GWW
W.W. Grainger, Inc.
$1,324.49
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 162.7% above fair value
You pay
$1,324.49
Bear
$376.92
Fair
$504.24
Bull
$625.22
Bear
$376.92
-71.5%
5% stage 1 growth, 11% discount
Fair
$504.24
-61.9%
9% stage 1 growth, 11% discount
Bull
$625.22
-52.8%
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
48.5x
Market is pricing in (growth)
20.8%
vs 8.8% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (39 analysts)
$1312.00
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 $504.24 per share.
Warnings
Wall Street's average price target is $1312.00 (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