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Franklin Electric Co., Inc. (FELE) Intrinsic Value

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

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Franklin Electric Co., Inc. (FELE)

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Intrinsic Value (DCF)

Current$100.45
→
Intrinsic$108.82
+8%
$74.48$108.82$174.07
Market implies 12% growth for 5 years
FELE appears fairly valued — current price aligns with our DCF estimate.
At $100, the market prices in 12% annual cash flow growth — a moderate expectation aligned with historical trends (14%).
Range: Bear $74 → Bull $174. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →10%12%14%16%
8%$131$142$154$167
10%$93$100$109$118
12%$72$77$84$90
14%$58$63$68$73

Bull Case

  • Bull case ($174) offers 73% upside at 16% growth, 9% discount
  • 8% margin of safety vs. base case estimate
  • Market-implied growth (12%) ≤ historical CAGR (14%)

Bear Case

  • Bear case ($74) implies 26% downside at 11% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$249.80M
Year 2$284.06M
Year 3$323.02M
Year 4$367.32M
Year 5$417.70M
Terminal$6.15B

📐 Model Inputs

Growth Rate13.7%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$219.67MTTM 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 FELE stock undervalued or overvalued?
🟡 FAIRLY VALUED

FELE trades at $100.45, within 10% of our $108.82 intrinsic value estimate. At 10.0% WACC and 13.7% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $75.23 (bear) to $156.01 (bull).

What is FELE's intrinsic value?

Using a 5-year DCF model: Base FCF of $220M, projected at 13.7% 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 $-29M net debt and dividing by 0.05B shares: Bear $75.23 | Base $108.82 | Bull $156.01. Current price $100.45 implies +9% to base case.

How is FELE's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.7% 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 ($5.03B).

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: 22.9x.