As of May 23, 2025, Herman Miller Inc's estimated intrinsic value ranges from $11.49 to $69.39 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $69.39 | +78.3% |
| Discounted Cash Flow (5Y) | $62.89 | +61.6% |
| Dividend Discount Model (Multi-Stage) | $62.02 | +59.3% |
| Dividend Discount Model (Stable) | $11.49 | -70.5% |
| Earnings Power Value | $12.94 | -66.8% |
Is Herman Miller Inc (MLHR) undervalued or overvalued?
With the current market price at $38.92, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Herman Miller 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 | 3.2% | 3.7% |
| Equity market risk premium | 4.2% | 5.2% |
| Adjusted beta | 0.93 | 1 |
| Cost of equity | 7.1% | 9.4% |
| Cost of debt | 4.3% | 4.6% |
| Tax rate | 27.3% | 31.5% |
| Debt/Equity ratio | 0.09 | 0.09 |
| After-tax WACC | 6.8% | 8.9% |
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 | $63 | $5,851M | 81.8% |
| 10-Year Growth | $69 | $6,343M | 65.4% |
| 5-Year EBITDA | $32 | $3,514M | 69.6% |
| 10-Year EBITDA | $42 | $4,302M | 48.9% |
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 | $159M |
| Discount Rate (WACC) | 8.9% - 6.8% |
| Enterprise Value | $1,790M - $2,343M |
| Net Debt | $1,086M |
| Equity Value | $704M - $1,257M |
| Outstanding Shares | 76M |
| Fair Value | $9 - $17 |
| Selected Fair Value | $12.94 |
| Metric | Value |
|---|---|
| Market Capitalization | $2949M |
| Enterprise Value | $4035M |
| Trailing P/E | 76.20 |
| Forward P/E | 14.12 |
| Trailing EV/EBITDA | 6.10 |
| Current Dividend Yield | 112.92% |
| Dividend Growth Rate (5Y) | -3.27% |
| Debt-to-Equity Ratio | 0.09 |
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% | $20.82 |
| Discounted Cash Flow (5Y) | 25% | $15.72 |
| Dividend Discount Model (Multi-Stage) | 20% | $12.40 |
| Dividend Discount Model (Stable) | 15% | $1.72 |
| Earnings Power Value | 10% | $1.29 |
| Weighted Average | 100% | $51.96 |
Based on our comprehensive valuation analysis, Herman Miller Inc's weighted average intrinsic value is $51.96, which is approximately 33.5% above the current market price of $38.92.
Key investment considerations:
Given these factors, we believe Herman Miller Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.