• If you are wondering whether Element Solutions is still reasonably priced after its recent run, this article walks through how its current share price stacks up against a few key valuation yardsticks.
• The stock last closed at US$30.73, with returns of 2.8% over 30 days, 18.5% year to date, 25.2% over 1 year, 65.8% over 3 years, and 58.3% over 5 years. So the question now is what you are paying for at this level.
• Recent coverage has focused on Element Solutions' role as a specialty chemicals provider for electronics and industrial applications, with investors paying attention to how demand trends and capital allocation decisions might influence its longer term prospects. Together with the share price performance data, this context is useful for judging whether expectations already look full or still leave room for upside.
• On our 6 point valuation checklist, Element Solutions scores 2 out of 6, which hints that some metrics suggest value while others look less compelling. Next we will walk through the main valuation approaches before finishing with a framework that can help you judge the numbers in a more complete way.

Element Solutions scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Element Solutions Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes estimates of the cash Element Solutions can generate in the future, then discounts those back to today to arrive at an implied value per share.

Element Solutions last twelve month Free Cash Flow sits at about $226.1 million. Using a 2 Stage Free Cash Flow to Equity model built on cash flow projections, analysts and extrapolated inputs see FCF reaching around $516.4 million in 2035. Simply Wall St uses analyst estimates out to 2028, where FCF is projected at $408.8 million, and then extends that path with its own assumptions through year ten.

Pulling those projected cash flows back to today and adding a terminal value gives an estimated intrinsic value of about $36.27 per share. Compared with the recent share price of $30.73, the model implies Element Solutions trades at roughly a 15.3% discount. On this cash flow view, the shares appear to be undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Element Solutions is undervalued by 15.3%. Track this in your watchlist or portfolio, or discover 50 more high quality undervalued stocks.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Element Solutions.

Approach 2: Element Solutions Price vs Earnings

For a profitable business like Element Solutions, the P/E ratio is a useful way to think about what you are paying for each dollar of current earnings. It ties directly to how the market views the company’s earnings power today, which is often where investors start when comparing opportunities.

A “normal” or “fair” P/E usually reflects what investors expect for future earnings growth and how risky those earnings look. Higher expected growth or lower perceived risk can support a higher P/E, while slower growth or higher uncertainty can point to a lower one.

Element Solutions currently trades on a P/E of 39.23x. That sits above the Chemicals industry average of about 24.31x and also above the peer group average of 24.11x. Simply Wall St’s Fair Ratio framework estimates a P/E of 29.32x for Element Solutions. This framework is designed to be more tailored because it folds in factors like the company’s earnings growth profile, profit margins, industry, market cap and key risks rather than relying only on broad peer or industry comparisons.

With the current P/E of 39.23x versus a Fair Ratio of 29.32x, the shares look expensive on this earnings based yardstick.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Element Solutions Narrative

Earlier we mentioned that there is an even better way to understand valuation, so on Simply Wall St’s Community page you can use Narratives, which let you connect your own story about Element Solutions to a set of revenue, earnings and margin forecasts. You can then see the fair value that falls out of that story and compare it to the current price to inform your investment decisions. Your view will update automatically when fresh news or earnings arrive. For example, one investor might lean on the higher US$38.50 fair value supported by assumptions about data center demand, margin shifts and a 29.45x future P/E. Another could anchor on a lower fair value that reflects more caution around cyclical end markets and competitive risks.

Do you think there's more to the story for Element Solutions? 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Disclaimer:This article represents the opinion of the author only. It does not represent the opinion of Webull, nor should it be viewed as an indication that Webull either agrees with or confirms the truthfulness or accuracy of the information. It should not be considered as investment advice from Webull or anyone else, nor should it be used as the basis of any investment decision.