As of May 31, 2025, Smiths Group PLC's estimated intrinsic value ranges from $929.28 to $1649.16 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $1649.16 | -23.4% |
| Discounted Cash Flow (5Y) | $1345.51 | -37.5% |
| Dividend Discount Model (Multi-Stage) | $1196.64 | -44.4% |
| Dividend Discount Model (Stable) | $1036.26 | -51.9% |
| Earnings Power Value | $929.28 | -56.9% |
Is Smiths Group PLC (SMIN.L) undervalued or overvalued?
With the current market price at $2154.00, the stock appears to be significantly overvalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Smiths Group PLC'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 | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.78 | 0.9 |
| Cost of equity | 8.7% | 11.3% |
| Cost of debt | 4.9% | 5.3% |
| Tax rate | 36.2% | 41.6% |
| Debt/Equity ratio | 0.09 | 0.09 |
| After-tax WACC | 8.2% | 10.6% |
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 | $1,346 | $5,060M | 74.0% |
| 10-Year Growth | $1,649 | $6,081M | 54.6% |
| 5-Year EBITDA | $1,514 | $5,625M | 76.6% |
| 10-Year EBITDA | $1,733 | $6,363M | 56.7% |
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 | $338M |
| Discount Rate (WACC) | 10.6% - 8.2% |
| Enterprise Value | $3,189M - $4,131M |
| Net Debt | $534M |
| Equity Value | $2,655M - $3,597M |
| Outstanding Shares | 3M |
| Fair Value | $789 - $1,069 |
| Selected Fair Value | $929.28 |
| Metric | Value |
|---|---|
| Market Capitalization | $7245M |
| Enterprise Value | $7779M |
| Trailing P/E | 23.60 |
| Forward P/E | 26.30 |
| Trailing EV/EBITDA | 7.50 |
| Current Dividend Yield | 210.36% |
| Dividend Growth Rate (5Y) | 3.93% |
| 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% | $494.75 |
| Discounted Cash Flow (5Y) | 25% | $336.38 |
| Dividend Discount Model (Multi-Stage) | 20% | $239.33 |
| Dividend Discount Model (Stable) | 15% | $155.44 |
| Earnings Power Value | 10% | $92.93 |
| Weighted Average | 100% | $1318.82 |
Based on our comprehensive valuation analysis, Smiths Group PLC's weighted average intrinsic value is $1318.82, which is approximately 38.8% below the current market price of $2154.00.
Key investment considerations:
Given these factors, we believe Smiths Group PLC is currently significantly overvalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.