AMETEK, Inc. (AME): what the price requires

At today's price, AMETEK, Inc. (AME) is priced for today's economics sustained for ~5.1 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/AME

Headline

FieldValue
TickerAME
CompanyAMETEK, Inc.
Current price$230.92/sh
CompositionProcess and analytical instrumentation 47% / Aerospace and power 30% / Automation and engineered solutions 24%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed21.2%
Operating margin today26.2%
Margin compression implied-5.0pp
Must persist for5.1y
Multiple paid29x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 8.8% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.

How unusual the bet is: elevated

ReferenceValue
vs own history+1.20σ
cohort percentile (of 177 peers)51
sustained it ~5.1 years at this level30%
implied end-window share0%

Valuation X-Ray

Asset, earnings-power and peer-multiple models all land far below the price; ONLY the growth-DCF reaches it. The bet is durable compounding the static frames structurally cannot price (a moat/durability premium).

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.75x5expensive
Earnings3.23x5expensive
Relative2.75x5expensive
Growth1.15x3expensive

Families that justify the price: Growth Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=18)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$183.461.26xyesFCF base $1.8B, growth 10% (input: historical growth), terminal g 4.0%, WACC 8.9%, 6yr projection
DCF Exit MultipleGrowth$243.320.95xyesExit EV/EBITDA: 21.0x / 23.0x / 25.0x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$159.131.45xyesP/E 23.02x (blended: static sector reference 18x + trailing (TTM) 35x), scenarios: 19.2x / 23.0x / 26.8x (bear / base = reference held flat / bull), EV/EBITDA 15.3x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$71.863.21xyesBV/sh $47.51, ROE (TTM) 14.0%, ke 9.3%
Two-Stage Excess ReturnAsset$87.472.64xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$200.481.15xyesRev $7.6B, growth 10% (input: historical growth; tapered), Terminal P/S: 5.8x / 7.0x / 8.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$79.442.91xyesEPS $6.62, growth 8% (input: historical EPS growth), PEG=4.11 (Overvalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$58.383.96xyesNormalized EBIT (5y avg op income, one-time charges added back) $1.69B × (1−19%) / WACC 8.9% → EPV (no growth)
Residual IncomeAsset$90.342.56xyesBV $47.51 + 5yr PV of (ROE (TTM) 14.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$84.122.75xyes√(22.5 × EPS $6.62 × BVPS $47.51) — Graham's conservative floor
EV/EBITDA RelativeRelative$116.321.99xyesEBITDA $2.39B × sector EV/EBITDA 12.0x
FCF YieldEarnings$71.523.23xyesFCF $1703.1M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$69.263.33xyesSBC-adj FCF $1.66B (FCF $1.70B − SBC $0.05B) capitalized at Kₑ
Ben Graham FormulaEarnings$140.941.64xyesEPS $6.62 × (8.5 + 2×8.5%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$17.3313.32xyesBV $47.51 × (ROIC 3.2% / WACC 8.9%)
P/Sales SectorRelative$82.642.79xyesRevenue $7.60B × sector P/S 2.5x
PEG Fair ValueRelative$83.922.75xyesEPS $6.62 × (PEG 1.5 × growth 8.5% (input: historical EPS growth)) → PE 12.7x
Earnings YieldEarnings$71.573.23xyesEPS $6.62 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.9b
Net debt / NOPAT (after-tax)1.88x
Net debt / operating income (pre-tax)1.52x
Interest coverage24.2x
Share count CAGR (buyback)-0.3%
Burning cashno

Bullet Takeaways

Bull Case

Valuing AMETEK well means valuing a process, not a product, because the right lens for a serial acquirer is the durability of the acquisition machine rather than any single end market. AMETEK buys small, high-margin niche businesses, instruments and electromechanical components that dominate tiny markets, and folds them into a disciplined operating system. The filing names the system directly: acquisitions are "a key to achieving the goals of the AMETEK Growth Model," whose stated goal is "high single digit annual percentage growth in sales and double digit annual percentage growth in earnings per share over the business cycle, strong cash flow generation, and a superior return on total capital." A company that articulates its growth as a repeatable model, and has hit it for years, is selling a capability, and that capability is what the static valuation methods, built to value a fixed business, cannot capture.

The track record gives the model credibility. From the start of 2021 through the end of 2025, AMETEK completed 15 acquisitions, and it keeps the pipeline full, having just announced an agreement to acquire First Aviation Services to broaden its defense-aftermarket capabilities. The acquired businesses are run at AMETEK's margins, which is why a roughly 26% operating margin holds even as the company absorbs new companies; in the most recent quarter operating margin reached 26.8%, with core margins up 160 basis points to 27.9%. Customer diversification protects the model from any single point of failure: in the electromechanical segment, "no single customer comprises greater than 5% of net sales," so the business is a portfolio of small, defensible niches rather than a bet on one cycle.

The operating momentum and balance sheet support the compounding. First-quarter orders hit a record $2.2 billion, up 23% with 22% organic growth, lifting backlog to $3.87 billion, which gives forward visibility, and management raised full-year 2026 adjusted earnings guidance to $7.94 to $8.14 a share. The balance sheet funds the deal flow comfortably, with net debt at a modest 1.5 times operating income and interest covered more than twenty times over, so AMETEK can keep buying without strain. A proven acquisition machine, high and stable margins, record orders, and a balance sheet built for more deals is the case for paying up for the compounding rather than the current earnings.

