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The Timken Company (TKR)

Company Dividend Discount ModelIndustry: Manufacturing - Tools & AccessoriesSector: Industrials

Valuation Snapshot

Stable Growth$47.19 - $76.66$60.40
Multi-Stage$58.03 - $63.53$60.73
Blended Fair Value$60.57
Current Price$75.18
Upside-19.44%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS2.51%0.62%1.371.341.301.311.241.211.221.181.161.24
YoY Growth--2.23%2.51%-0.54%5.98%2.47%-0.93%2.88%2.08%-6.21%-3.65%
Dividend Yield--1.90%1.52%1.59%2.16%1.52%3.73%2.68%2.70%2.57%3.69%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)297.30
(-) Cash Dividends Paid (M)97.80
(=) Cash Retained (M)199.50
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)59.4637.1622.30
Cash Retained (M)199.50199.50199.50
(-) Cash Required (M)-59.46-37.16-22.30
(=) Excess Retained (M)140.04162.34177.20
(/) Shares Outstanding (M)70.3670.3670.36
(=) Excess Retained per Share1.992.312.52
LTM Dividend per Share1.391.391.39
(+) Excess Retained per Share1.992.312.52
(=) Adjusted Dividend3.383.703.91
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate1.80%2.80%3.80%
Fair Value$47.19$60.40$76.66
Upside / Downside-37.23%-19.66%1.96%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)297.30305.64314.21323.03332.09341.40351.64
Payout Ratio32.90%44.32%55.74%67.16%78.58%90.00%92.50%
Projected Dividends (M)97.80135.45175.13216.94260.95307.26325.27

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate1.80%2.80%3.80%
Year 1 PV (M)122.95124.15125.36
Year 2 PV (M)144.29147.14150.02
Year 3 PV (M)162.24167.07171.99
Year 4 PV (M)177.14184.20191.47
Year 5 PV (M)189.32198.80208.66
PV of Terminal Value (M)3,286.603,451.223,622.37
Equity Value (M)4,082.544,272.594,469.88
Shares Outstanding (M)70.3670.3670.36
Fair Value$58.03$60.73$63.53
Upside / Downside-22.82%-19.22%-15.49%

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