GWW
W.W. Grainger, Inc.
$1,351.87
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 167.5% above fair value
You pay
$1,351.87
Bear
$377.82
Fair
$505.44
Bull
$626.71
Bear
$377.82
-72.1%
5% stage 1 growth, 11% discount
Fair
$505.44
-62.6%
9% stage 1 growth, 11% discount
Bull
$626.71
-53.6%
11% stage 1 growth, 11% discount
Adjust Assumptions
8.7%
11.0%
3.0%
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
49.3x
Market is pricing in (growth)
21.0%
vs 8.8% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (39 analysts)
$1333.75
Divergence from AlphaVal
62%
Summary
Using a two-stage FCF DCF with 9% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $505.44 per share.
Warnings
Wall Street's average price target is $1333.75 (from 39 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