On the four Ms, Sensata Technologies Holdplc earns 18 for management and 32 for moat. The management score rests on a return on invested capital of 2.2% and a gross margin of 27.1% — figures that describe capital earning less than it costs to employ. Debt sits at 1.05x equity.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 4.1% a year, the rate measured from the filings. The exit multiple assumed is 8.1x. That produces an intrinsic value of $1.86, a 10-CAP price of $41.26 and a payback time price of $39.66, with the value zone set at the highest of the three, $41.26. Today's price of $42.35 sits 3% above it.
The price is above the value zone and the business scores 32 for moat and 18 for management. Neither test argues for paying up here.
| Price | $42.35 |
| Market cap | $6.2B |
| P/E ratio | 68.3x |
| Return on invested capital | 2.2% |
| Gross margin | 27.1% |
| Debt to equity | 1.05x |
| Free cash flow yield | 10.1% |
| Growth rate used | 4.1% |
| Growth rate measured | 4.0% |
| Exit multiple assumed | 8.1x |
| Company | Moat | Buy price |
| Novanta Inc (NOVT) | 38 | $37.85 |
| Plexus Corp (PLXS) | 61 | $34.60 |
| Cognex Corp (CGNX) | 40 | $15.93 |
| Ttm Technologies (TTMI) | 47 | $8.67 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of Sensata Technologies Holdplc rather than accepting ours.