Mettler-Toledo International Inc.MTDNYSE

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DCF Valuation

DCF Valuation Summary

Strong Sell

Fair Value: $858.19 per share(market-calibrated)

-34.8%

Upside to Fair Value

Current

$1,316.71

Pure Model

$820.58

Fair Value

$858.19

Bull Case

$1,019.84

Bear Case

$630.50

Market Reality Check

Model Terminal Growth

3.00%

Market-Implied Growth

7.73%

Calibrated Growth

4.18%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $820.58.

What's Driving This Ratingfor MTD

✓

CapEx already efficient

CapEx at 2.71% 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 28.19% 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 5.05% revenue growth, fading to 3.00% by Year 10. Revenue reaches $6.0B (vs $4.0B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $594.93/share (14.2x terminal FCF) while exit multiple gives $1,046.24/share (31.9x terminal FCF). The 24x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.00% growth is more conservative. The base case averages both methods.

🎯

Market pricing in higher long-term growth

To justify $1,316.71, the market implies 7.73% perpetual growth — 473bps above the model's 3.00%. 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 75.33% indicates efficient cash generation. FCF reaches $1.4B by Year 10 (23.45% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.44

Market Risk Premium4.50%

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

Cost of Equity (Re)10.96%

Cost of Debt

Pre-tax Cost of Debt2.72%

Tax Rate17.13%

After-tax Cost of Debt2.26%

Equity Weight (E/V)92.05%

Debt Weight (D/V)7.95%

WACC Calculation

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

WACC = (92.05% × 10.96%) + (7.95% × 2.26%)

= 10.27%

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	$4.2B	$4.7B	$5.1B	$5.4B	$6.0B
EBIT	$1.2B	$1.3B	$1.4B	$1.5B	$1.7B
Tax	$204M	$226M	$246M	$263M	$288M
NOPAT	$988M	$1.1B	$1.2B	$1.3B	$1.4B
+ Depreciation	$124M	$137M	$150M	$160M	$175M
- Capex	$115M	$126M	$138M	$147M	$161M
- Δ NWC	$10M	$12M	$8M	$8M	$8M
Free Cash Flow	$988M	$1.1B	$1.2B	$1.3B	$1.4B
Discount Factor	0.907	0.746	0.613	0.504	0.376
Present Value	$896M	$813M	$732M	$643M	$526M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.4B

Terminal Growth Rate3.00%

WACC10.27%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$19.8B

PV of Terminal Value$7.4B

Exit Multiple Method

Year 10 EBITDA$1.9B

Exit Multiple (EV/EBITDA)24.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$44.5B

PV of Terminal Value$16.7B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$7.1B

PV of Terminal Value$7.4B

Enterprise Value$14.5B

(-) Net Debt$2.3B

Equity Value$12.3B

Shares Outstanding21M

Price per Share$594.93

Exit Multiple Method

PV of Projected FCFs$7.1B

PV of Terminal Value$16.7B

Enterprise Value$23.8B

(-) Net Debt$2.3B

Equity Value$21.6B

Shares Outstanding21M

Price per Share$1,046.24

Pure Model Fair Value

$820.58

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.00%	2.50%	3.00%	3.50%	4.00%
8.27%	$1,004.25	$1,027.16	$1,054.43	$1,087.41	$1,128.12
9.27%	$890.86	$906.37	$924.35	$945.44	$970.54
10.27%	$797.19	$808.14	$820.58	$834.87	$851.44
11.27%	$717.91	$725.89	$734.82	$744.91	$756.39
12.27%	$649.62	$655.58	$662.18	$669.54	$677.79

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

$630.50

-52.1% vs current

• -25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 1.79

Base Case

$820.58

-37.7% vs current

• Analyst consensus
• Terminal growth: 3.0%
• Beta: 1.44

Bull Case

$1,019.84

-22.5% vs current

• +25% vs analyst consensus
• Terminal growth: 3.5%
• Beta: 1.22

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

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.05%

Year 3 Revenue Growth5.36%

Year 5 Revenue Growth3.46%

Year 7 Revenue Growth3.28%

Year 10 Revenue Growth3.00%

Terminal Growth Rate3.00%

Margin & Efficiency

Current EBIT Margin28.19%

Tax Rate17.13%

Historical Capex / Rev2.71%

NWC / Revenue4.89%

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: 24x EV/EBITDA (Healthcare 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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