DCI
Donaldson Company, Inc.
$83.66
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 44.3% above fair value
You pay
$83.66
Bear
$46.39
Fair
$57.99
Bull
$69.59
Bear
$46.39
-44.5%
$3.11 × 12x P/E
Fair
$57.99
-30.7%
$3.11 × 15x P/E
Bull
$69.59
-16.8%
$3.11 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
26.9x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $103.20 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $57.99 per share.
Warnings
Dividend-based valuation: $79.78 (above our primary estimate by 71%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $103.20 (from 14 analysts). Our estimate is 55% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples