate.

Firstly, let's address the elephant in the room: Trainline's share price. As of the latest data, Trainline's share price is £3.96, which is significantly below its estimated intrinsic value of £5.32. This discrepancy suggests that Trainline's shares could be undervalued by approximately 26%.

But how can we be so confident in this estimate? The answer lies in the Discounted Cash Flow (DCF) model, which takes into account Trainline's future cash flows, discount rate, terminal value, and share count. By considering these factors, the DCF model estimates Trainline's intrinsic value to be £5.32 per share.

Now, let's explore the key drivers behind Trainline's growth potential in the EU and UK, which could further support the notion that its shares are undervalued.

1. Digitization of Rail Travel: Trainline is capitalizing on the digitization of rail travel, which has led to a 17% sales increase. This trend is expected to continue, driving growth for the company (Seeking Alpha, 14 days ago).
2. Strong Ticket Sales Growth: Trainline has benefited from fewer strikes and the growing popularity of digital tickets, leading to an increase in ticket sales. The company has upped its ticket sales forecasts for the full year, indicating strong growth potential (Evening Standard, 2 months ago).
3. Expansion into International Markets: Trainline's International Consumer segment offers travel apps and websites for individual travelers for journeys between the UK and outside the UK. This expansion into international markets contributes to the company's overall growth (About Trainline).
4. Growing Demand for Rail Travel: As rail travel becomes more popular, Trainline, as the leading independent rail and coach travel platform, is well-positioned to benefit from this increased demand. The company's revenue has grown by 21.27% in 2023 compared to the previous year, indicating a strong trend (Financial Performance).
5. Innovative Products and Services: Trainline has been investing in product innovation, as seen in their investor webinar in 2022. These innovations can help attract more customers and drive growth (Investor webinar – Product innovation at Trainline, 06 July 2022).



In conclusion, Trainline's share price of £3.96 could be 26% below its intrinsic value estimate of £5.32 per share, indicating that the company's shares may be undervalued. The key drivers of Trainline's growth potential in the EU and UK, such as the digitization of rail travel, strong ticket sales growth, and expansion into international markets, further support the notion that Trainline's shares could be a bargain. However, investors should always conduct their own thorough research and consider seeking professional advice before making any investment decisions.