APOG
Apogee Enterprises, Inc.
$38.82
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Undervalued
Trading 34.1% below fair value
You pay
$38.82
Bear
$43.23
Fair
$58.95
Bull
$74.66
Bear
$43.23
+11.4%
$3.89 × 14x + net cash
Fair
$58.95
+51.8%
$3.89 × 18x + net cash
Bull
$74.66
+92.3%
$3.89 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($3.89)
Implied Market Multiple
10.0x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $61.33 from 6 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $58.95 per share.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 4.9x 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