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Hubbell Incorporated (HUBB) Intrinsic Value

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

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Hubbell Incorporated (HUBB)

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Intrinsic Value (DCF)

Current$484.11
→
Intrinsic$329.11
-32%
$216.41$329.11$543.22
Market implies 24% growth for 5 years
Current price reflects execution expectations above 15% growth — not unreasonable for quality businesses.
At $484, the market prices in continued strong cash flow growth (24%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $216 → Bull $543. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →11%13%15%17%
8%$402$439$478$521
10%$276$302$329$358
12%$207$226$246$268
14%$163$178$194$211

Bull Case

  • Bull case ($543) offers 12% upside at 17% growth, 9% discount
  • Conservative 15% growth assumption is achievable based on track record

Bear Case

  • Bear case ($216) implies 55% downside at 12% growth, 12% discount
  • Price reflects 24% growth expectations vs 15% historical — high bar to clear
  • Trading 32% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$928.41M
Year 2$1.06B
Year 3$1.22B
Year 4$1.39B
Year 5$1.60B
Terminal$23.48B

📐 Model Inputs

Growth Rate14.5%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$810.80MTTM 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 HUBB stock undervalued or overvalued?
🔴 OVERVALUED

HUBB trades at $484.11 vs. our DCF-derived intrinsic value of $329.11, implying -31% downside. Using a 10.0% WACC and 14.5% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($487.13) suggests limited upside.

What is HUBB's intrinsic value?

Using a 5-year DCF model: Base FCF of $811M, projected at 14.5% 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 $1.39B net debt and dividing by 0.05B shares: Bear $217.36 | Base $329.11 | Bull $487.13. Current price $484.11 implies -31% to base case.

How is HUBB's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.5% 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 ($19.16B).

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: 23.6x.