AMETEK, Inc.AMENYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $163.36 per share(market-calibrated)

-32.3%

Upside to Fair Value

Current

$241.46

Pure Model

$156.62

Fair Value

$163.36

Bull Case

$189.09

Bear Case

$126.91

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

5.95%

Calibrated Growth

3.18%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $156.62.

What's Driving This Ratingfor AME

✓

CapEx already efficient

CapEx at 1.74% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 27.72% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 7.58% revenue growth, fading to 2.25% by Year 10. Revenue reaches $10.9B (vs $7.4B today).

🎯

Market pricing in higher long-term growth

To justify $241.46, the market implies 5.95% perpetual growth — 370bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 78.69% indicates efficient cash generation. FCF reaches $2.8B by Year 10 (25.54% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.04

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.16%

Cost of Debt

Pre-tax Cost of Debt3.85%

Tax Rate17.69%

After-tax Cost of Debt3.17%

Equity Weight (E/V)96.06%

Debt Weight (D/V)3.94%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (96.06% × 9.16%) + (3.94% × 3.17%)

= 8.93%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$8.0B	$8.9B	$9.6B	$10.2B	$10.9B
EBIT	$2.2B	$2.5B	$2.7B	$2.8B	$3.0B
Tax	$391M	$438M	$472M	$498M	$534M
NOPAT	$1.8B	$2.0B	$2.2B	$2.3B	$2.5B
+ Depreciation	$378M	$424M	$457M	$481M	$516M
- Capex	$138M	$155M	$167M	$176M	$189M
- Δ NWC	$70M	$66M	$33M	$32M	$30M
Free Cash Flow	$2.0B	$2.2B	$2.5B	$2.6B	$2.8B
Discount Factor	0.918	0.774	0.652	0.550	0.425
Present Value	$1.8B	$1.7B	$1.6B	$1.4B	$1.2B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.8B

Terminal Growth Rate2.25%

WACC8.93%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$42.6B

PV of Terminal Value$18.1B

Exit Multiple Method

Year 10 EBITDA$3.5B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$63.6B

PV of Terminal Value$27.1B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$15.3B

PV of Terminal Value$18.1B

Enterprise Value$33.4B

(-) Net Debt$1.8B

Equity Value$31.6B

Shares Outstanding230M

Price per Share$137.23

Exit Multiple Method

PV of Projected FCFs$15.3B

PV of Terminal Value$27.1B

Enterprise Value$42.4B

(-) Net Debt$1.8B

Equity Value$40.6B

Shares Outstanding230M

Price per Share$176.02

Pure Model Fair Value

$156.62

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
6.93%	$191.07	$196.69	$203.51	$211.97	$222.73
7.93%	$168.90	$172.58	$176.92	$182.09	$188.36
8.93%	$151.17	$153.71	$156.62	$160.01	$164.00
9.93%	$136.52	$138.33	$140.38	$142.72	$145.41
10.93%	$124.12	$125.46	$126.95	$128.62	$130.51

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$126.91

-47.4% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.29

Base Case

$156.62

-35.1% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.04

Bull Case

$189.09

-21.7% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.88

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth7.58%

Year 3 Revenue Growth6.27%

Year 5 Revenue Growth2.82%

Year 7 Revenue Growth2.59%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin27.72%

Tax Rate17.69%

Historical Capex / Rev1.74%

NWC / Revenue12.54%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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