TRNS
Transcat, Inc.
$87.90
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 134.9% above fair value
You pay
$87.90
Bear
$21.82
Fair
$37.42
Bull
$52.25
Bear
$21.82
-75.2%
5% stage 1 growth, 11% discount
Fair
$37.42
-57.4%
9% stage 1 growth, 11% discount
Bull
$52.25
-40.6%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
68.0x
Market is pricing in (growth)
25.3%
vs 8.7% 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 $123.60 from 10 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $37.42 per share.
Warnings
Stock-based employee pay equals 140% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $123.60 (from 10 analysts). Our estimate is 87% 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