ESI
Element Solutions Inc
$40.75
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 95.8% above fair value
You pay
$40.75
Bear
$15.85
Fair
$20.81
Bull
$25.26
Bear
$15.85
-61.1%
4% stage 1 growth, 11% discount
Fair
$20.81
-48.9%
7% stage 1 growth, 11% discount
Bull
$25.26
-38.0%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
48.0x
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 $42.43 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $20.81 per share.
Warnings
Wall Street's average price target is $42.43 (from 35 analysts). Our estimate is 73% 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