ARCB
ArcBest Corporation
$124.57
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 182.2% above fair value
You pay
$124.57
Bear
$17.66
Fair
$44.15
Bull
$70.66
Bear
$17.66
-85.8%
$7.93 × 4x + net cash
Fair
$44.15
-64.6%
$7.93 × 6x + net cash
Bull
$70.66
-43.3%
$7.93 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.93)
Implied Market Multiple
15.7x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $117.14 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $44.15 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 3.0x 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 $117.14 (from 24 analysts). Our estimate is 83% 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