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MKS Inc. (MKSI) Intrinsic Value

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

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MKS Inc. (MKSI)

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Intrinsic Value (DCF)

Current$205.26
→
Intrinsic$103.09
-50%
$51.14$103.09$201.75
Market implies 31% growth for 5 years
Current price reflects execution expectations above 18% growth — not unreasonable for quality businesses.
At $205, the market prices in continued strong cash flow growth (31%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $51 → Bull $202. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →14%16%18%20%
8%$138$155$173$192
10%$79$91$103$116
12%$47$56$65$74
14%$26$33$40$48

Bull Case

  • Bull case ($202) with 21% growth, 9% discount rate

Bear Case

  • Bear case ($51) implies 75% downside at 14% growth, 12% discount
  • Price reflects 31% growth expectations vs 18% historical — high bar to clear
  • Trading 50% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$483.06M
Year 2$569.13M
Year 3$670.54M
Year 4$790.02M
Year 5$930.79M
Terminal$13.70B

📐 Model Inputs

Growth Rate17.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$410.00MTTM 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 MKSI stock undervalued or overvalued?
🔴 OVERVALUED

MKSI trades at $205.26 vs. our DCF-derived intrinsic value of $103.09, implying -44% downside. Using a 10.0% WACC and 17.8% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($181.89) suggests limited upside.

What is MKSI's intrinsic value?

Using a 5-year DCF model: Base FCF of $410M, projected at 17.8% 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 $4.07B net debt and dividing by 0.07B shares: Bear $48.74 | Base $103.09 | Bull $181.89. Current price $205.26 implies -44% to base case.

How is MKSI's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 17.8% 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 ($11.03B).

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: 26.9x.