STE
STERIS plc
$216.57
Platform & Compounding FCF
65%
Two-stage FCF DCF
Mild
·
Conviction
Overvalued
Trading 11.0% above fair value
You pay
$216.57
Bear
$147.81
Fair
$195.04
Bull
$239.67
Bear
$147.81
-31.8%
5% stage 1 growth, 11% discount
Fair
$195.04
-9.9%
9% stage 1 growth, 11% discount
Bull
$239.67
+10.7%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
23.4x
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 $269.50 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $195.04 per share.
Warnings
Wall Street's average price target is $269.50 (from 13 analysts). Our estimate is 35% 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