Atkore Inc. (ATKR) stock intrinsic value fair value estimate & owner earnings analysis

Atkore makes electrical conduit, cable and installation accessories (its Electrical segment, sold mainly to contractors through electrical wholesalers) and metal framing and other safety and infrastructure products (its Safety & Infrastructure segment). About 88% of fiscal 2025 sales were in the United States. One customer, Sonepar USA, accounted for more than 10% of sales in each of the last three fiscal years. Important context: Atkore has announced an all-cash agreement to be acquired by Prysmian S.p.A. at $95.00 per share. Our valuation below is a standalone view of the business, built from its financial statements, and does not use the deal price. If the deal closes, shareholders would receive the deal price and the shares would stop trading, so the cases below matter mainly if the deal does not close. How we measure earnings. We take the cash the business generates from operations, remove swings in receivables, inventory and payables, subtract stock-based compensation as a real cost, and subtract the capital spending needed just to maintain the plants. On that basis, per-share owner earnings were $1.66 in fiscal 2016, rose to $4.61 in fiscal 2020, then jumped to $12.98 in fiscal 2021, $20.89 in fiscal 2022 and $15.63 in fiscal 2023 as conduit prices spiked. They fell to $12.45 in fiscal 2024 and $5.38 in fiscal 2025 (total roughly $183 million) as average selling prices fell 11.9% in fiscal 2025 and 11.5% in fiscal 2024. The earnings level we use is $183 million a year, about $5.38 per share on 34.0 million diluted shares. This is the middle of fiscal 2019 ($175 million), fiscal 2020 ($222 million) and fiscal 2025 ($183 million). We left out fiscal 2021 through 2024 because the price spike behind them has reversed. The first nine months of fiscal 2026 point to a similar level: after removing roughly $136.5 million of litigation settlements paid (the $186.5 million expense less the $50 million still owed) and the swings in working capital, our rough estimate of nine-month owner earnings is about $138 million, or about $183 million annualized. That estimate is approximate because one working-capital line was not available in the quarterly data. Owner earnings fell about 60% in fiscal 2025. For the first year of the base case we assume no growth, which is above that trailing decline. The reason is that fiscal 2026 net sales are up 4.0% for nine months and 8.1% in the third quarter, which indicates the price-driven decline has stopped, and our nine-month estimate above is in line with the assumed level. We do not credit any growth beyond that, because no contract, backlog or proven repeatable expansion in the filings supports it. Litigation. In the PVC Pipe Antitrust Litigation, plaintiffs allege that PVC pipe and conduit makers shared price information. The company recorded $186.5 million of settlement expense in fiscal 2026, of which $50.0 million was still owed at June 26, 2026. We deduct that $50 million in every case. A separate lawsuit in British Columbia, Canada makes similar allegations and the company said it cannot estimate any loss, so we have not put a number on it. Adverse developments there would lower all of our estimates. Base case, $64 per share. Owner earnings stay at $183 million for ten years. After that, with nothing specific we can point to that keeps the earnings growing, we assume they decline 5% a year forever. Support for the level is that owner earnings have been positive every year from fiscal 2016 through 2025, and never below $104 million. Discounted at 6%, this is about $2.23 billion, less the $50 million settlement, or about $2.18 billion, which is $64.14 per share. Bear case, $39 per share. Prices and margins fall back to the fiscal 2016-2018 level, when owner earnings were $104 million to $149 million a year, and we use the middle of those years, about $124 million. Average selling prices have already fallen in each of the last two fiscal years, and the company impaired its HDPE conduit business by $127.7 million in fiscal 2025 and announced closure of three facilities in fiscal 2026. The company also carries $760.2 million of debt (against $346.2 million of cash at June 26, 2026), so profit declines hit shareholders harder. After year ten we assume an 8% annual decline. Net of the settlement, this is $38.78 per share. Bull case, $85 per share. Owner earnings reach $220 million a year, matching the best pre-spike year (fiscal 2020, $222 million), supported by the recent sales momentum. After year ten they decline 3% a year. Net of the settlement, this is $85.15 per share. We do not assume any repeat of the fiscal 2021-2023 price spike. Accounting notes. Depreciation and amortization ($124.5 million in fiscal 2025) and the fiscal 2025 asset write-downs are already excluded from the cash-based measure. Because Atkore has written down acquired assets and its intangibles are wearing out, we carry that decay in the fade after year ten and in the bear case, not by lowering today's earnings. Growth capital spending is separated from maintenance spending using the company's average spending of 2.9% of sales; in fiscal 2025 sales fell, so all $107.1 million of capital spending counts as maintenance. The components we could tag do not fully explain reported operating cash flow in some years (differences of up to $31 million, in fiscal 2022), which we attribute to smaller non-cash items; because we start from reported operating cash flow this does not change our result. What would make this wrong: a large adverse outcome in the antitrust litigation, further price declines, or margin pressure from input costs, which the company said in its third-quarter fiscal 2026 release were outpacing price increases in both segments. Margin-of-safety price: about $40 per share, close to the bear case, reflecting a business whose earnings swing with pricing and that faces open litigation.