DCI
Donaldson Company, Inc.
$89.25
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 54.5% above fair value
You pay
$89.25
Bear
$46.20
Fair
$57.75
Bull
$69.30
Bear
$46.20
-48.2%
$3.85 × 12x P/E
Fair
$57.75
-35.3%
$3.85 × 15x P/E
Bull
$69.30
-22.4%
$3.85 × 18x P/E
Adjust Assumptions
15.0x
3.85$
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
23.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$97.00
Divergence from AlphaVal
40%
Summary
Applying a 15x P/E to adjusted EPS of $3.85, the base-case value is $57.75 per share. DDM cross-check: $95.75.
Warnings
Dividend-based valuation: $95.75 (above our primary estimate by 66%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $97.00 (from 14 analysts). Our estimate is 40% 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