Hillenbrand (HI): Evaluating Valuation Following Portfolio Streamlining and Push into Digital Manufacturing

Hillenbrand (HI) has been in the spotlight lately as investors weigh its push to streamline its business, pay down debt, and drive cost savings through recent initiatives. Rising demand for factory automation, combined with the company’s focus on digital manufacturing and aftermarket services, has added some optimism even though underlying challenges remain.

See our latest analysis for Hillenbrand.

Hillenbrand’s share price has edged higher in recent months as investors reacted to operational improvements, portfolio streamlining, and stronger cash flow. However, concerns about profitability and integration risks have kept long-term total shareholder returns essentially flat over the past year. The stock’s latest moves suggest sentiment is cautiously turning as momentum in automation and digital manufacturing builds, but the jury is still out on a lasting turnaround.

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With shares trading at a discount to analyst price targets, but ongoing risks clouding the outlook, investors are left to wonder: is Hillenbrand undervalued, or is the market already pricing in its future growth potential?

Most Popular Narrative: 18.7% Undervalued

Hillenbrand’s widely followed narrative sees room for significant upside, with analysts’ fair value estimate sitting well above the company’s recent closing price. The key debate centers on whether improvements in automation and digital services can overcome ongoing profitability challenges.

Accelerating industry demand for factory automation and digital manufacturing solutions aligns with Hillenbrand's increased investment in R&D and digital service offerings (automation, remote monitoring, predictive maintenance). This supports growth in recurring, higher-margin aftermarket and service revenue streams.

Read the complete narrative.

Want to know the real reason behind this bullish valuation? The narrative’s hidden formula combines bold profit margin forecasts, a major earnings turnaround, and a market-matching PE ratio in a surprisingly ambitious timeline. The financial leap included could change how you see what’s next for Hillenbrand.

Result: Fair Value of $33.00 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing macroeconomic uncertainty and challenges in operational integration could easily disrupt the recovery narrative and extend the pressure on Hillenbrand’s profitability.

Find out about the key risks to this Hillenbrand narrative.

Another View: The SWS DCF Model’s Take

While analysts see plenty of upside based on earnings forecasts and future multiples, the SWS DCF model offers a more cautious perspective. According to our DCF, Hillenbrand is actually trading a bit above its estimate of fair value. This suggests the market may already be factoring in much of the expected improvement.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Hillenbrand for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Hillenbrand Narrative

If you view the numbers differently or want to draw your own conclusions, it's quick and easy to craft your personal outlook in minutes, Do it your way.

A great starting point for your Hillenbrand research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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.

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