AEHR
Aehr Test Systems
$95.02
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 1034.2% above fair value
You pay
$95.02
Bear
$6.40
Fair
$8.38
Bull
$10.36
Bear
$6.40
-93.3%
$0.50 × 12x + net cash
Fair
$8.38
-91.2%
$0.50 × 16x + net cash
Bull
$10.36
-89.1%
$0.50 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.50)
Implied Market Multiple
192.0x
Summary
Using 7-year normalized EPS of $0.50 at a 16x cycle multiple, the base-case value is $8.38 per share. P/TBV cross-check: 29.5x.
Warnings
Price-to-book value of 29.5x 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