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Peninsula Energy (ASX:PEN) is back in focus after confirming the acidification process has started at Header House 16 within the Lance uranium project, with early progress reportedly ahead of schedule.
See our latest analysis for Peninsula Energy.
The latest operational reset at Lance seems to have caught investors’ attention, with a 30 day share price return of 55.38% and a 90 day share price return of 77.19% from a base that still reflects a 1 year total shareholder return decline of 11.03%. This suggests sentiment has improved recently while longer term holders remain under water.
If this kind of uranium story has you watching what might move next, it could be worth broadening your search to fast growing stocks with high insider ownership.
With Peninsula Energy posting a strong short term share price rebound yet still sitting on a 1 year total shareholder return decline, the real question for investors is whether the current price leaves room for upside or if the market is already pricing in future growth.
The SWS DCF model puts Peninsula Energy’s fair value at A$4.03 per share, compared with the latest close of A$1.01, implying a wide gap between price and modelled future cash flows.
The model works by projecting future cash flows from the Lance project and discounting them back to today at an appropriate rate, then summing those cash flows into a single per share value. It is a cash flow based view, rather than one anchored to current earnings or revenue, which matters for a company that currently reports no meaningful revenue and a net loss of A$12.495m.
For a uranium developer still in the ramp up phase, a DCF approach leans heavily on assumptions about when operations scale, how quickly earnings improve and what long term profitability looks like. That may help explain why the model can arrive at a fair value that is much higher than a market price that still seems influenced by a 3 year total shareholder return decline of 54.91% and a 5 year decline of 46.24%.
Look into how the SWS DCF model arrives at its fair value.
Result: DCF Fair value of A$4.03 (UNDERVALUED)
However, you still need to weigh project execution setbacks or prolonged losses of A$12.495m against the recent share price rebound and the implied valuation gap.
Find out about the key risks to this Peninsula Energy narrative.
While the SWS DCF model arrives at a fair value of A$4.03, Peninsula Energy is also flagged as “good value” based on its P/B of 1.7x versus 1.8x for the Australian Oil and Gas industry and 10.4x for peers. So is the current discount a cushion or a warning sign?
