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Vertiv Holdings Co (VRT) Intrinsic Value

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

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Vertiv Holdings Co (VRT)

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Intrinsic Value (DCF)

Current$172.54
→
Intrinsic$107.55
-38%
$70.29$107.55$181.59
Current price reflects execution expectations above 25% growth — not unreasonable for quality businesses.
Range: Bear $70 → Bull $182. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →21%23%25%27%
8%$138$149$162$175
10%$92$99$108$116
12%$68$73$79$85
14%$53$57$62$66

Bull Case

  • Bull case ($182) offers 5% upside at 30% growth, 8% discount

Bear Case

  • Bear case ($70) implies 59% downside at 20% growth, 12% discount
  • Trading 38% above base case — execution must exceed assumptions to justify
  • Using 25% growth — aggressive, watch for mean reversion
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5-Year Free Cash Flow Projection

Year 1$1.42B
Year 2$1.77B
Year 3$2.22B
Year 4$2.77B
Year 5$3.46B
Terminal$54.90B

📐 Model Inputs

Growth Rate25.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate9.5%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.14BTTM 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 VRT stock undervalued or overvalued?
🔴 OVERVALUED

VRT trades at $172.54 vs. our DCF-derived intrinsic value of $88.15, implying -50% downside. Using a 9.5% WACC and 25.0% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($138.49) suggests limited upside.

What is VRT's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.14B, projected at 25.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 9.5% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.91B net debt and dividing by 0.39B shares: Bear $55.01 | Base $88.15 | Bull $138.49. Current price $172.54 implies -50% to base case.

How is VRT'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=9.5%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($35.97B).

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: 31.7x.