HYSTER-YALE, INC. (HY) stock intrinsic value fair value estimate & owner earnings analysis

Hyster-Yale designs, manufactures and sells forklifts and other material-handling equipment under the Hyster and Yale brands, along with lift-truck attachments (Bolzoni) and an early-stage hydrogen fuel-cell technology business (Nuvera). The company sells through an independent dealer network worldwide, with roughly two-thirds of revenue booked in the United States and most of the remainder in Europe and other parts of the Americas and Asia-Pacific. This is a cyclical, capital-intensive manufacturing business whose profitability swings sharply with the gap between what it pays for steel, engines and other components and what it can charge on orders placed months or years earlier. That dynamic produced a genuinely difficult stretch in 2021-2022, when input costs and supply-chain disruption outran the fixed prices locked into a then-enormous order backlog, followed by an unusually strong 2023-2024 as that backlog was worked through at much better pricing. In 2025, order backlog (a leading indicator of future shipments) fell from about $1.9 billion to about $1.3 billion as shipments ran ahead of new orders, and revenue and profitability declined; the company posted a net loss for the year, which included a $38 million charge tied to a workforce reduction and a scaling-back of the Nuvera fuel-cell business. Management has targeted $40-45 million of annualized cost savings starting in 2026. The first half of 2026 has been weaker still, consistent with the company's own guidance of a slow start followed by a second-half recovery as backlog rebuilds - though that recovery has not yet shown up in the numbers, and new U.S. tariffs on imported materials imposed during 2025 remain a live cost pressure whose resolution (including a partial court ruling on one category of tariffs in February 2026) is still unsettled. We valued the shares using owner earnings - cash generated by the business after real, ongoing reinvestment, stripped of the swings caused by inventory and receivables timing and of the accounting cost of stock compensation. Owner earnings per share over the last ten years have ranged from about negative $7 in the depth of the 2021-2022 cost squeeze to about positive $11 in the 2023-2024 boom, with a typical (median) year in the high-$2 range; that typical level is the starting point for our estimate of the business's normal earning power, since neither the 2021-22 trough nor the 2023-24 peak looks likely to repeat exactly as it did. Three cases: Bear case: the current downturn runs longer and deeper than the company expects, tariff-driven cost pressure persists, the cost-savings program only partly delivers, and the business settles at a lower normal level than its history - around $1.75 of owner earnings per share once it stabilizes. Leverage is a real consideration here: the company drew more heavily on its credit facilities last year to get through the downturn, leaving less room for error if conditions stay weak. This case is worth roughly $23 per share. Base case: 2026 remains weak, consistent with results reported so far this year, before a gradual recovery through 2027-2028 as order backlog rebuilds and the announced cost savings take hold, settling at a normal level close to the company's own ten-year median - around $2.70 of owner earnings per share - continuing indefinitely on the strength of the company's long-standing position (Hyster and Yale are century-old brands with roughly the #2 global share in forklifts) and its dealer and aftermarket-parts network. This case is worth roughly $40 per share. Bull case: the cost-savings program is fully realized, order bookings (which actually grew in 2025 even as backlog shrank) convert into a faster rebuild of backlog, and the business settles at a materially better normal level than its history - around $6 of owner earnings per share - without assuming a repeat of the unusual one-time pricing dynamics that drove the 2023-2024 peak. This case is worth roughly $93 per share. Because the business is currently in a real downturn with more debt than a year ago, and because two of the last ten years already show what a bad stretch looks like for this company, the margin-of-safety price is set at a meaningful discount to our base-case estimate, and the business trigger calls for concrete evidence - order bookings continuing to outrun shipments so backlog stabilizes or grows, or a visible drop in overhead costs - that the expected 2026 recovery is actually underway rather than only guided.