AWI
Armstrong World Industries, Inc.
$178.65
Platform & Compounding FCF
70%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 21.5% above fair value
You pay
$178.65
Bear
$100.87
Fair
$147.01
Bull
$194.21
Bear
$100.87
-43.5%
7% stage 1 growth, 11% discount
Fair
$147.01
-17.7%
12% stage 1 growth, 11% discount
Bull
$194.21
+8.7%
15% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
40%
Implied Market Multiple
32.7x
Market is pricing in (growth)
15.5%
vs 11.6% 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 $197.50 from 26 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $147.01 per share.
Warnings
Wall Street's average price target is $197.50 (from 26 analysts). Our estimate is 34% 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