Applied Industrial Technologies (AIT) · DCF calculator
What is one share of Applied Industrial Technologies worth today if its free cash flow keeps growing and the market keeps paying the multiple it has paid? Every starting value below comes from Applied Industrial Technologies's own filings and price history. Change any of them; nothing here is a forecast or advice.
Free cash flow, as filed and projected
| Year | Growth | Free cash flow |
|---|---|---|
| 1 | 25.0% | 575.65M |
| 2 | 22.5% | 705.17M |
| 3 | 20.2% | 847.96M |
| 4 | 18.2% | 1.00B |
| 5 | 16.4% | 1.17B |
How it is worked out
The figure is grown for each year of the horizon at a rate that fades, the multiple puts a market value on the last year's figure, and that value is divided over the share count as it will be by then. What that future price is worth today is it discounted at the return you want.
growth in year n = g × (1 − fade)n−1
figure in year n = figure in year n−1 × (1 + growth in year n)
future price = figure in year N × multiple ÷ (shares today × (1 + share change)N)
fair value = future price ÷ (1 + return wanted)N
The starting values are Applied Industrial Technologies's own: the latest twelve months of the figure as filed, what it actually grew at over four years, the company's own five-year median multiple of it or today's if that is lower, and what its share count actually did. A model this simple is only as good as the assumptions put into it, and the most important one -- that the business keeps growing -- is the one no filing can tell you.