AEHR
Aehr Test Systems
$91.12
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 1575.0% above fair value
You pay
$91.12
Bear
$4.08
Fair
$5.44
Bull
$6.80
Bear
$4.08
-95.5%
$0.34 × 12x
Fair
$5.44
-94.0%
$0.34 × 16x
Bull
$6.80
-92.5%
$0.34 × 20x
Adjust Assumptions
16.0x
0.34$
Key Value Driver
Through-cycle normalized EPS ($0.34)
Implied Market Multiple
268.0x
Summary
Using 7-year normalized EPS of $0.34 at a 16x cycle multiple, the base-case value is $5.44 per share. P/TBV cross-check: 14.9x.
Warnings
Price-to-book value of 14.9x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing