Has Core & Main’s 178% Three Year Surge Already Priced In Its Growth Potential?

• If you are wondering whether Core & Main is still worth buying after its big run, you are not alone. This article will unpack what the current share price really implies about its value.
• The stock has climbed 10.4% over the last week and 8.5% over the past month, adding to a hefty 177.8% gain over three years, so expectations and risk perceptions have clearly shifted.
• Investors have been reacting to Core & Main's continued expansion in water infrastructure and fire protection distribution, as well as strategic acquisitions that aim to deepen its footprint in key regional markets. These moves have reinforced the narrative that the company sits at the heart of long term infrastructure investment themes in the United States.
• Despite that momentum, our valuation framework gives Core & Main a score of 1/6, meaning it screens as undervalued on only one of six checks. Next we will walk through those valuation methods, before finishing with a more powerful way to think about what the stock is really worth.

Core & Main scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Core & Main Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting its future cash flows and discounting them back to today to reflect the time value of money and risk.

For Core & Main, the model starts with last twelve month Free Cash Flow of about $577 million and uses analyst forecasts for the next few years, then extends those trends further out. By 2028, Free Cash Flow is projected to be roughly $614 million, and Simply Wall St extrapolates this path through 2035 using a 2 Stage Free Cash Flow to Equity framework.

Aggregating and discounting these projected cash flows results in an estimated intrinsic value of about $51.76 per share. Compared with the current market price, the DCF output suggests Core & Main is roughly 6.7% overvalued, which is a relatively small gap and well within the usual margin of error for long term forecasts.

Overall, the DCF view is that the stock is trading close to its modeled fair value rather than at a glaring bargain or bubble level.

Result: ABOUT RIGHT

Core & Main is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Core & Main.

Approach 2: Core & Main Price vs Earnings

For profitable businesses like Core & Main, the Price to Earnings (PE) ratio is a useful yardstick because it directly links what investors pay today to the company’s current earnings power. In general, faster growth and lower perceived risk justify a higher PE, while slower growth or greater uncertainty call for a lower, more conservative multiple.

Core & Main currently trades on a PE of about 24x, which is above both the Trade Distributors industry average of roughly 20x and the peer average of about 20.3x. On the surface, that premium suggests the market is already paying up for Core & Main’s scale and growth profile. However, Simply Wall St’s proprietary Fair Ratio framework goes a step further by estimating what PE the stock should trade on, given its earnings growth outlook, margins, industry, market cap and risk profile.

That Fair Ratio for Core & Main is approximately 25.9x, slightly higher than where the stock trades today. Because the gap between the current PE and the Fair Ratio is modest, the multiple view points to Core & Main being priced roughly in line with its fundamentals rather than meaningfully cheap or expensive.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Core & Main Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce Narratives, a simple way to connect your view of Core & Main’s story with your own numbers for future revenue, earnings, margins and fair value. You can then compare that Fair Value to today’s Price to decide whether to buy or sell, all within an easy tool on Simply Wall St’s Community page that updates dynamically as new news or earnings arrive and lets different investors express very different perspectives. For example, one Narrative might lean bullish by focusing on ongoing share repurchases, expanding private label margins and long term municipal infrastructure demand to justify a fair value closer to the most optimistic price target. Another might lean cautious by emphasizing execution risks, tariffs, higher interest costs and potential construction slowdowns to anchor fair value nearer the lowest target. Yet both are clear, quantified stories that anyone can create and refine without needing a degree in finance.

Do you think there's more to the story for Core & Main? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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