My valuation is based on a detailed DCF model.
Equity Valuation - PI Industries.xls (170 KB)
I have also explained my model here.
My whole point is when a company is selling at 23 times earnings, even small hichups matter. Table below shows various fundamental statistics for PI.
Source: Capitaline
PI has produced a CAGR of 49% over 5 years but 5 years ago its PE ratio was a reasonable 17. Once the PE ratio reached as high as 39 two years ago, stock returned only 3% in next 2 years despite producing a 36% CAGR in terms of EPS. Many investors here ignore the valuation risk and focus too much on fundamental risk. All I want to highlight is valuations do matter and especially when fundamentals may not look as good as the past.