As of June 12, 2025, Element Solutions Inc has a Discounted Cash Flow (DCF) derived fair value of $35.34 per share. With the current market price at $21.74, this represents a potential upside of 62.6%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $29.60 |
| DCF Fair Value (10-year) | $35.34 |
| Potential Upside (5-year) | 36.2% |
| Potential Upside (10-year) | 62.6% |
| Discount Rate (WACC) | 7.1% - 9.2% |
Revenue is projected to grow from $2457 million in 12-2024 to $3193 million by 12-2034, representing a compound annual growth rate of approximately 2.7%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 2457 | 5% |
| 12-2025 | 2451 | 0% |
| 12-2026 | 2557 | 4% |
| 12-2027 | 2685 | 5% |
| 12-2028 | 2775 | 3% |
| 12-2029 | 2892 | 4% |
| 12-2030 | 2950 | 2% |
| 12-2031 | 3009 | 2% |
| 12-2032 | 3069 | 2% |
| 12-2033 | 3130 | 2% |
| 12-2034 | 3193 | 2% |
Net profit margin is expected to improve from 10% in 12-2024 to 23% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | 243 | 10% |
| 12-2025 | 302 | 12% |
| 12-2026 | 375 | 15% |
| 12-2027 | 452 | 17% |
| 12-2028 | 526 | 19% |
| 12-2029 | 605 | 21% |
| 12-2030 | 629 | 21% |
| 12-2031 | 652 | 22% |
| 12-2032 | 677 | 22% |
| 12-2033 | 702 | 22% |
| 12-2034 | 728 | 23% |
with a 5-year average of $49 million. Projected CapEx is expected to maintain at approximately 2% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 53 |
| 12-2026 | 55 |
| 12-2027 | 56 |
| 12-2028 | 57 |
| 12-2029 | 56 |
| 12-2030 | 58 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 68 |
| Days Inventory | 69 |
| Days Payables | 33 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 9M/2025 | 340 | 42 | 38 | 18 | 242 |
| 2026 | 542 | 69 | 53 | 24 | 396 |
| 2027 | 638 | 83 | 56 | 9 | 490 |
| 2028 | 728 | 97 | 58 | 22 | 551 |
| 2029 | 822 | 112 | 60 | 20 | 630 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 29.60 | 36.2% |
| 10-Year DCF (Growth) | 35.34 | 62.6% |
| 5-Year DCF (EBITDA) | 26.91 | 23.8% |
| 10-Year DCF (EBITDA) | 32.44 | 49.2% |
Is Element Solutions Inc (ESI) a buy or a sell? Element Solutions Inc is definitely a buy. Based on our DCF analysis, Element Solutions Inc (ESI) appears to be significantly undervalued with upside potential of 62.6%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider a strong buy at the current market price of $21.74.