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AMETEK, Inc. (AME) Intrinsic Value

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

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AMETEK, Inc. (AME)

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Intrinsic Value (DCF)

Current$215.02
→
Intrinsic$141.82
-34%
$94.25$141.82$232.23
Market implies 21% growth for 5 years
Current price reflects execution expectations above 11% growth — not unreasonable for quality businesses.
At $215, the market prices in continued strong cash flow growth (21%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $94 → Bull $232. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →7%9%11%13%
8%$171$187$204$223
10%$119$130$142$154
12%$90$98$107$117
14%$72$78$85$93

Bull Case

  • Bull case ($232) offers 8% upside at 13% growth, 9% discount
  • Conservative 11% growth assumption is achievable based on track record

Bear Case

  • Bear case ($94) implies 56% downside at 9% growth, 12% discount
  • Price reflects 21% growth expectations vs 11% historical — high bar to clear
  • Trading 34% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$1.89B
Year 2$2.09B
Year 3$2.32B
Year 4$2.58B
Year 5$2.86B
Terminal$42.10B

📐 Model Inputs

Growth Rate11.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.70BTTM 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 AME stock undervalued or overvalued?
🔴 OVERVALUED

AME trades at $215.02 vs. our DCF-derived intrinsic value of $141.82, implying -34% downside. Using a 10.0% WACC and 11.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($202.50) suggests limited upside.

What is AME's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.70B, projected at 11.0% 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 $1.95B net debt and dividing by 0.23B shares: Bear $97.63 | Base $141.82 | Bull $202.50. Current price $215.02 implies -34% to base case.

How is AME's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 11.0% 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 ($34.88B).

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: 20.5x.