Summit Materials, Inc. (SUM) Stock Valuation — DCF Analysis
Construction Materials · NYSE
Current Price
$52.49
Intrinsic Value
$51.65
-1.6% margin of safety
COMPETITIVE MOAT
↑Geographic Concentration
Summit Materials operates in specific, often less competitive, geographic regions. This allows them to establish strong local market positions and pricing power.
↑Integrated Supply Chain
Owning quarries and production facilities provides control over raw material sourcing and production costs. This integration offers a cost advantage over competitors reliant on external suppliers.
↑Long-Term Customer Relationships
The company builds enduring relationships with contractors and developers through reliable supply and service. This fosters repeat business and a stable demand base.
INVESTMENT RISKS
↓Cyclical Industry Demand
Construction activity is highly sensitive to economic cycles and interest rates. Downturns can significantly reduce demand for Summit's products.
↓Regulatory and Environmental Hurdles
Operating quarries and production facilities involves stringent environmental regulations and permitting processes. Changes in these can impact operations and costs.
↓Commodity Price Volatility
Fluctuations in the cost of key inputs like fuel and asphalt binder can directly affect profitability. The recent royalty acquisition suggests a move to diversify revenue streams, but core operations remain exposed.
Base case
SUM base case valuation
A base case discounted cash flow model for SUM estimates an intrinsic value of about $51.65 per share, against a current price of $52.49. The model assumes 18.4% annual free cash flow growth, a 10.0% discount rate, and a 30x exit multiple.
Intrinsic Value
$51.65
Margin of safety
-1.6%
Expected annual return
-0.3%
Base case assumptions: 18.4% annual growth, 10.0% discount rate, 30x exit multiple, 5 year projection. Data as of 2025-02-10.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the SUM valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Summit Materials, Inc. respond.
Open DCF Calculator for SUMCompany Overview
Summit Materials, Inc. is a prominent provider of essential construction materials and related downstream products, serving a diverse clientele across public infrastructure, residential development, and commercial construction sectors through its network of subsidiaries. The company organizes its business into three main operating divisions: West, East, and Cement. Its comprehensive product line includes aggregates, cement, ready-mix concrete, asphalt paving mixtures, various concrete goods, and plastic components. Beyond manufacturing, Summit Materials also delivers asphalt paving services and related support to both private and governmental infrastructure projects. The firm further diversifies its operations by managing landfills for municipal, construction, and demolition waste, as well as operating terminals for liquid asphalt. Established in 2009, the company is headquartered in Denver, Colorado, with an operational footprint spanning the United States and British Columbia, Canada.
Financial Metrics — SUM Stock Valuation Data
Revenue/Share (TTM)
$22.00
FCF/Share (TTM)
$1.54
ROIC (TTM)
4.7%
ROE (TTM)
13.3%
P/FCF
50.4x
EV/EBITDA
15.4x
FCF Yield
1.99%
Debt/Equity
1.02x
Based on trailing twelve-month data, SUM shows a free cash flow per share of $1.54 and a ROIC of 4.7%, key inputs for stock valuation using the DCF method. The P/FCF ratio of 50.4x and FCF yield of 1.99% are important context metrics when evaluating SUM's stock valuation relative to peers.
Frequently Asked Questions
What is the intrinsic value of SUM?
Summit Materials, Inc. currently generates $1.54 in free cash flow per share. At the current price of $52.49, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is SUM undervalued?
SUM trades at a P/FCF ratio of 50.4x with a free cash flow yield of 1.99%. This elevated P/FCF suggests the market is pricing in significant future growth. However, whether SUM is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value SUM stock using DCF?
To perform a DCF valuation on Summit Materials, Inc.: (1) Start with the trailing free cash flow per share ($1.54) as the base, (2) project future FCF growth over 5-10 years based on Construction Materials industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting SUM's risk profile — with a debt-to-equity of 1.02x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to SUM?
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Summit Materials, Inc., this means projecting how much free cash flow the company will produce over the next 5-10 years, shaped by Construction Materials trends, then discounting those amounts to today's dollars. SUM's ROIC of 4.7% suggests the company may face challenges generating returns above its cost of capital.
How does WACC affect SUM stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For SUM, with a debt-to-equity ratio of 1.02x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 15.4x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See SUM PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Basic Materials valuationsDCF and P/E value SUM with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2025-02-10. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.