As of December 15, 2025, Toromont Industries Ltd's estimated intrinsic value ranges from $84.46 to $274.85 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $274.85 | +66.1% |
| Discounted Cash Flow (5Y) | $205.09 | +24.0% |
| Dividend Discount Model (Multi-Stage) | $176.01 | +6.4% |
| Dividend Discount Model (Stable) | $84.46 | -48.9% |
| Earnings Power Value | $88.98 | -46.2% |
Is Toromont Industries Ltd (TIH.TO) undervalued or overvalued?
With the current market price at $165.43, the stock appears to be moderately 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 Toromont Industries Ltd'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 | 5.1% | 6.1% |
| Adjusted beta | 0.84 | 1 |
| Cost of equity | 7.5% | 10.3% |
| Cost of debt | 4.0% | 4.5% |
| Tax rate | 27.0% | 27.1% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 7.2% | 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 | $205 | $16,473M | 77.7% |
| 10-Year Growth | $275 | $22,149M | 61.0% |
| 5-Year EBITDA | $229 | $18,405M | 80.0% |
| 10-Year EBITDA | $298 | $24,057M | 64.1% |
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 | $588M |
| Discount Rate (WACC) | 9.9% - 7.2% |
| Enterprise Value | $5,917M - $8,130M |
| Net Debt | $(218)M |
| Equity Value | $6,135M - $8,348M |
| Outstanding Shares | 81M |
| Fair Value | $75 - $103 |
| Selected Fair Value | $88.98 |
| Metric | Value |
|---|---|
| Market Capitalization | $13463M |
| Enterprise Value | $13245M |
| Trailing P/E | 27.16 |
| Forward P/E | 19.92 |
| Trailing EV/EBITDA | 11.20 |
| Current Dividend Yield | 121.00% |
| Dividend Growth Rate (5Y) | 11.74% |
| Debt-to-Equity Ratio | 0.05 |
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% | $82.45 |
| Discounted Cash Flow (5Y) | 25% | $51.27 |
| Dividend Discount Model (Multi-Stage) | 20% | $35.20 |
| Dividend Discount Model (Stable) | 15% | $12.67 |
| Earnings Power Value | 10% | $8.90 |
| Weighted Average | 100% | $190.50 |
Based on our comprehensive valuation analysis, Toromont Industries Ltd's intrinsic value is $190.50, which is approximately 15.2% above the current market price of $165.43.
Key investment considerations:
Given these factors, we believe Toromont Industries Ltd is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.