AIT
Applied Industrial Technologies, Inc.
$331.15
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 36.8% above fair value
You pay
$331.15
Bear
$195.69
Fair
$242.06
Bull
$284.19
Bear
$195.69
-40.9%
4% stage 1 growth, 11% discount
Fair
$242.06
-26.9%
7% stage 1 growth, 11% discount
Bull
$284.19
-14.2%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
27.0x
Market is pricing in (growth)
13.0%
vs 7.0% 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 $336.75 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $242.06 per share.
Warnings
Wall Street's average price target is $336.75 (from 15 analysts). Our estimate is 37% 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