• If you are wondering whether Worthington Enterprises at around US$54.51 is offering good value today, the key is to look past the headline share price and focus on what the fundamentals suggest about its worth.
• The stock has returned 1.8% over the last 7 days, a 3.2% decline over 30 days, 4.9% year to date, 32.1% over 1 year and 77.4% and 79.0% over 3 and 5 years respectively. These returns may change how investors think about both its growth potential and risk.
• Recent news flow around Worthington Enterprises has focused on its position within the capital goods space and how investors are reacting to its ongoing corporate actions and portfolio focus. This context helps explain why the share price has moved over different time frames as investors reassess what they are willing to pay for the business.
• On our checks, Worthington Enterprises has a valuation score of 5/6, suggesting there is more to unpack when comparing different valuation methods. Later in the article we will also look at a framework that can give you a clearer read on what that score might mean for you.

Approach 1: Worthington Enterprises Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes estimates of the cash a company could generate in the future and discounts those amounts back into today’s dollars, aiming to estimate what the entire business might be worth now.

For Worthington Enterprises, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flows in US$. The latest twelve month free cash flow is about $145.1 million. Analysts provide explicit forecasts for the next few years, and Simply Wall St then extrapolates further to build a 10 year path. Under this framework, projected free cash flow reaches $310.4 million in 2035, with interim years such as 2026 and 2030 at $168.9 million and $255.0 million respectively.

When all these forecast cash flows are discounted back, the estimated intrinsic value comes out at $84.43 per share. Compared with the recent share price of about $54.51, this suggests the stock is trading at a 35.4% discount to that DCF value, indicating a sizable valuation gap based on these assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Worthington Enterprises is undervalued by 35.4%. Track this in your watchlist or portfolio, or discover 869 more undervalued stocks based on cash flows.

Approach 2: Worthington Enterprises Price vs Earnings

For a profitable company like Worthington Enterprises, the P/E ratio is a useful way to relate what you pay per share to the earnings generated per share. It helps you see how much the market is paying for each dollar of earnings.

What counts as a “normal” P/E really depends on how the market views a company’s growth potential and risk. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually calls for a lower one.

Worthington Enterprises currently trades on a P/E of 25.48x. That sits below the peer group average of 42.90x and also below the Machinery industry average of 27.64x. Simply Wall St’s Fair Ratio for Worthington Enterprises is 23.25x. This is its estimate of an appropriate P/E once factors like earnings growth profile, profit margins, market cap, risk and industry context are taken into account. This Fair Ratio approach can be more tailored than a simple comparison with peers or the broad industry, because it is based on the company’s own characteristics rather than assuming all Machinery stocks deserve the same multiple.

Comparing the current P/E of 25.48x with the Fair Ratio of 23.25x suggests Worthington Enterprises is valued slightly above that model’s estimate.

Result: OVERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Worthington Enterprises Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, where you tell the story you believe about Worthington Enterprises, link that story to specific forecasts for revenue, earnings and margins, turn those into a fair value, and then compare that fair value to the current price. The platform updates your Narrative as new news or earnings arrive. For example, one investor might align with a higher fair value closer to US$81.00 based on confidence in new IoT products, partnerships and margin expansion. Another might anchor nearer to US$50.00 because they are more focused on risks like steel pricing, M&A execution and consumer demand. Narratives lets both views sit side by side so you can decide which story fits what you believe.

Do you think there's more to the story for Worthington Enterprises? 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.