{"id":2083928,"date":"2025-10-11T14:38:15","date_gmt":"2025-10-11T14:38:15","guid":{"rendered":"https:\/\/celebrity.land\/en\/?p=2083928"},"modified":"2025-10-11T14:38:15","modified_gmt":"2025-10-11T14:38:15","slug":"is-there-an-opportunity-with-inspired-entertainment-inc-s-nasdaqinse-26-undervaluation","status":"publish","type":"post","link":"https:\/\/celebrity.land\/en\/is-there-an-opportunity-with-inspired-entertainment-inc-s-nasdaqinse-26-undervaluation\/","title":{"rendered":"Is There An Opportunity With Inspired Entertainment, Inc.&#8217;s (NASDAQ:INSE) 26% Undervaluation?"},"content":{"rendered":"<p><\/p>\n<div data-cy-id=\"article-content\">\n<h3>Key Insights<\/h3>\n<ul>\n<li> Inspired Entertainment&#8217;s estimated fair value is US$11.15 based on 2 Stage Free Cash Flow to Equity <\/li>\n<li> Inspired Entertainment is estimated to be 26% undervalued based on current share price of US$8.27 <\/li>\n<li> Our fair value estimate is 16% lower than<a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/stocks\/us\/consumer-services\/nasdaq-inse\/inspired-entertainment\/valuation\" rel=\"noopener noreferrer\" data-vars-link-type=\"cta\" class=\"company-report-links\"> Inspired Entertainment&#8217;s analyst price target of US$13.33<\/a> <\/li>\n<\/ul>\n<p> Today we will run through one way of estimating the intrinsic value of Inspired Entertainment, Inc. (<a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/stocks\/us\/consumer-services\/nasdaq-inse\/inspired-entertainment\" rel=\"noopener noreferrer\" data-vars-link-type=\"intro\" class=\"company-report-links\">NASDAQ:INSE<\/a>) by taking the expected future cash flows and discounting them to their present value.  Our analysis will employ the Discounted Cash Flow (DCF) model.  It may sound complicated, but actually it is quite simple! <\/p>\n<p> We generally believe that a company&#8217;s value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws.  Anyone interested in learning a bit more about intrinsic value should have a read of the <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/github.com\/SimplyWallSt\/Company-Analysis-Model\/blob\/master\/MODEL.markdown#discounted-cash-flow-dcf\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Simply Wall St analysis model<\/a>. <\/p>\n<p class=\"link-injector\"><a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/discover\/investing-ideas\/434426\/us-transformative-artificial-intelligence-ai-healthcare-stocks\/global\" rel=\"noopener noreferrer\" data-vars-link-type=\"investing-ideas\" class=\"company-report-links\">AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part &#8211; they are all under $10bn in marketcap &#8211; there is still time to get in early.<\/a><\/p>\n<h2> The Model <\/h2>\n<p> We&#8217;re using the 2-stage growth model, which simply means we take in account two stages of company&#8217;s growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate.  To begin with, we have to get estimates of the next ten years of cash flows.   Where possible we use analyst estimates, but when these aren&#8217;t available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.  <\/p>\n<p> Generally we assume that a dollar today is more valuable than a dollar in the future,  so we discount the value of these future cash flows to their estimated value in today&#8217;s dollars: <\/p>\n<h4> 10-year free cash flow (FCF) forecast <\/h4>\n<table>\n<tr>\n<td> <\/td>\n<td><strong>2026<\/strong><\/td>\n<td><strong>2027<\/strong><\/td>\n<td><strong>2028<\/strong><\/td>\n<td><strong>2029<\/strong><\/td>\n<td><strong>2030<\/strong><\/td>\n<td><strong>2031<\/strong><\/td>\n<td><strong>2032<\/strong><\/td>\n<td><strong>2033<\/strong><\/td>\n<td><strong>2034<\/strong><\/td>\n<td><strong>2035<\/strong><\/td>\n<\/tr>\n<tr>\n<td><strong> Levered FCF ($, Millions) <\/strong><\/td>\n<td>US$29.7m<\/td>\n<td>US$30.3m<\/td>\n<td>US$30.4m<\/td>\n<td>US$30.8m<\/td>\n<td>US$31.3m<\/td>\n<td>US$32.0m<\/td>\n<td>US$32.8m<\/td>\n<td>US$33.7m<\/td>\n<td>US$34.6m<\/td>\n<td>US$35.6m<\/td>\n<\/tr>\n<tr>\n<td><strong>Growth Rate Estimate Source<\/strong><\/td>\n<td>Analyst x4<\/td>\n<td>Analyst x2<\/td>\n<td>Est @ 0.43%<\/td>\n<td>Est @ 1.22%<\/td>\n<td>Est @ 1.78%<\/td>\n<td>Est @ 2.17%<\/td>\n<td>Est @ 2.44%<\/td>\n<td>Est @ 2.63%<\/td>\n<td>Est @ 2.77%<\/td>\n<td>Est @ 2.86%<\/td>\n<\/tr>\n<tr>\n<td><strong> Present Value ($, Millions) Discounted @ 12% <\/strong><\/td>\n<td>US$26.4<\/td>\n<td>US$24.0<\/td>\n<td>US$21.5<\/td>\n<td>US$19.4<\/td>\n<td>US$17.5<\/td>\n<td>US$16.0<\/td>\n<td>US$14.5<\/td>\n<td>US$13.3<\/td>\n<td>US$12.2<\/td>\n<td>US$11.1<\/td>\n<\/tr>\n<\/table>\n<p><i>(&#8220;Est&#8221; = FCF growth rate estimated by Simply Wall St)<\/i><br \/><strong>Present Value of 10-year Cash Flow (PVCF)<\/strong> = US$176m<\/p>\n<p> After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage.  