ABM
ABM Industries Incorporated
$40.19
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 51.5% above fair value
You pay
$40.19
Bear
$14.21
Fair
$26.53
Bull
$37.88
Bear
$14.21
-64.6%
5% stage 1 growth, 11% discount
Fair
$26.53
-34.0%
8% stage 1 growth, 11% discount
Bull
$37.88
-5.8%
10% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
37%
Implied Market Multiple
25.4x
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $50.00 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $26.53 per share.
Warnings
Wall Street's average price target is $50.00 (from 11 analysts). Our estimate is 59% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions