GWW
W.W. Grainger, Inc.
$1,391.68
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 93.8% above fair value
You pay
$1,391.68
Bear
$535.79
Fair
$718.02
Bull
$891.17
Bear
$535.79
-61.5%
5% stage 1 growth, 11% discount
Fair
$718.02
-48.4%
9% stage 1 growth, 11% discount
Bull
$891.17
-36.0%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
53.2x
Market is pricing in (growth)
22.0%
vs 8.8% 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 $1275.33 from 38 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $718.02 per share.
Warnings
Wall Street's average price target is $1275.33 (from 38 analysts). Our estimate is 62% 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