IOSP
Innospec Inc.
$81.62
Platform & Compounding FCF
50%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 0.3% above fair value
You pay
$81.62
Bear
$66.03
Fair
$81.37
Bull
$95.75
Bear
$66.03
-19.1%
5% stage 1 growth, 11% discount
Fair
$81.37
-0.3%
8% stage 1 growth, 11% discount
Bull
$95.75
+17.3%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (8% base case)
Terminal Value % of EV
37%
Implied Market Multiple
21.6x
Market is pricing in (growth)
10.0%
vs 8.3% 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 $115.00 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $81.37 per share.
Warnings
Wall Street's average price target is $115.00 (from 9 analysts). Our estimate is 37% 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