Bear Case

The bear case is about the slow erosion of the very moat that makes AMETEK special, because the moat is a process and processes can decay. The growth model depends on a steady supply of attractive, fairly priced acquisition targets, and the company is candid that this is not guaranteed. Its filing warns that "we may not be able to consummate future acquisitions or successfully integrate recent and future acquisitions," and that "a portion of our growth has been attributed to acquisitions of strategic businesses." That is the fragility in plain terms: a meaningful slice of the growth comes from deals, and deals depend on a pipeline AMETEK does not fully control. The market for high-quality niche industrial businesses has become crowded with well-funded private-equity buyers and other serial acquirers bidding up prices, and a compounder that has to pay more for each deal earns a lower return on it, which slowly erodes the spread between its cost of capital and the returns it captures.

The organic engine underneath the acquisitions is more cyclical and more modest than the headline growth suggests. In the most recent quarter, organic sales grew 5%, with the electronic-instruments segment growing only 2% organically while acquisitions contributed 7 percentage points of its growth. That split matters: it shows the underlying businesses growing at low-single-digit rates, with the difference between that and the double-digit earnings target made up by acquisitions and margin expansion. If deal flow slows or integration gets harder, the organic base is not growing fast enough to carry the model alone, and the earnings growth that justifies a premium multiple would step down toward the organic rate.

The valuation is where the moat-erosion risk becomes a price risk. At $237.36 (June 27, 2026), the static methods that value the demonstrated business land well below the price: an earnings-power value near $58, a free-cash-flow capitalization near $72, a conservative Graham floor near $84, and a peer-earnings-multiple read near $161. Only the forward-growth methods reach the price, and they do so by extrapolating the acquisition-driven compounding forward for years. The price is therefore a durability premium on the growth model continuing exactly as it has. The inversion shows the margin bar is not high, but the growth bar is: the price assumes AMETEK keeps finding and integrating accretive deals indefinitely. The balance sheet is pristine, so this is not a distress story; it is a story about whether a brilliant acquisition machine can keep running at the same return as competition for targets intensifies. The bear case is that the spread on each new deal narrows over time, and a premium price built on continued double-digit compounding has little room if the model decelerates toward its organic rate.

Valuation

AMETEK has to be valued as a compounder, which means the question is not whether today's earnings justify the price, because they plainly do not, but whether the acquisition-driven growth model continues. At $237.36, the static lenses that value the demonstrated business sit far below the price: an earnings-power value near $58, a free-cash-flow capitalization near $72, a conservative floor near $84. Even a blended peer-earnings-multiple read near $161 falls short. Only the forward-growth methods reach the price, with an exit-multiple cash-flow read near $249 essentially at it and a perpetual-growth read near $183. The pattern is unmistakable: the price is a durability premium, paying for the growth model to keep compounding, which the static frames structurally cannot value.

The embedded assumption, from the inversion, is undemanding on margin but demanding on persistence. The price requires an operating margin somewhat below the roughly 26% AMETEK earns today, which it clears comfortably, paired with continued growth over a multi-year horizon. In plain terms, the price does not require margin heroics; it requires AMETEK to keep growing at its target rate, which depends on the acquisition pipeline staying full and accretive. That is the right way to frame a serial acquirer: the value lives in the repeatability of the model, and the risk is that the repeatability fades as competition for targets raises prices and the organic base grows only in the low single digits.

Solvency is a clear strength and a precondition for the model. AMETEK carries net debt at a modest 1.5 times operating income with interest covered more than twenty times over, so the balance sheet is built to fund continued acquisitions without strain, and the share count is essentially flat, so this is a reinvestment-and-acquisition compounder rather than a buyback story. The cash flow that funds the deals is strong and recurring. The decisive question for the buyer is not the balance sheet; it is whether the acquisition machine keeps generating the same returns as the market for niche industrial businesses gets more competitive.

Catalysts

AMETEK posted record first-quarter 2026 results and raised its outlook. Net sales rose 11.3% to $1.93 billion, with 5% organic growth, 4% from acquisitions, and a 2% currency tailwind, while operating margin reached 26.8% and core margins rose 160 basis points to 27.9%. The standout was demand: orders hit a record $2.2 billion, up 23% with 22% organic growth, lifting backlog to $3.87 billion and giving strong forward visibility.

The forward setup reinforced the compounding story. AMETEK raised its full-year 2026 adjusted earnings guidance to $7.94 to $8.14 a share, representing 7% to 10% growth over 2025, and guided second-quarter adjusted earnings to $1.96 to $2.00. On the acquisition front, it announced an agreement to acquire First Aviation Services, broadening its defense-aftermarket capabilities and keeping the deal pipeline active. The next prints turn on two readings: whether organic growth holds up given that it ran below the headline rate, and whether the company keeps deploying capital into accretive acquisitions, since the premium in the price depends on the growth model continuing at its target pace.

Peer Cohorts (Per Segment, With Filing Citations)

Electronic Instruments Group (EIG) (reported)

Electromechanical Group (EMG) (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

company FY2025 10-K · Q1 FY2026 earnings release

View the full interactive AME report on boothcheck