PINC
Premier, Inc.
$28.26
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 17.0% above fair value
You pay
$28.26
Bear
$19.32
Fair
$24.15
Bull
$28.99
Bear
$19.32
-31.6%
$1.62 × 10x P/E
Fair
$24.15
-14.5%
$1.62 × 12x P/E
Bull
$28.99
+2.6%
$1.62 × 15x P/E
Key Value Driver
Normalized P/E multiple (12x base case)
Implied Market Multiple
17.4x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $33.15 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $24.15 per share.
Warnings
The company's reported profits differ from official accounting profits by 638%. Check what costs are being left out of the adjusted number.
The company pays out 382% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $13.69 (below our primary estimate by 33%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $33.15 (from 31 analysts). Our estimate is 39% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples