ARCB
ArcBest Corp
$151.19
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 188.5% above fair value
You pay
$151.19
Bear
$20.97
Fair
$52.41
Bull
$83.87
Bear
$20.97
-86.1%
$7.93 × 4x + net cash
Fair
$52.41
-65.3%
$7.93 × 6x + net cash
Bull
$83.87
-44.5%
$7.93 × 7x + net cash
Key Value Driver
Through-cycle normalized EPS ($7.93)
Implied Market Multiple
19.1x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $150.17 from 24 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $52.41 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 3.7x 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 $150.17 (from 24 analysts). Our estimate is 87% 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