For a number of reasons a very conservative growth rate is used that cannot exceed that of a country&#8217;s GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (3.1%) to estimate future growth. In the same way as with the 10-year &#8216;growth&#8217; period, we discount future cash flows to today&#8217;s value, using a cost of equity of 12%. <\/p>\n<p><strong>Terminal Value (TV)<\/strong>= FCF<sub>2035<\/sub> \u00d7 (1 + g) \u00f7 (r \u2013 g) = US$36m\u00d7 (1 + 3.1%) \u00f7 (12%\u2013 3.1%) = US$397m<\/p>\n<p><strong>Present Value of Terminal Value (PVTV)<\/strong>= TV \/ (1 + r)<sup>10<\/sup>= US$397m\u00f7 ( 1 + 12%)<sup>10<\/sup>= US$124m<\/p>\n<p> The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value,  which in this case is US$300m.  In the final step we divide the equity value by the number of shares outstanding.  Relative to the current share price of US$8.3, the company appears   a touch undervalued    at a 26% discount to where the stock price trades currently.   Remember though, that this is just an approximate valuation, and like any complex formula &#8211; garbage in, garbage out. <\/p>\n<figure><a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/stocks\/us\/consumer-services\/nasdaq-inse\/inspired-entertainment\/valuation\" rel=\"noopener noreferrer\" data-vars-link-type=\"infographic\" class=\"company-report-links\"><\/a><figcaption class=\"wp-caption-text\">NasdaqCM:INSE Discounted Cash Flow October 11th 2025<\/figcaption><\/figure>\n<h2> The Assumptions <\/h2>\n<p> The calculation above is very dependent on two assumptions. The first is the discount rate and the other is the cash flows.  You don&#8217;t have to agree with these inputs, I recommend redoing the calculations yourself and playing with them.  The DCF also does not consider the possible cyclicality of an industry, or a company&#8217;s future capital requirements, so it does not give a full picture of a company&#8217;s potential performance.  Given that we are looking at Inspired Entertainment 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&#8217;ve used 12%, which is based on a levered beta of 2.000. Beta is a measure of a stock&#8217;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. <\/p>\n<p><span class=\"veryHighlightLink\"><a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/stocks\/us\/consumer-services\/nasdaq-inse\/inspired-entertainment\" rel=\"noopener noreferrer\" data-vars-link-type=\"cta\" class=\"company-report-links\"> View our latest analysis for Inspired Entertainment <\/a><\/span><\/p>\n<h3>SWOT Analysis for Inspired Entertainment<\/h3>\n<div class=\"sc-8e1a88f-5 dSGGTD\">\n<div class=\"block strength\"><strong>Strength<\/strong> <\/p>\n<ul>\n<li> No major strengths identified for INSE.<\/li>\n<\/ul>\n<\/div>\n<div class=\"block weakness\"><strong>Weakness<\/strong> <\/p>\n<ul>\n<li>Interest payments on debt are not well covered.<\/li>\n<\/ul>\n<\/div>\n<div class=\"block opportunity\"><strong>Opportunity<\/strong> <\/p>\n<ul>\n<li>Good value based on P\/E ratio and estimated fair value.<\/li>\n<\/ul><\/div>\n<div class=\"block threat\"><strong>Threat<\/strong><\/p>\n<ul>\n<li>Debt is not well covered by operating cash flow.<\/li>\n<\/ul>\n<ul>\n<li>Total liabilities exceed total assets, which raises the risk of financial distress.<\/li>\n<\/ul>\n<ul>\n<li>Annual earnings are forecast to decline for the next 2 years.<\/li>\n<\/ul><\/div>\n<\/div>\n<h2> Looking Ahead: <\/h2>\n<p> Whilst important, the DCF calculation  ideally won&#8217;t be the sole piece of analysis you scrutinize for a company.  DCF models are not the be-all and end-all of investment valuation.  Preferably you&#8217;d apply different cases and assumptions and see how they would impact the company&#8217;s valuation.  For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result.   Why is the intrinsic value higher than the current share price?   