As of June 13, 2025, Transcat Inc's estimated intrinsic value ranges from $21.24 to $190.81 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $190.81 | +146.6% |
| Discounted Cash Flow (5Y) | $129.46 | +67.3% |
| Dividend Discount Model (Multi-Stage) | $119.70 | +54.7% |
| Dividend Discount Model (Stable) | $69.44 | -10.3% |
| Earnings Power Value | $21.24 | -72.6% |
Is Transcat Inc (TRNS) undervalued or overvalued?
With the current market price at $77.39, 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 Transcat 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 | 0.5 | 0.69 |
| Cost of equity | 6.2% | 8.7% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 20.8% | 21.3% |
| Debt/Equity ratio | 0.05 | 0.05 |
| After-tax WACC | 6.1% | 8.5% |
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 | $129 | $1,238M | 87.5% |
| 10-Year Growth | $191 | $1,810M | 78.0% |
| 5-Year EBITDA | $88 | $849M | 81.8% |
| 10-Year EBITDA | $127 | $1,211M | 67.1% |
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 | $16M |
| Discount Rate (WACC) | 8.5% - 6.1% |
| Enterprise Value | $191M - $268M |
| Net Debt | $31M |
| Equity Value | $159M - $237M |
| Outstanding Shares | 9M |
| Fair Value | $17 - $25 |
| Selected Fair Value | $21.24 |
| Metric | Value |
|---|---|
| Market Capitalization | $721M |
| Enterprise Value | $752M |
| Trailing P/E | 49.69 |
| Forward P/E | 31.25 |
| Trailing EV/EBITDA | 11.40 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| 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% | $57.24 |
| Discounted Cash Flow (5Y) | 25% | $32.36 |
| Dividend Discount Model (Multi-Stage) | 20% | $23.94 |
| Dividend Discount Model (Stable) | 15% | $10.42 |
| Earnings Power Value | 10% | $2.12 |
| Weighted Average | 100% | $126.09 |
Based on our comprehensive valuation analysis, Transcat Inc's weighted average intrinsic value is $126.09, which is approximately 62.9% above the current market price of $77.39.
Key investment considerations:
Given these factors, we believe Transcat Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.