- Wondering if Integer Holdings at around US$86.85 is offering value or just price? This article walks through what the current share price might be implying about the business.
- The stock is flat over the past week and month and up 13.1% year to date, yet it has delivered a 25.2% decline over the past year and a 6.5% decline over five years, which can leave investors unsure how to read the story.
- Recent coverage has focused on putting these mixed returns into context for a medical equipment company, often highlighting how investors are reassessing where they want to take risk in healthcare. For anyone watching Integer, this kind of attention can prompt a closer look at whether the current price still lines up with the fundamentals.
- On Simply Wall St's 6 point valuation framework, Integer scores 3 out of 6. Next up is a look at the usual valuation tools like P/E, multiples and cash flow models, followed by a more complete way to think about value at the end of the article.
Find out why Integer Holdings's -25.2% return over the last year is lagging behind its peers.
Approach 1: Integer Holdings Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting future cash flows and discounting them back to a present value. It focuses on the cash that might be available to shareholders rather than accounting earnings.
For Integer Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at about $81.5 million. Based on analyst input and extrapolations by Simply Wall St, projected free cash flow reaches about $376.3 million in 2035, with intermediate projections such as $99.2 million in 2026 and $187.9 million in 2027. All these figures are in US$ and remain well below $1b, so they are best thought of in millions.
When all projected cash flows are discounted back and combined, the DCF model arrives at an estimated intrinsic value of about $142.64 per share. Compared with the recent share price around $86.85, this implies the shares trade at a 39.1% discount, which screens as materially undervalued on this model alone.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Integer Holdings is undervalued by 39.1%. Track this in your watchlist or portfolio, or discover 62 more high quality undervalued stocks.
Approach 2: Integer Holdings Price vs Earnings (P/E)
For a profitable company, the P/E ratio is a straightforward way to see how much investors are paying for each dollar of earnings. A higher or lower P/E is not “good” or “bad” on its own; it usually reflects what the market expects for future growth and how much risk investors see in those earnings.
Integer Holdings currently trades on a P/E of about 29.1x. That sits above the Medical Equipment industry average of roughly 26.6x and well below the peer average of about 97.4x. To go a step further, Simply Wall St estimates a proprietary “Fair Ratio” for Integer of 24.7x. This blends in factors such as the company’s earnings growth profile, industry, profit margins, market cap and risk characteristics, which makes it more tailored than a simple comparison with broad industry or peer averages.
Because the Fair Ratio is below the current P/E, the shares screen as somewhat expensive on this metric, even if not wildly out of line with the wider industry.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your Integer Holdings Narrative
Earlier it was mentioned that there is an even better way to understand valuation. Here is Narratives, a simple way for you to attach a clear story about Integer Holdings to hard numbers like expected revenue, earnings, margins and a fair value. You can then compare that fair value with today’s price on Simply Wall St’s Community page, where Narratives are updated as new news or earnings arrive and different investors can line up very different views. For example, someone who agrees with the analyst consensus fair value of about US$93.25 and assumes revenue near US$2.1b, earnings of US$178.1 million and a P/E of 22.2x by 2029 may see more upside than another investor who builds a more cautious Narrative that focuses on risks such as product attrition, foreign exchange exposure and contract concentration. That more cautious investor may therefore settle on a lower fair value and a tighter margin of safety when comparing Integer’s current price with their own estimate of what the shares are worth.
Do you think there's more to the story for Integer Holdings? 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