GWW
W.W. Grainger, Inc.
$1,247.79
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 77.2% above fair value
You pay
$1,247.79
Bear
$525.47
Fair
$704.19
Bull
$874.01
Bear
$525.47
-57.9%
5% stage 1 growth, 11% discount
Fair
$704.19
-43.6%
9% stage 1 growth, 11% discount
Bull
$874.01
-30.0%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
47.9x
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 $1229.25 from 38 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $704.19 per share.
Warnings
Wall Street's average price target is $1229.25 (from 38 analysts). Our estimate is 61% 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