Is Thermo Fisher Scientific Inc (TMO) overvalued?
On Equity Rank's model estimate, TMO trades 35% above its fair value. Thermo Fisher Scientific Inc (TMO) last closed at $694.76; the multi-method model fair value is $513.54.
| Price | Model fair value | Price vs model |
|---|---|---|
| $694.76 | $513.54 | 35% above |
What the answer rests on
- 2 of 10 valuation methods put TMO's value above its price and 8 put it below, so the methods mostly agree.
- To justify today's price, TMO's free cash flow would need to grow about 14.1% a year for ten years (a reverse discounted cash flow). Over the last three years it actually grew -3.1% a year.
- TMO trades at 37.2 times its last year's earnings, against a median of 38.3 for 26 profitable Life Sciences Tools companies.
- Over the past year the price sat below the model fair value on 7% of trading days. The gap ranged from 11% below to 32% above the model fair value.
Read this before relying on it
The model fair value is an estimate from published financial statements. It is not a forecast of where the price goes, and it can be wrong. Within 10% either side we call it close to fair value: valuation models are not precise enough to read more into a smaller gap. Our own lists have no proven edge over the market yet; the live record shows every result, misses included.
Every valuation method behind TMO's fair value · What prices assume · Other companies