Summit Materials, Inc. (SUM) Intrinsic Value & DCF Valuation
Construction Materials · NYSE
Current Price
$52.49
Intrinsic Value
$31.23
-68.1% margin of safety
What Is Summit Materials, Inc.'s Intrinsic Value?
As of 2025-02-10, the base-case DCF model estimates the intrinsic value of Summit Materials, Inc. (SUM) at $31.23 per share, compared with a market price of $52.49, a margin of safety of -68.1%. The base case assumes 6.5% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $26.17 to $36.99. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Summit Materials, Inc. (SUM) Undervalued?
At the current price of $52.49, SUM trades above the base-case intrinsic value estimate by a meaningful margin. By this model the stock looks expensive, though faster growth than assumed would change the picture.
COMPETITIVE MOAT
↑Geographic Concentration & Scale
Summit Materials operates in specific, often geographically concentrated markets. This scale within these regions creates cost advantages and barriers to entry for smaller competitors.
↑Integrated Business Model
The company controls the value chain from raw material extraction to finished product delivery. This integration offers cost efficiencies and greater control over supply and quality.
↑Customer Relationships & Contracts
Long-term relationships and contracts with large infrastructure and construction clients provide revenue visibility and stability. These relationships are difficult for new entrants to replicate.
INVESTMENT RISKS
↓Cyclicality of Construction Industry
Demand for Summit's products is heavily tied to the cyclical nature of the construction and infrastructure spending. Economic downturns can significantly reduce sales.
↓Environmental Regulations & Permitting
Strict environmental regulations and the lengthy, complex permitting process for new quarry sites or expansions can hinder growth and increase operating costs.
↓Transportation & Logistics Costs
The heavy and bulky nature of construction materials makes transportation a significant cost factor. Rising fuel prices and logistical challenges can impact margins.
Base case
SUM base case valuation
Intrinsic Value
$31.23
Margin of safety
-68.1%
Expected annual return
-9.9%
Base case assumptions: 6.5% 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
On a trailing twelve-month basis, SUM generates free cash flow per share of $1.54 alongside a ROIC of 4.7%, both central inputs for a DCF valuation. Its P/FCF ratio of 50.4x and FCF yield of 1.99% then frame how SUM is priced against peers on a cash flow basis.
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%. A high P/FCF means investors are paying more per dollar of free cash flow, which usually reflects expectations of 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% means the company's return on invested capital sits below the level that typically clears 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.