STE
STERIS plc
$214.40
Platform & Compounding FCF
65%
Two-stage FCF DCF
Moderate
·
Conviction
Overvalued
Trading 19.8% above fair value
You pay
$214.40
Bear
$134.34
Fair
$178.98
Bull
$221.41
Bear
$134.34
-37.3%
5% stage 1 growth, 11% discount
Fair
$178.98
-16.5%
9% stage 1 growth, 11% discount
Bull
$221.41
+3.3%
11% stage 1 growth, 11% discount
Adjust Assumptions
8.8%
11.0%
3.0%
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
23.2x
Market is pricing in (growth)
11.0%
vs 8.8% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (14 analysts)
$271.33
Divergence from AlphaVal
34%
Summary
Using a two-stage FCF DCF with 9% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $178.98 per share.
Warnings
Wall Street's average price target is $271.33 (from 14 analysts). Our estimate is 34% 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