AGX
Argan, Inc.
$345.56
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 549.5% above fair value
You pay
$345.56
Bear
$41.38
Fair
$53.21
Bull
$65.03
Bear
$41.38
-88.0%
$2.96 × 14x
Fair
$53.21
-84.6%
$2.96 × 18x
Bull
$65.03
-81.2%
$2.96 × 22x
Adjust Assumptions
18.0x
2.96$
Key Value Driver
Through-cycle normalized EPS ($2.96)
Implied Market Multiple
116.9x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (7 analysts)
$436.50
Divergence from AlphaVal
88%
Summary
Using 7-year normalized EPS of $2.96 at a 18x cycle multiple, the base-case value is $53.21 per share. P/TBV cross-check: 11.2x.
Warnings
Recent profits ($9.73/share) are 229% above the mid-cycle average ($2.96). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 11.2x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $436.50 (from 7 analysts). Our estimate is 88% below the consensus -- consider that gap carefully.
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