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(TLDR: APH is, by my calculation, still priced at a premium. My fair value is around 115 vs 135 to 170 from the rating agencies. )
Last week APH announced great results and the share price dropped roughly 15% from $167 to the current $144. Barron’s said yesterday it is a good stock to stick with, because the business is humming along, it fell because expectations got a bit far ahead of itself. Morningstar says to buy the dips and has a fair value price of $170. CFRA has a IV price of $135 for APH.
I did my sums just now, and find that this AI/Datacentre company is still above my fair value price, it has now become slightly expensive from very expensive.
Here is my calculation:
2025 Full year adjusted EPS: 3.34
Average 10 years FCF/Net Income = 1.00
**EPS fwd Growth estimates:**
DCF dot com: 3.31, 4.37, 5.12, 5.65, 7.25 <2029 CAGR: 21.65%
MS-NR: 2025: 3.34, 4.41, 5.46, 6.41, 7.40, 8.40 <- 2030 CAGR: 20.3%
SA dot com: 3.34, 4.39, 5.15, 5.75, 7.40, 8.40 <- 2030 CAGR: ((8.40/3.34)\^(1/5))-1 = 20.3%
Eulerpool dot com: 3.34, 4.27, 4.89, 4.14, 4.45 < 2029 CAGR: 7.43%
**Assumptions:**
i will assume two scenarios, that EPS continue to grow at 20.3% for the next 5 years.
And a more conservative growth at 15% for the next 5 years.
I could use a 10 year duration but i think that woud be too aggressive.
I am using a discount rate of 9% (the WACC is around 7.3% according to MS-NR, and Gemma-AI says that WACC across the various websites are betwee 8+ to 11+%) and a terminal growth of 3%. (this 9% and 3% is standardised across all my calculations)
i enter the EPS of 3.34, 15% and 20% growth + the assumptions into my NPV calculator:
[https://docs.google.com/spreadsheets/d/1ihvQSyOGAPVEXnzKjhw88WEHea1IEH1g-bSVsVKK5hg/edit?usp=sharing](https://docs.google.com/spreadsheets/d/1ihvQSyOGAPVEXnzKjhw88WEHea1IEH1g-bSVsVKK5hg/edit?usp=sharing)
I get a IV range of:
20% growth: $115.22
15% growth: $94.62
So, there is a disconnect with what Morningstar and CFRA are valuing APH: either my growth assumptions are wrong, or the duration of 5 years is too short or my discount rate is too high. But instead of fretting about accuracy, i would prefer to put the price, 115.22 into my watchlist as a "buy price", think of it as buying with a margin of safety.