A Look At The Intrinsic Value Of Atmus Filtration Technologies Inc. (NYSE:ATMU)

Simply Wall St.12-20 18:58

Key Insights Using the 2 Stage Free Cash Flow to Equity, Atmus Filtration Technologies fair value estimate is US$46.92 Atmus Filtration Technologies' US$38.78 share price indicates it is trading ...

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(NYSE:ATMU)","media":"Simply Wall St.","content":"<div>\n<p>Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Atmus Filtration Technologies fair value estimate is US$46.92 \n Atmus Filtration Technologies' US$38.78 share price indicates it is trading ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-intrinsic-value-atmus-filtration-105828970.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>A Look At The Intrinsic Value Of Atmus Filtration Technologies Inc. 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(NYSE:ATMU)\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-12-20 18:58 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/look-intrinsic-value-atmus-filtration-105828970.html><strong>Simply Wall St.</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Atmus Filtration Technologies fair value estimate is US$46.92 \n Atmus Filtration Technologies' US$38.78 share price indicates it is trading ...</p>\n\n<a href=\"https://finance.yahoo.com/news/look-intrinsic-value-atmus-filtration-105828970.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FCF","symbol_name":"第一联邦金融","start_time":0,"source_url":"https://finance.yahoo.com/news/look-intrinsic-value-atmus-filtration-105828970.html","article_id":"2492411535","we_media_id":null,"thumbnails":["https://s.yimg.com/uu/api/res/1.2/KiXFs.9cm..G7GbravDxmw--~B/aD00MzI7dz0xMTk0O2FwcGlkPXl0YWNoeW9u/https://media.zenfs.com/en/simply_wall_st__316/6540fe5988bdb3105f465c4ad0990b6f"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2492411535","pubTimestamp":1734692308,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Using the 2 Stage Free Cash Flow to Equity, Atmus Filtration Technologies fair value estimate is US$46.92. Atmus Filtration Technologies' US$38.78 share price indicates it is trading at similar levels as its fair value estimate. Our fair value estimate is similar to Atmus Filtration Technologies' analyst price target of US$46.86. Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Atmus Filtration Technologies Inc.  as an investment opportunity by taking the forecast future cash flows of the company and discounting them back to today's value. Our analysis will employ the Discounted Cash Flow  model. Before you think you won't be able to understand it, just read on!See our latest analysis for Atmus Filtration Technologies. We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GD","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"FCF":"第一联邦金融","BK4149":"建筑机械与重型卡车","BK4124":"机动车零配件与设备","NYSE":"纽交所","BK4211":"区域性银行","DCF":"Dreyfus Alcentra Global Credit Income 2024 Target Term Fund, Inc","TV":"墨西哥电视","LU1559883803.SGD":"Aberdeen Standard SICAV I - North American Smaller Companies Fund A Acc SGD-H","ATMU":"Atmus Filtration Technologies Inc.","LU0566484027.USD":"安本美国小盘成长股","BK4100":"有线和卫星"},"translate_title":"了解Atmus Filtration Technologies Inc.（纽约证券交易所股票代码：ATMU）的内在价值","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"ATMU":1,"DCF":1,"FCF":1,"NYSE":1,"TV":1},"content_text":"Key Insights\n\n Using the 2 Stage Free Cash Flow to Equity, Atmus Filtration Technologies fair value estimate is US$46.92 \n Atmus Filtration Technologies' US$38.78 share price indicates it is trading at similar levels as its fair value estimate \n Our fair value estimate is similar to Atmus Filtration Technologies' analyst price target of US$46.86 \n\n Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Atmus Filtration Technologies Inc. (NYSE:ATMU) as an investment opportunity by taking the forecast future cash flows of the company and discounting them back to today's value. Our analysis will employ the Discounted Cash Flow (DCF) model. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. \n We generally believe that a company's value is the present value of all of the cash it will generate in the future. However, a DCF is just one valuation metric among many, and it is not without flaws. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. \n See our latest analysis for Atmus Filtration Technologies \n The Calculation \n We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. \n A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, and so the sum of these future cash flows is then discounted to today's value: \n 10-year free cash flow (FCF) estimate \n\n\n\n\n2025\n2026\n2027\n2028\n2029\n2030\n2031\n2032\n2033\n2034\n\n\n Levered FCF ($, Millions) \nUS$201.6m\nUS$197.0m\nUS$195.6m\nUS$196.2m\nUS$198.1m\nUS$201.1m\nUS$204.7m\nUS$209.0m\nUS$213.6m\nUS$218.6m\n\n\nGrowth Rate Estimate Source\nAnalyst x3\nAnalyst x1\nEst @ -0.70%\nEst @ 0.30%\nEst @ 0.99%\nEst @ 1.48%\nEst @ 1.82%\nEst @ 2.06%\nEst @ 2.23%\nEst @ 2.35%\n\n\n Present Value ($, Millions) Discounted @ 7.1% \nUS$188\nUS$172\nUS$159\nUS$149\nUS$140\nUS$133\nUS$126\nUS$120\nUS$115\nUS$110\n\n\n\n(\"Est\" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = US$1.4b\n We now need to calculate the Terminal Value, which accounts for all the future cash flows after this ten year period. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.6%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 7.1%. \nTerminal Value (TV)= FCF2034 × (1 + g) ÷ (r – g) = US$219m× (1 + 2.6%) ÷ (7.1%– 2.6%) = US$5.0b\nPresent Value of Terminal Value (PVTV)= TV / (1 + r)10= US$5.0b÷ ( 1 + 7.1%)10= US$2.5b\n The total value, or equity value, is then the sum of the present value of the future cash flows, which in this case is US$3.9b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of US$38.8, the company appears about fair value at a 17% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind. \n\n\n\n  NYSE:ATMU Discounted Cash Flow December 20th 2024\n \n\n Important Assumptions \n Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Atmus Filtration Technologies as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 7.1%, which is based on a levered beta of 1.098. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. \nSWOT Analysis for Atmus Filtration Technologies\n\n\nStrength\n\nEarnings growth over the past year exceeded its 5-year average.\n\n\nDebt is well covered by earnings and cashflows.\n\n\nBalance sheet summary for ATMU.\n\n\n\nWeakness\n\nEarnings growth over the past year underperformed the Machinery industry.\n\n\nDividend is low compared to the top 25% of dividend payers in the Machinery market.\n\n\n\nOpportunity\n\nAnnual earnings are forecast to grow for the next 3 years.\n\n\nGood value based on P/E ratio and estimated fair value.\n\n\n\nThreat\n\n Annual earnings are forecast to grow slower than the American market.\n\n\nWhat else are analysts forecasting for ATMU?\n\n\n\n Looking Ahead: \n Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. For Atmus Filtration Technologies, there are three essential aspects you should assess: \n\n Risks: Case in point, we've spotted   1 warning sign for Atmus Filtration Technologies  you should be aware of. \nFuture Earnings: How does ATMU's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.\n Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing! \n\n PS. Simply Wall St updates its DCF calculation for every American stock every day, so if you want to find the intrinsic value of any other stock just search here.\nHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2492411535"}