As of May 25, 2025, Armstrong World Industries Inc's estimated intrinsic value ranges from $41.51 to $213.07 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $213.07 | +38.0% |
| Discounted Cash Flow (5Y) | $158.27 | +2.5% |
| Dividend Discount Model (Multi-Stage) | $161.15 | +4.4% |
| Dividend Discount Model (Stable) | $119.23 | -22.8% |
| Earnings Power Value | $41.51 | -73.1% |
Is Armstrong World Industries Inc (AWI) undervalued or overvalued?
With the current market price at $154.43, the stock appears to be fairly valued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Armstrong World Industries Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.94 | 0.99 |
| Cost of equity | 8.2% | 10.4% |
| Cost of debt | 4.6% | 4.8% |
| Tax rate | 23.7% | 24.2% |
| Debt/Equity ratio | 0.08 | 0.08 |
| After-tax WACC | 7.8% | 9.9% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $158 | $7,347M | 81.5% |
| 10-Year Growth | $213 | $9,727M | 68.1% |
| 5-Year EBITDA | $151 | $7,043M | 80.7% |
| 10-Year EBITDA | $199 | $9,135M | 66.0% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $199M |
| Discount Rate (WACC) | 9.9% - 7.8% |
| Enterprise Value | $2,012M - $2,541M |
| Net Debt | $473M |
| Equity Value | $1,538M - $2,068M |
| Outstanding Shares | 43M |
| Fair Value | $35 - $48 |
| Selected Fair Value | $41.51 |
| Metric | Value |
|---|---|
| Market Capitalization | $6707M |
| Enterprise Value | $7180M |
| Trailing P/E | 24.47 |
| Forward P/E | 20.21 |
| Trailing EV/EBITDA | 11.70 |
| Current Dividend Yield | 77.08% |
| Dividend Growth Rate (5Y) | 6.59% |
| Debt-to-Equity Ratio | 0.08 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $63.92 |
| Discounted Cash Flow (5Y) | 25% | $39.57 |
| Dividend Discount Model (Multi-Stage) | 20% | $32.23 |
| Dividend Discount Model (Stable) | 15% | $17.88 |
| Earnings Power Value | 10% | $4.15 |
| Weighted Average | 100% | $157.75 |
Based on our comprehensive valuation analysis, Armstrong World Industries Inc's weighted average intrinsic value is $157.75, which is approximately 2.2% above the current market price of $154.43.
Key investment considerations:
Given these factors, we believe Armstrong World Industries Inc is currently fairly valued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.