VALMONT INDUSTRIES INC (VMI): what the price requires
At today's price, VALMONT INDUSTRIES INC (VMI) is priced for today's economics sustained for ~5.5 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: 2026-07-17 · Source: https://boothcheck.com/report/VMI
Headline
| Field | Value |
|---|---|
| Ticker | VMI |
| Company | VALMONT INDUSTRIES INC |
| Current price | $541.31/sh |
| Composition | Infrastructure 75% / Agriculture 25% |
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 | 12.3% |
| Operating margin today | 11.1% |
| Margin expansion implied | +1.2pp |
| Must persist for | 5.5y |
| Multiple paid | 25x 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 9.7% 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 | +0.47σ |
| cohort percentile (of 225 peers) | 58 |
| sustained it ~5.5 years at this level | 28% |
| 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 | 2.65x | 5 | expensive |
| Earnings | 3.21x | 5 | expensive |
| Relative | 1.55x | 5 | expensive |
| Growth | 1.42x | 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 8.6%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $248.21 | 2.18x | yes | FCF base $0.3B, growth 2% (input: historical growth), terminal g 2.5%, WACC 8.6%, 5yr projection |
| DCF Exit Multiple | Growth | $454.54 | 1.19x | yes | Exit EV/EBITDA: 19.4x / 21.4x / 23.4x (bear / base = today's held flat / bull), 5yr |
| Relative Valuation | Relative | $386.94 | 1.40x | yes | P/E 21.19x (blended: static sector reference 18x + trailing (TTM) 29x), scenarios: 17.8x / 21.2x / 24.6x (bear / base = reference held flat / bull), EV/EBITDA 14.81x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $204.49 | 2.65x | yes | BV/sh $85.61, ROE (TTM) 22.1%, ke 9.3% |
| Two-Stage Excess Return | Asset | $314.39 | 1.72x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $379.95 | 1.42x | yes | Rev $4.2B, growth 2% (input: historical growth; tapered), Terminal P/S: 2.1x / 2.6x / 3.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $233.02 | 2.32x | yes | EPS $17.98, growth 13% (input: historical EPS growth), PEG=2.21 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $168.88 | 3.21x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.44B × (1−21%) / WACC 8.6% → EPV (no growth) |
| Residual Income | Asset | $294.70 | 1.84x | yes | BV $85.61 + 5yr PV of (ROE (TTM) 22.1% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $186.10 | 2.91x | yes | √(22.5 × EPS $17.98 × BVPS $85.61) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $286.95 | 1.89x | yes | EBITDA $0.53B × sector EV/EBITDA 12.0x |
| FCF Yield | Earnings | $151.64 | 3.57x | yes | FCF $345.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $139.16 | 3.89x | yes | SBC-adj FCF $0.32B (FCF $0.35B − SBC $0.02B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $518.67 | 1.04x | yes | EPS $17.98 × (8.5 + 2×13.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $50.29 | 10.76x | yes | BV $85.61 × (ROIC 5.0% / WACC 8.6%) |
| P/Sales Sector | Relative | $530.69 | 1.02x | yes | Revenue $4.16B × sector P/S 2.5x |
| PEG Fair Value | Relative | $349.52 | 1.55x | yes | EPS $17.98 × (PEG 1.5 × growth 13.0% (input: historical EPS growth)) → PE 19.4x |
| Earnings Yield | Earnings | $194.38 | 2.78x | yes | EPS $17.98 / 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 | $635.5m |
| Net debt / NOPAT (after-tax) | 1.77x |
| Net debt / operating income (pre-tax) | 1.40x |
| Interest coverage | 11.4x |
| Share count CAGR (buyback) | -1.2% |
| Burning cash | no |
Bullet Takeaways
- Valmont makes the steel structures that hold up the grid and the machines that water crops: Infrastructure (utility, lighting, telecom poles and coatings) is about 75% of sales and Agriculture (center-pivot irrigation) the rest. Q1 2026 delivered record first-quarter EPS of $5.51, up 27.5%, on sales of $1.03 billion, with operating margin up 190 basis points to 15.1%.
- The two halves are pulling in opposite directions. Infrastructure sales rose 14.2% with North America utility up 27.4%, while Agriculture fell 15.1% on weak international demand. Management raised the floor of full-year EPS guidance to $21.50 to $23.50 and lifted the dividend 13%.
- The price has run ahead of the methods and even ahead of the Street. At $570.14 the market is paying about 26 times operating income, a level where no valuation family, not even forward growth, reaches the price, and the average analyst target sits below the current quote.
Bull Case
The fairest way to frame Valmont is to admit where the price sits relative to the methods, then ask what could justify it. On the X-ray, no valuation family reaches $570.14 (June 28, 2026): the earnings-power family lands near a third of the price, the asset-based family lower, and even the forward-growth family falls short. That is unusual, and it tells you the bull case cannot lean on any standard frame; it has to rest on a demand story the static methods cannot yet see. The candidate is the grid. Valmont's own 10-K notes that 2025 sales to the US electric utility industry ran about $1.5 billion, and the structural drivers behind that, grid hardening, electrification, and the surge in power demand from data centers and reshored manufacturing, are exactly the kind of multi-year tailwind that a snapshot valuation underprices.
