DCF Studio

    AME · NYQ · Industrials

    AMETEK, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 101.13

    Market price

    USD 237.64

    Implied upside

    -57.4%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Current EV/EBITDA of 24.2x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 101.13-57.4%
    Exit multiple
    USD 203.79-14.2%
    Market price
    USD 237.64

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn1bn3bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 7.9bnUSD 8.4bnUSD 8.9bnUSD 9.5bnUSD 10.1bn+6.4%
    EBITUSD 2.0bnUSD 2.1bnUSD 2.3bnUSD 2.4bnUSD 2.6bn+6.4%
    NOPATUSD 1.6bnUSD 1.7bnUSD 1.9bnUSD 2.0bnUSD 2.1bn+6.4%
    Add depreciation & amortisationUSD 423.9mUSD 450.9mUSD 479.6mUSD 510.1mUSD 542.6m+6.4%
    Less capital expenditureUSD -155.8mUSD -165.7mUSD -176.2mUSD -187.5mUSD -199.4m+6.4%
    Less increase in working capitalUSD 91.2mUSD 97.0mUSD 103.2mUSD 109.8mUSD 116.8m-6.4%
    Free cashflow to firmUSD 2.0bnUSD 2.1bnUSD 2.3bnUSD 2.4bnUSD 2.6bn+6.4%
    Discount factor0.95260.86450.78450.71190.6461-
    Present valueUSD 1.9bnUSD 1.8bnUSD 1.8bnUSD 1.7bnUSD 1.7bn-3.5%
    Present Value Of The ForecastUSD 8.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.993Reported 0.989, pulled toward 1.0 (Blume)
    Cost of equity10.46%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 54.5bn95.9% of capital
    Total debtUSD 2.3bn4.1% of capital, book value as a proxy
    Tax rate18.0%Effective, capped at statutory
    WACC10.20%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 101.13

    65% of EV

    Forecast FCFF, final year
    USD 2.6bn
    Capex at depreciation, working capital in reinvestment
    USD 2.4bn
    Less reinvestment at g/ROIC (20.3% of NOPAT)
    USD -486.2m
    Capitalised
    USD 1.9bn
    ROIC (reported)
    12.3%
    Terminal value, undiscounted
    USD 25.4bn
    Terminal value, discounted
    USD 16.4bn
    Enterprise value
    USD 25.3bn
    Less net debt
    USD 1.9bn
    Equity value
    USD 23.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 203.79

    82% of EV

    Terminal value, undiscounted
    USD 62.1bn
    Terminal value, discounted
    USD 40.1bn
    Enterprise value
    USD 49.0bn
    Less net debt
    USD 1.9bn
    Equity value
    USD 47.1bn

    Spread between methods: 67%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    8.20%128.54131.99135.98140.69146.34
    9.20%111.70113.71115.98118.56121.56
    10.20%98.7199.86101.13102.53104.10
    11.20%88.3888.9989.6590.3691.12
    12.20%79.9680.2480.5180.7981.07

    Outlined: this model. Green text: above today's price of 237.64. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year6.4%26.9%+20.6pp
    EBIT margin25.4%62.4%+37.0pp
    Discount rate10.2%5.7%-4.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.