ALG
Alamo Group Inc.
$150.02
Platform & Compounding FCF
70%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 24.1% below fair value
You pay
$150.02
Bear
$163.98
Fair
$197.60
Bull
$227.82
Bear
$163.98
+9.3%
4% stage 1 growth, 11% discount
Fair
$197.60
+31.7%
7% stage 1 growth, 11% discount
Bull
$227.82
+51.9%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
12.4x
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 $189.00 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $197.60 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