ESI
Element Solutions Inc
$37.40
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 73.0% above fair value
You pay
$37.40
Bear
$16.43
Fair
$21.62
Bull
$26.27
Bear
$16.43
-56.1%
4% stage 1 growth, 11% discount
Fair
$21.62
-42.2%
7% stage 1 growth, 11% discount
Bull
$26.27
-29.8%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
44.5x
Market is pricing in (growth)
19.6%
vs 6.6% 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 $45.29 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $21.62 per share.
Warnings
Wall Street's average price target is $45.29 (from 35 analysts). Our estimate is 75% 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