THERMON GROUP HOLDINGS, INC. (THR): what the price requires
At today's price, THERMON GROUP HOLDINGS, INC. (THR) is priced for today's economics sustained for ~5.7 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/THR
Headline
| Field | Value |
|---|---|
| Ticker | THR |
| Company | THERMON GROUP HOLDINGS, INC. |
| Current price | $61.02/sh |
| Composition | United States and Latin America 49% / Canada 31% / Europe, Middle East and Africa 13% / Asia-Pacific 7% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 9.1% |
| Operating margin today | 16.8% |
| Margin compression implied | -7.7pp |
| Must persist for | 5.7y |
| Multiple paid | 24x 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 10% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.7 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.51σ |
| cohort percentile (of 225 peers) | 56 |
| sustained it ~5.7 years at this level | 30% |
| implied end-window share | 0% |
Valuation X-Ray
Every valuation family lands below the price. The price therefore requires assumptions beyond what those standard frames encode.
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 4.32x | 4 | expensive |
| Earnings | 5.85x | 4 | expensive |
| Relative | 1.57x | 3 | expensive |
| Growth | 1.26x | 3 | expensive |
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 8.7%); the inversion above states its own rate.
Per-Model Detail (n=14)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $20.63 | 2.96x | yes | FCF base $0.0B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.7%, 6yr projection |
| DCF Exit Multiple | Growth | $52.75 | 1.16x | yes | Exit EV/EBITDA: 20.6x / 22.6x / 24.6x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $38.92 | 1.57x | yes | P/E 26.23x (blended: static sector reference 18x + trailing (TTM) 45x), scenarios: 21.8x / 26.2x / 30.6x (bear / base = reference held flat / bull), EV/EBITDA 15.19x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $14.52 | 4.20x | yes | BV/sh $16.23, ROE (TTM) 8.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $13.73 | 4.44x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $48.31 | 1.26x | yes | Rev $0.5B, growth 7% (input: historical growth; tapered), Terminal P/S: 3.1x / 3.8x / 4.4x (bear / base = today's held flat / bull, cap 8x) |
| Growth-Adjusted P/E | Relative | — | — | no | — |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $14.57 | 4.19x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.06B × (1−21%) / WACC 8.7% → EPV (no growth) |
| Residual Income | Asset | $13.60 | 4.49x | yes | BV $16.23 + 5yr PV of (ROE (TTM) 8.3% − Kₑ 9.3%) × BV; BV grows 5.4%/yr |
| Graham Number | Asset | $22.29 | 2.74x | yes | √(22.5 × EPS $1.36 × BVPS $16.23) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $31.12 | 1.96x | yes | EBITDA $0.09B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $8.13 | 7.51x | yes | FCF $32.9M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $5.44 | 11.22x | yes | SBC-adj FCF $0.02B (FCF $0.03B − SBC $0.01B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $2.03 | 30.06x | yes | EPS $1.36 × (8.5 + 2×-3.4%) × (4.4 / 5.3%) (excluded from median) |
| ROIC-Justified P/B | Asset | $2.54 | 24.02x | yes | BV $16.23 × (ROIC 1.4% / WACC 8.7%) (excluded from median) |
| P/Sales Sector | Relative | $40.40 | 1.51x | yes | Revenue $0.54B × sector P/S 2.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | $14.70 | 4.15x | yes | EPS $1.36 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $70.3m |
| Net debt / NOPAT (after-tax) | 1.02x |
| Net debt / operating income (pre-tax) | 0.80x |
| Interest coverage | 10.1x |
| Share count CAGR (buyback) | -0.4% |
| Burning cash | no |
Bullet Takeaways
At about $61, the price is above every valuation family: asset value reads it at more than 4x, earnings power at nearly 6x, and even forward growth at 1.26x. The reverse-DCF high is roughly $55, below the current price.
The direction of travel is strong. Fiscal 2026 set records, with revenue around $536 million (up about 8%), gross margins in the mid-40s, orders up 14%, and a book-to-bill above 1.0.
The price is paying for the growth narrative, particularly data center and medium-voltage heater markets. That is the most fragile assumption: industrial process heating is cyclical, and large-project timing can slip in any quarter.
Bull Case
The earnings trajectory is the cleanest part of the Thermon story, and it has been bending upward for several quarters. Fiscal 2026 produced revenue around $536 million, up roughly 8% year over year, with the back half setting records: Q3 revenue of $147.3 million (up 9.6%) at a 46.6% gross margin, and Q4 revenue of $148.3 million (up 11%) with adjusted EBITDA of $32.1 million. Gross margins sitting in the mid-40s for an industrial manufacturer are notable, and the fact that they held while revenue grew double digits says the growth is profitable, not bought with price. Net income and adjusted EPS both moved up alongside the top line. The direction of every important line, revenue, margin, and earnings, is positive.
The order book points the same way. Orders grew 14% to $158.2 million with a book-to-bill ratio of 1.1x, meaning Thermon is taking in more work than it is shipping, which builds visibility into future revenue. Management raised its outlook and pointed specifically to continued expansion in data center and medium-voltage heater markets, two areas where electrification and AI-driven power infrastructure are creating new demand for the kind of process-heating and heat-management technology Thermon makes. The company's revenue is also geographically diversified across the United States and Latin America, Canada, EMEA, and Asia-Pacific, which smooths exposure to any single regional cycle.
