Carrier Global Corp (CARR) Valuation

From a value investing perspective, Carrier Global Corp's valuation appears unfavourable. The primary valuation tool in the framework is a Discounted Cash Flow (DCF) analysis, and the GoodMoat Target of $34.87 represents a fair value estimate. At a current price of $59.25, the stock trades at a premium of approximately 70% to this target, resulting in a negative margin of safety. According to the GoodMoat framework's bands, this places the stock firmly in the 'Unfavourable' category, as a margin of safety of at least 20% is required for a favourable assessment. The forward P/E multiple of 33.6x also presents a challenge. This multiple is high for a company exhibiting negative revenue growth (-6.0% YoY) and a profit margin of 6.8%. The framework notes that a P/E of 25-26x can be reasonable for a company growing at 50%, but it is high for a slower grower. In this case, the multiple is elevated despite a contraction in the business's top line. While the free cash flow yield of 4.3% is positive, the combination of a high price relative to intrinsic value, elevated P/E, and negative growth trajectory suggests the stock is expensive relative to its current fundamental quality and performance. Analysis based on data as of 2024-05-15.