ABM
ABM Industries Inc.
$47.20
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 205.5% above fair value
You pay
$47.20
Bear
$3.83
Fair
$15.45
Bull
$25.69
Bear
$3.83
-91.9%
4% stage 1 growth, 11% discount
Fair
$15.45
-67.3%
6% stage 1 growth, 11% discount
Bull
$25.69
-45.6%
8% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (6% base case)
Terminal Value % of EV
35%
Implied Market Multiple
34.4x
Market is pricing in (growth)
16.2%
vs 5.9% base
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 $48.33 from 11 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $15.45 per share.
Warnings
Wall Street's average price target is $48.33 (from 11 analysts). Our estimate is 85% 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