Thermon Group Holdings provides highly engineered thermal solutions, known as heat tracing, for process industries, including energy, chemical processing and power generation. Thermon's products provide an external heat source to pipes, vessels and instruments for the purposes of freeze protection, temperature maintenance, environmental monitoring and surface snow and ice melting. The company was founded in 1954 and is based in San Marcos, Texas.
THR Price Forecast Based on DCF Valuation
DCF Fair Value Target:
Below please find a table outlining a discounted cash flow forecast for THR, in which we model out valuation assuming a variety of terminal growth rates. To summarize, we found that Thermon Group Holdings Inc ranked in the 60th percentile in terms of potential gain offered. More precisely, our analysis suggests the stock is undervalued by approximately 80.83% on a DCF basis. The most interesting components of our discounted cash flow analysis for Thermon Group Holdings Inc ended up being:
The business' balance sheet reveals debt to be 34% of the company's capital (with equity being the remaining amount). Approximately 57.69% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
Thermon Group Holdings Inc's weighted average cost of capital (WACC) is 9%; for context, that number is higher than 57.88% of tickers in our DCF set.
The company's cost of debt, derived from its interest coverage, tax rate, and market capitalization, is greater than 58.29% of stocks in its sector (Industrials).
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
KSU, SNA, NNBR, JBT, and DE can be thought of as valuation peers to THR, in the sense that they are in the Industrials sector and have a similar price forecast based on DCF valuation.
Thermon Group Holdings, Inc (THR) have reently been hammered due to the COVID pandemic and OPEC+ price war, leading to reduced demand from a muted crude oil price, which resulted in a drop in revenues and a subsequent, and justifiable, drop in the stock price. The company looks to have...
LWF Equity Research on Seeking Alpha | August 31, 2020
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