For Inspired Entertainment, we&#8217;ve put together three  relevant  factors  you should explore: <\/p>\n<ol>\n<li> <strong>Risks<\/strong>: For instance, we&#8217;ve identified <a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/stocks\/us\/consumer-services\/nasdaq-inse\/inspired-entertainment\" rel=\"noopener noreferrer\" data-vars-link-type=\"conclusion\" class=\"company-report-links\"> <strong> 4 warning signs for Inspired Entertainment<\/strong> (3 are potentially serious) <\/a> you should be aware of. <\/li>\n<li><strong>Future Earnings<\/strong>: How does INSE&#8217;s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our <a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/stocks\/us\/consumer-services\/nasdaq-inse\/inspired-entertainment\/future\" rel=\"noopener noreferrer\" data-vars-link-type=\"conclusion\" class=\"company-report-links\">free analyst growth expectation chart<\/a>.<\/li>\n<li> <strong>Other Solid Businesses<\/strong>: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore <a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/discover\/investing-ideas\/10146\/solid-balance-sheet-and-fundamentals\/global\" rel=\"noopener noreferrer\" data-vars-link-type=\"conclusion-grid\" class=\"company-report-links\">our interactive list of stocks with solid business fundamentals<\/a> to see if there are other companies you may not have considered! <\/li>\n<\/ol>\n<p> PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just <a rel=\"nofollow\" target=\"_blank\" target=\"_blank\" href=\"https:\/\/simplywall.st\/discover\/investing-ideas\/157\/popular-view\" rel=\"noopener noreferrer\" data-vars-link-type=\"conclusion-grid\" class=\"company-report-links\">search here<\/a>.<\/p>\n<div class=\"sc-faf9a398-0 jKqVyS\">\n<h3 class=\"sc-dODueM KOdCR\"><strong>New: <\/strong>AI Stock Screener &amp; Alerts<\/h3>\n<p>Our new AI Stock Screener scans the market every day to uncover opportunities.<\/p>\n<p>\u2022 Dividend Powerhouses (3%+ Yield)<br \/>\u2022 Undervalued Small Caps with Insider Buying<br \/>\u2022 High growth Tech and AI Companies<\/p>\n<p>Or build your own from over 50 metrics.<\/p>\n<p><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/simplywall.st\/features\/stock-screener\" target=\"_blank\" data-focus=\"dashed\" class=\"sc-kuACkN dMOfgv\">Explore Now for Free<\/a><\/div>\n<p class=\"sc-8e1a88f-2 fcAAUm\"><strong>Have feedback on this article? Concerned about the content?<\/strong> <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/investor-research.typeform.com\/to\/wvg6MFri#feedback_token=NDExOTg4NjpkZjk5N2EwMDY3NWQ1ZmJi&amp;company=Inspired Entertainment&amp;blueprintid=4119886\" target=\"_blank\" rel=\"nofollow noopener noreferrer\"><strong>Get in touch<\/strong><\/a><strong> with us directly.<\/strong><i> Alternatively, email editorial-team (at) simplywallst.com.<\/i><\/p>\n<p><i>This article by Simply Wall St is general in nature. <strong>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.<\/strong> 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.<\/i><\/p>\n<\/div>\n<p><em> \u2018 The preceding article may include information circulated by third parties \u2019 <\/em><\/p>\n<p><em> \u2018 Some details of this article were extracted from the following source simplywall.st \u2019 <\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Insights Inspired Entertainment&#8217;s estimated fair value is US$11.15 based on 2 Stage Free Cash Flow to Equity Inspired Entertainment is estimated to be 26% undervalued based on current share price of US$8.27 Our fair value estimate is 16% lower than Inspired Entertainment&#8217;s analyst price target of US$13.33 Today we will run through one way [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":2083929,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_jetpack_memberships_contains_paid_content":false,"jnews-multi-image_gallery":[],"jnews_single_post":[],"jnews_primary_category":[],"jnews_social_meta":[],"footnotes":""},"categories":[25172],"tags":[],"class_list":["post-2083928","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-entertainment"],"jetpack_featured_media_url":"https:\/\/celebrity.land\/en\/wp-content\/uploads\/2025\/10\/Is-There-An-Opportunity-With-Inspired-Entertainment-Incs-NASDAQINSE-26.png","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts\/2083928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/comments?post=2083928"}],"version-history":[{"count":1,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts\/2083928\/revisions"}],"predecessor-version":[{"id":2083930,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/posts\/2083928\/revisions\/2083930"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/media\/2083929"}],"wp:attachment":[{"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/media?parent=2083928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/categories?post=2083928"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/celebrity.land\/en\/wp-json\/wp\/v2\/tags?post=2083928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}