ALG
Alamo Group Inc.
$162.43
Platform & Compounding FCF
70%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 17.7% below fair value
You pay
$162.43
Bear
$163.81
Fair
$197.40
Bull
$227.59
Bear
$163.81
+0.8%
4% stage 1 growth, 11% discount
Fair
$197.40
+21.5%
7% stage 1 growth, 11% discount
Bull
$227.59
+40.1%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
13.5x
Market is pricing in (growth)
3.7%
vs 6.6% 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 $188.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $197.40 per share.
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