KE
Kimball Electronics, Inc.
$24.86
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 66.7% below fair value
You pay
$24.86
Bear
$64.84
Fair
$74.60
Bull
$83.29
Bear
$64.84
+160.8%
3% stage 1 growth, 11% discount
Fair
$74.60
+200.1%
5% stage 1 growth, 11% discount
Bull
$83.29
+235.0%
6% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (5% base case)
Terminal Value % of EV
34%
Implied Market Multiple
4.5x
Market is pricing in (growth)
-12.6%
vs 4.9% 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 $26.00 from 5 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $74.60 per share.
Warnings
Stock-based employee pay equals 38% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $26.00 (from 5 analysts). Our estimate is 234% above 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