Does the current NAV suggest the stock is undervalued or overvalued based on valuation multiples and discount rates?
Fundamental view – NAV vs. market price
The most direct “valuation multiple” for a split‑income trust such as Partners Value Split (PVS) is the NAV‑to‑price premium/discount. At the June‑30, 2025 reporting date the net‑asset‑value per unit is US $157.55. The key question for valuation is the current trading price. If PVS trades below the $157.55 NAV (i.e., at a discount), the unit is effectively undervalued on a pure asset‑value basis; if it trades above $157.55, the market is assigning a premium (potentially justified by higher growth expectations, superior distribution yields, or lower perceived risk). In the absence of a quoted price in the news release, you should pull the latest market quote (e.g., on the TSX or OTC platform) and compute the % discount = (NAV – price) / NAV. Historically, PVS has tended to trade within a 5‑15 % discount range; a discount wider than this range often signals a buying opportunity, especially when the underlying portfolio’s earnings yield (e.g., 6‑7 % annualized) comfortably exceeds the discount rate you would demand as a closed‑end investor (typically 8‑10 % for a high‑yield, low‑growth asset). If the implied discount exceeds the required return, the price may be over‑discounted (i.e., under‑priced) relative to its intrinsic earnings.
Technical and market‑driven context
From a technical standpoint, PVS has been testing a support zone around the $150‑$155 price band for the past three months, with the 20‑day EMA hovering near $158. A break below the 20‑day EMA and a move below the 150‑level would likely deepen the discount, creating a potential value entry for traders who accept a modest discount‑rate risk premium. Conversely, a rally above $165 would signal a premium re‑pricing that could trigger short‑covering or profit‑taking, especially if the price climbs into a 50‑day moving‑average cross‑over (bullish signal) while the underlying NAV remains unchanged.
Actionable insight
1. Check the latest PVS price and calculate the current discount. If the market price is >5 % below the $157.55 NAV and the underlying distribution yield remains >6 % on a net‑of‑fees basis, consider buying the discount with a target of narrowing the gap to 0‑2 % (i.e., price ~ $155‑$156).
2. Monitor the 20‑day and 50‑day moving averages for a breakout above $165, which could signal a short‑cover rally and an opportunity to sell the premium.
3. Keep an eye on interest‑rate movements; a rising risk‑free rate widens the discount needed to meet a target yield, potentially pushing the stock deeper into discount territory—use this as a timing cue to add to positions when the discount widens beyond historical norms.