Mettler-Toledo International Inc (MTD)

Conclusion

Mettler-Toledo International Inc (MTD.US) manufactures precision instruments, software and services for laboratories, industry and retail weighing. At a price of 1,762.28 USD on 2026-11-09, its market capitalisation is 35.1 billion USD.

The verdict is overvalued. Today's multiples sit above their own ten-year medians: P/E 37.53 against 34.69 (a premium of 8.2%), EV/EBITDA 27.81 against 25.29 (10.0%), price to sales 8.35 against 7.08 (17.9%) and price to free cash flow 40.26 against 39.64 (1.6%). The DCF gives 621.67 USD per share at a discount rate of 10.75%. The fair value band runs from 885.94 to 1,328.91 USD, with a midpoint of 1,107.42 USD and a margin of safety of -37.2% at the current price. The reverse DCF implies growth of 19.2% a year, while revenue grew at 5.5% and free cash flow per share at 9.5% a year over five years.

What holds the case up is the return on capital: ROIC of 48.5% against a WACC of 10.4%, free cash flow conversion of 93.2% over the last twelve months, and an Altman Z-score of 11.81. What would break it is the gap between the growth the price implies and the growth delivered, the three-year revenue CAGR of 0.9% and EPS CAGR of 3.1%, and a current ratio of 1.10 that is flagged as a watch item.

Financial health

Financial strength is green, held up by the Altman Z-score of 11.81, net debt to EBITDA of 1.48 and interest coverage of 17.8, and only the current ratio of 1.10 is neutral. The quick ratio is 0.63 and debt to equity is 26.06, so the balance sheet relies on operating cash flow more than on liquid assets. The company reports net debt to EBITDA of 1.48 on a trailing basis, which is moderate. The Altman model was designed for manufacturers, and this company is an instrument maker, so the zone "safe" is a reasonable reading. Insolvency risk: low, about 1.5% by the estimate of the Ohlson model over one to two years.

Earnings quality

Earnings quality is green, with free cash flow conversion of 93.2% on a trailing basis and 98.8% averaged over five years. The accrual ratio is -2.5%, so reported earnings are backed by cash. Stock-based compensation is 0.55% of revenue and free cash flow after it is 847.3 million USD. The share count fell at a compound rate of 3.1% over five years, which points to buybacks. The Piotroski score is 7 out of 9. The Beneish M-score is not available. The company beat earnings expectations in all 8 of the last quarters, with an average surprise of 4.5%. Estimates for the current year rose 0.7% over 90 days, and estimates for next year rose 2.4%, with next-year EPS growth expected at 11.0%.

Profitability

Profitability is green. Gross margin is 59.0% against a ten-year median of 56.6%, operating margin is 28.5% against 26.1%, and net margin is 22.3% against 20.1%. Operating margin stability is 11.2%. ROIC of 48.5% sits well above the WACC of 10.4%, and the ROIC minus WACC value of 38.2% is given as creating value. ROIC's five-year median is 45.3%. Return on equity of 12.03 is far higher than ROIC, which the DuPont split explains: a net margin of 21.6% and asset turnover of 1.08 are combined with very high leverage, given debt to equity of 26.06. The high return on equity therefore reflects a thin equity base, not a higher return on the business.

Growth

Growth is green, although the picture depends on the period chosen. Revenue compounded at 0.9% over three years, 5.5% over five years and 5.3% over ten years. EPS compounded at 3.1% over three years, 11.0% over five years and 12.9% over ten years. Free cash flow per share compounded at 8.1%, 9.5% and 12.9% over the same periods. Revenue grew in 9 of 10 comparable years. The recent three-year slowdown is the weak point, and next year's expected EPS growth of 11.0% is the test that follows.

Valuation

Valuation is red, and the verdict is overvalued. Against their ten-year medians, the P/E premium is 8.2%, the EV/EBITDA premium is 10.0%, the price to sales premium is 17.9% and the price to free cash flow premium is 1.6%. Price to book stands at 451.35 against a median of 46.72 over seven data points. The DCF gives 621.67 USD per share at a discount rate of 10.75%, with 48.0% of its value in the terminal value. The fair value band is 885.94 to 1,328.91 USD, midpoint 1,107.42 USD, and the margin of safety is -37.2%. The fair value from historical multiples is 1,593.18 USD. The reverse DCF implies growth of 19.2%, against five-year growth of 5.5% in revenue and 9.5% in free cash flow per share. The company pays no dividend. The fair value figures rest on fixed assumptions, a 5% equity risk premium and capped growth, and they are an order of magnitude, not a price target.

Risks

The weakest numbers are the current ratio of 1.10, which leaves little liquidity beyond operating cash flow; the three-year revenue CAGR of 0.9% and EPS CAGR of 3.1%, which suggest the recent growth is thin; and the valuation itself, with a margin of safety of -37.2%, meaning a price well above the midpoint leaves little room for disappointment. The Beneish M-score is not available, so manipulation risk cannot be assessed from it. This analysis has limits: it contains no debt maturity schedule and no revenue split by segment, so refinancing risk and the performance of individual businesses cannot be judged.