DCI
Donaldson Company, Inc.
$91.11
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 58.7% above fair value
You pay
$91.11
Bear
$45.93
Fair
$57.42
Bull
$68.90
Bear
$45.93
-49.6%
$3.11 × 12x P/E
Fair
$57.42
-37.0%
$3.11 × 15x P/E
Bull
$68.90
-24.4%
$3.11 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
29.3x
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 $100.33 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $57.42 per share.
Warnings
Dividend-based valuation: $87.26 (above our primary estimate by 87%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $100.33 (from 14 analysts). Our estimate is 53% 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