The business model has a quality the headline cyclicality can obscure. A meaningful share of Thermon's revenue is recognized at a point in time on shipment, but its installed base of heating systems generates recurring aftermarket and maintenance demand, the kind of pull-through that keeps cash flowing between large project cycles. The filing notes the company tracks the "cyclicality of end users' markets" as a core driver (FY2025 10-K, accession 0001489096-25-000071), which is candor about the risk but also evidence the company manages around it. Institutional buying has accompanied the upgraded guidance. For a buyer who believes the data center and electrification demand is structural rather than a one-time wave, Thermon is a profitable, growing, diversified industrial riding exactly the right end markets, which is why the market is willing to pay above the standard methods for it.
Bear Case
The bear case is about which future revenue stream the price is leaning on, and how fragile that lean is. At about $61 (June 28, 2026), the price sits above every valuation family, with the reverse-DCF high near $55 below the current level, so the market is explicitly paying for growth that the standard frames cannot yet see. The single most fragile assumption is the data center and medium-voltage heater narrative. Those are the markets management highlighted to justify the upgraded outlook, and they are also the newest, least proven, and most competitive parts of Thermon's mix. If the AI-infrastructure build slows, or if larger industrial-technology players crowd into the same medium-voltage heating opportunity, the growth premium the price embeds is the first thing to deflate.
The second fragility is the lumpiness underneath the growth. Thermon's business depends on winning and executing large industrial projects, and the filing is direct that "customer project delays and cancellations may limit our ability to realize value from our backlog as expected and cause fluctuations in the timing or the amount of revenue earned" (FY2025 10-K, accession 0001489096-25-000071). It adds that "our future revenue depends in part on our ability to bid and win new contracts" and that failure to do so "could adversely affect our profitability" (FY2025 10-K, accession 0001489096-25-000071). A book-to-bill of 1.1x is healthy, but a single quarter of project slippage, an oil-and-gas customer deferring capital spending, or a delayed data center build can turn a record quarter into a miss. The company also flagged uncertainty from recent changes in United States trade policy as a swing factor on customer behavior.
The valuation gives none of that room. Asset-based models read the price at more than 4x and earnings power at nearly 6x, both calling it expensive against current earnings, and the implied margin of 8.9% sits below the current 13.2%, meaning even the model assumes some margin give-back. Process heating remains a cyclical industrial business tied to energy, chemical, and infrastructure capital cycles, and cyclical industrials priced above their reverse-DCF high are priced for a continued upcycle. If the cycle cools or the data center demand proves more episodic than structural, the earnings power and asset frames that already call the price rich will be vindicated, and the stock has to fall toward the base case near $39 to meet them.
Valuation
At about $61, Thermon trades above every valuation family. Asset-based models put the price at roughly 4.3x their estimate, earnings power at nearly 5.9x, peer multiples at 1.6x, and even forward growth at 1.3x. The reverse-DCF band runs from a low near $29 through a base near $39 to a high near $55, so the current price sits above the high end of the supported range. The composite read is elevated, and the source is clear: the market is paying for growth and margin durability that the conservative frames, anchored on current assets and earnings, do not credit.
The implied figures sharpen the picture. The price embeds an operating margin of about 8.9% against a current 13.2%, which means the model is not even asking margins to expand; it is conceding some give-back and still finding the price rich. In other words, the elevation is not coming from an aggressive margin assumption but from the market extrapolating the recent revenue and order growth, particularly in data center and medium-voltage markets, well into the future. The 1.1x book-to-bill and the upgraded guidance support near-term momentum, but the price is capitalizing that momentum at a premium multiple.
If the data center and electrification demand is structural and the order growth sustains, the premium is earned and the price can keep rising with the earnings. If the cycle turns or large projects slip, the earnings-power and asset models that already flag the price as expensive get the last word, and the stock would need to retrace toward the $39 base to align with them. This is a momentum-and-narrative valuation: attractive if you believe the end markets, exposed if you do not.
Catalysts
Fiscal 2026 finished strong. Full-year revenue came in around $536 million, up roughly 8%. Q3 delivered revenue of $147.3 million (up 9.6%), gross profit of $68.7 million at a 46.6% margin, net income of $18.3 million, and adjusted EPS of $0.66. Q4 followed with revenue of $148.3 million (up 11%), a 44.0% gross margin, and adjusted EBITDA of $32.1 million. Orders grew 14% to $158.2 million with a book-to-bill of 1.1x, and management raised its outlook. (Sources: Investing.com, ir.thermon.com, Simply Wall St.)
The forward catalyst management is pointing at is end-market expansion in data center and medium-voltage heater applications, tied to electrification and AI-power-infrastructure demand. Progress in those markets, alongside the broader industrial process-heating book, is the growth the elevated price is paying for. Institutional buying has followed the upgraded guidance. (Sources: Simply Wall St, ir.thermon.com.)
The watch items are concrete: the order and book-to-bill trend (the leading indicator of revenue), execution and timing on large projects given the filing's caution about delays and cancellations, the pace of data center and medium-voltage adoption, gross-margin durability in the mid-40s, and any impact from US trade-policy shifts on customer capital spending. Continued double-digit order growth with steady margins would justify the premium; a slip in large-project timing or a cooling industrial cycle would test it. (Sources: Investing.com, ir.thermon.com.)
Peer Cohorts (Per Segment, With Filing Citations)
US-LAM (reported)
- NVT (nVent Electric plc)
- (no filing in the citation store)
- KAI (KADANT INC)
- (no filing in the citation store)
- GRC (The Gorman-Rupp Company)
- (no filing in the citation store)
- FELE (FRANKLIN ELECTRIC CO., INC.)
- (no filing in the citation store)
- HAYW (Hayward Holdings, Inc.)
- (no filing in the citation store)
- ZWS (ZURN ELKAY WATER SOLUTIONS CORPORATION)
- (no filing in the citation store)
- MWA (MUELLER WATER PRODUCTS, INC.)
- (no filing in the citation store)
- ESAB (ESAB Corporation)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
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.