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The projected fair value for Jupiter Energy is AU$0.022 based on 2 Stage Free Cash Flow to Equity
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With AU$0.025 share price, Jupiter Energy appears to be trading close to its estimated fair value
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Jupiter Energy’s peers seem to be trading at a higher premium to fair value based onthe industry average of -106%
Today we will run through one way of estimating the intrinsic value of Jupiter Energy Limited (ASX:JPR) by taking the forecast future cash flows of the company and discounting them back to today’s value. This will be done using the Discounted Cash Flow (DCF) model. Don’t get put off by the jargon, the math behind it is actually quite straightforward.
Remember though, that there are many ways to estimate a company’s value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model.
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We are going to use a two-stage DCF model, which, as the name states, takes into account two stages of growth. The first stage is generally a higher growth period which levels off heading towards the terminal value, captured in the second ‘steady growth’ period. To begin with, we have to get estimates of the next ten years of cash flows. Seeing as no analyst estimates of free cash flow are available to us, we have extrapolate the previous free cash flow (FCF) from the company’s last reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we need to discount the sum of these future cash flows to arrive at a present value estimate:
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2026
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2027
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2028
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2029
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2030
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2031
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2032
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2033
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2034
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2035
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Levered FCF (A$, Millions)
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AU$1.73m
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AU$1.72m
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AU$1.73m
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AU$1.76m
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AU$1.79m
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AU$1.84m
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AU$1.88m
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AU$1.94m
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AU$2.00m
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AU$2.06m
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Growth Rate Estimate Source
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Est @ -2.18%
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Est @ -0.54%
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Est @ 0.61%
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Est @ 1.42%
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Est @ 1.98%
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Est @ 2.38%
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Est @ 2.66%
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Est @ 2.85%
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Est @ 2.98%
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Est @ 3.08%
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Present Value (A$, Millions) Discounted @ 9.0%
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AU$1.6
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AU$1.5
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AU$1.3
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AU$1.2
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AU$1.2
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AU$1.1
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AU$1.0
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AU$1.0
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AU$0.9
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AU$0.9
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(“Est” = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = AU$12m
The second stage is also known as Terminal Value, this is the business’s cash flow after the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country’s GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.3%) to estimate future growth. In the same way as with the 10-year ‘growth’ period, we discount future cash flows to today’s value, using a cost of equity of 9.0%.
Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = AU$2.1m× (1 + 3.3%) ÷ (9.0%– 3.3%) = AU$37m
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= AU$37m÷ ( 1 + 9.0%)10= AU$16m
The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is AU$27m. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of AU$0.03, the company appears around fair value at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula – garbage in, garbage out.
ASX:JPR Discounted Cash Flow December 30th 2025
The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows. Part of investing is coming up with your own evaluation of a company’s future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company’s future capital requirements, so it does not give a full picture of a company’s potential performance. Given that we are looking at Jupiter Energy as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we’ve used 9.0%, which is based on a levered beta of 0.866. Beta is a measure of a stock’s volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
See our latest analysis for Jupiter Energy
Strength
Weakness
Opportunity
Threat
Although the valuation of a company is important, it ideally won’t be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Rather it should be seen as a guide to “what assumptions need to be true for this stock to be under/overvalued?” If a company grows at a different rate, or if its cost of equity or risk free rate changes sharply, the output can look very different. For Jupiter Energy, there are three essential factors you should explore:
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Risks: You should be aware of the 3 warning signs for Jupiter Energy (2 shouldn’t be ignored!) we’ve uncovered before considering an investment in the company.
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Management:Have insiders been ramping up their shares to take advantage of the market’s sentiment for JPR’s future outlook? Check out our management and board analysis with insights on CEO compensation and governance factors.
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Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. Simply Wall St updates its DCF calculation for every Australian stock every day, so if you want to find the intrinsic value of any other stock just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
