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Applied Industrial Technologies, Inc. (AIT) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Applied Industrial Technologies, Inc. (AIT)

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Intrinsic Value (DCF)

Current$282.47
→
Intrinsic$413.69
+46%
$278.52$413.69$670.15
Market implies 15% growth for 5 years
DCF analysis suggests AIT could have 46% upside at 25% growth — verify assumptions match your view.
At $282, the market prices in continued high-teens cash flow growth (15%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $279 → Bull $670. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →21%23%25%27%
8%$511$553$598$645
10%$355$383$414$446
12%$268$289$312$336
14%$213$230$248$267

Bull Case

  • Bull case ($670) offers 137% upside at 30% growth, 9% discount
  • 32% margin of safety vs. base case estimate
  • Market-implied growth (15%) ≤ historical CAGR (25%)

Bear Case

  • Bear case ($279) implies 1% downside at 20% growth, 12% discount
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$581.50M
Year 2$726.87M
Year 3$908.59M
Year 4$1.14B
Year 5$1.42B
Terminal$20.89B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$465.20MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is AIT stock undervalued or overvalued?
🟢 UNDERVALUED

AIT trades at $282.47 vs. our DCF-derived intrinsic value of $341.00, implying +28% upside. At a 10.0% WACC and 25.0% projected FCF growth, the market appears to be underpricing the present value of AIT's future cash flows. The bear case ($220.28) still suggests upside, providing margin of safety.

What is AIT's intrinsic value?

Using a 5-year DCF model: Base FCF of $465M, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $382M net debt and dividing by 0.04B shares: Bear $220.28 | Base $341.00 | Bull $518.79. Current price $282.47 implies +28% to base case.

How is AIT's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 25.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($13.62B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.