ESP
Espey Mfg. & Electronics Corp.
$63.69
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 52.6% below fair value
You pay
$63.69
Bear
$101.94
Fair
$134.34
Bull
$166.66
Bear
$101.94
+60.1%
6% stage 1 growth, 11% discount
Fair
$134.34
+110.9%
11% stage 1 growth, 11% discount
Bull
$166.66
+161.7%
14% stage 1 growth, 11% discount
Adjust Assumptions
10.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (11% base case)
Terminal Value % of EV
39%
Implied Market Multiple
9.3x
Market is pricing in (growth)
-1.6%
vs 10.6% base
Summary
Using a two-stage FCF DCF with 11% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $134.34 per share.
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