AIT
Applied Industrial Technologies, Inc.
$307.10
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 28.8% above fair value
You pay
$307.10
Bear
$192.77
Fair
$238.45
Bull
$279.96
Bear
$192.77
-37.2%
4% stage 1 growth, 11% discount
Fair
$238.45
-22.4%
7% stage 1 growth, 11% discount
Bull
$279.96
-8.8%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
25.1x
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 $322.33 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $238.45 per share.
Warnings
Wall Street's average price target is $322.33 (from 15 analysts). Our estimate is 35% 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