The operating results give that story real momentum. Q1 2026 was a record first quarter: EPS of $5.51, up 27.5%, on sales of $1.03 billion, with operating income of $155.6 million and margin up 190 basis points to 15.1%. The Infrastructure segment, the grid exposure, grew 14.2% to $803.2 million with operating income up 22%, and North America utility sales alone climbed 27.4% on both pricing and volume. That is not a company eking out cyclical gains; it is one whose largest segment is accelerating as utilities spend. Management responded by raising the floor of full-year EPS guidance to $21.50 from $20.50 and lifting the dividend 13% to $0.77, a signal of confidence in the durability of the demand.
The balance sheet supports the run. Interest is covered about eleven times, net debt sits at a manageable 1.4 times operating income, and the share count has been shrinking. That gives Valmont room to invest in capacity for the utility build and keep returning cash. The company has also navigated a difficult tariff backdrop, managing incremental Section 232 steel tariffs without derailing margins. The bull case is straightforward even if the multiple is not: if the utility and electrification cycle is as long and deep as the order trends suggest, Valmont grows into a price that today looks stretched, because the standard methods are valuing a pre-supercycle earnings base.
Bear Case
The competitive and demand risks are sharper than a record quarter suggests, and the Agriculture segment is where they show first. Ag sales fell 15.1% to $227 million on weak international demand, a reminder that center-pivot irrigation is a discretionary capital purchase for farmers whose budgets track crop prices and farm income. Valmont's own 10-K frames irrigation demand as coming from converting flood systems, replacing obsolete machines, and bringing new land under irrigation, all of which farmers defer when commodity prices are soft. A quarter of the business is therefore cyclical in a way the utility story does not fix, and it can swing hard against the consolidated number.
The Infrastructure side has its own dependency that the bull case treats as a given. The 10-K is candid that utilities may defer purchases by cutting capital spending in an unfavorable regulatory environment, a slow economy, or under financing constraints. The 27% utility growth is real, but it rests on utility capital budgets staying elevated, and a steel-structure maker competes against other fabricators on price and lead time, not on a proprietary technology that locks customers in. Add the Section 232 steel tariffs, which raise input costs and require constant management, and the margin expansion that drove the record quarter is not guaranteed to repeat if steel prices or competitive dynamics turn.
At about 26 times operating income the price embeds growth held at the self-funding ceiling for roughly six years, an assumption that even an excellent industrial rarely sustains. The market's own analysts are skeptical: the average price target sits below the current price, with several targets in the $460 to $486 range. When a stock trades above where the people who follow it most closely think it should, and above every valuation method, the burden of proof is entirely on continued acceleration. Any stumble in either segment, or a normalization of the utility cycle, leaves a long way to fall.
Valuation
Valmont is the rare case where the X-ray flags the price as a bet beyond any standard frame. At $570.14 the market is paying about 26 times company-wide operating income, which under a 9.8% cost of capital solves to operating growth held at the self-funding ceiling for roughly six years. When even the growth-DCF lens, the one that usually justifies a premium, falls short, the price is leaning on demand expectations no formula yet captures.
The reliability on this solve is reasonable, and the operating story behind it is genuinely strong: a 10.6% trailing operating margin rising toward the 15.1% the latest quarter showed, record EPS, and a utility segment growing more than 25%. The case for the multiple is that the utility and electrification cycle lifts the earnings base structurally, so today's price is being measured against a soon-to-be-obsolete level of profits. That is a coherent argument, but it is an argument about the future, not a value supported by the present.
The honest synthesis is that this is priced for a supercycle to both materialize and persist. The implied six-year run at the growth ceiling leaves no cushion, and the external check is sobering: the average analyst target sits below the current price, with a range roughly $460 to $526. The conclusion is that Valmont is an excellent business trading above what both the valuation methods and the analyst community think it is worth, so the entry offers no margin for error. The return depends entirely on the grid build delivering growth at the pace the price already assumes.
Catalysts
The dominant catalyst is the utility and grid cycle. Q1 2026 showed Infrastructure sales up 14.2% to $803.2 million with North America utility up 27.4% on pricing and volume, and Valmont's sales to the US electric utility industry ran about $1.5 billion in 2025. The pace of utility capital spending, driven by grid hardening, electrification and data-center power demand, is the single most important thing to watch, because it is the demand the elevated price is built on.
The Agriculture segment is the offsetting swing factor. Ag sales fell 15.1% to $227 million on weak international demand, and irrigation purchases track crop prices and farm income, so a recovery or further weakness there moves the consolidated result. Watch international agriculture trends and commodity prices as the leading indicators for that quarter of the business.
Guidance, capital return and costs round out the picture. Management raised the floor of full-year EPS guidance to $21.50 to $23.50 and lifted the dividend 13% to $0.77, so the next prints test that bar. Section 232 steel tariffs remain a cost to manage and a margin variable to monitor. On sentiment, the analyst consensus is a buy but the average target sits below the current price, so the stock is effectively priced ahead of the Street, and a clear continuation of utility-led acceleration is what would be needed to pull targets up toward the quote.
Peer Cohorts (Per Segment, With Filing Citations)
Infrastructure (reported)
- MWA (MUELLER WATER PRODUCTS, INC.)
- (no filing in the citation store)
- AGCO (AGCO CORP /DE)
- (no filing in the citation store)
- ALG (ALAMO GROUP INC.)
- (no filing in the citation store)
Agriculture (reported)
- AGCO (AGCO CORP /DE)
- (no filing in the citation store)
- CNH (CNH INDUSTRIAL N.V.)
- (no filing in the citation store)
- DE (DEERE & CO)
- (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.