- If you are wondering whether Chart Industries at around US$207.16 is still offering value or already pricing in a lot of optimism, you are asking the right question.
- The share price has moved only slightly over the past week and month, with returns of about 0.1% decline in both periods, while the 1 year return of 38.4% and 3 year return of 56.8% put a spotlight on how much has already been priced in compared to the 0.5% year to date move.
- This article was prompted as part of ongoing coverage, so rather than reacting to a single headline, it looks at how the market is currently treating Chart Industries. That context is useful if you are trying to understand whether the 31.3% 5 year return still lines up with the company’s underlying worth.
- On Simply Wall St’s 6 point valuation checklist, Chart Industries scores 4 out of 6. This suggests some areas of potential undervaluation that are worth a closer look. Next, we will walk through the usual valuation approaches before finishing with a different way to think about what “fair value” really means.
Approach 1: Chart Industries Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth today by projecting its future cash flows and then discounting those back to a present value. It is essentially asking what future cash a shareholder might receive in total, expressed in today’s dollars.
For Chart Industries, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections in $. The latest twelve month free cash flow is about $167.3 million. Analyst and extrapolated estimates used in the model show projected free cash flow rising to $884 million in 2030, with intermediate annual figures between 2026 and 2035 ranging from roughly $608.6 million to $1,102.1 million, all discounted back to today using Simply Wall St’s methodology.
Putting those discounted cash flows together results in an estimated intrinsic value of about $288.74 per share. Compared to the current share price of around $207.16, this implies the stock is trading at roughly a 28.3% discount to that DCF estimate. This suggests the shares may be undervalued according to this model.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Chart Industries is undervalued by 28.3%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.
Approach 2: Chart Industries Price vs Sales
For a profitable, revenue generating business like Chart Industries, the P/S ratio is a useful way to see what investors are paying for each dollar of sales. It keeps the focus on the top line, which can be helpful when earnings are affected by items that do not reflect the underlying business.
In general, higher growth expectations or lower perceived risk can justify a higher P/S multiple, while slower growth or higher risk typically point to a lower, more conservative range. So the question is what feels “normal” for Chart Industries given its profile.
Right now, Chart Industries trades on a P/S of 2.29x, compared with the Machinery industry average of about 2.19x and a peer group average of 3.19x. Simply Wall St’s Fair Ratio for Chart Industries is 2.57x, which is its proprietary view of what the P/S should be given factors like growth outlook, profit margins, size and risk.
That Fair Ratio can be more tailored than a simple peer or industry comparison because it adjusts for the company’s own fundamentals rather than assuming all Machinery stocks deserve the same multiple. With the current P/S of 2.29x sitting below the Fair Ratio of 2.57x, the shares appear to be trading on a lower multiple based on this measure.
Result: LOWER P/S MULTIPLE THAN FAIR RATIO
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Upgrade Your Decision Making: Choose your Chart Industries Narrative
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply your own story about Chart Industries that connects what you think about its business, like LNG, data centers and space exploration exposure, order volumes, margins and risks, to a financial forecast and then to a fair value you can compare with the current price on Simply Wall St's Community page.
On the platform, you can set out your assumptions about future revenue, earnings and margins, translate those into a forecast and fair value, and then see at a glance whether your Narrative suggests Chart Industries is worth more or less than today’s share price. This can help you decide whether you see it as closer to a buy, hold or sell.
Because Narratives update automatically when new information such as earnings or news arrives, your fair value view stays aligned with the latest data rather than a one off calculation that quickly goes out of date.
For example, one investor might build a Narrative that leans toward the higher analyst fair value near US$227 based on confidence in revenue growth and margins. Another might use more cautious assumptions that anchor closer to the lower end near US$169, and both views can coexist transparently on the same company page.
Do you think there's more to the story for Chart Industries? Head over to our Community to see what others are saying!
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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