ATRO
Astronics Corporation
$80.86
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 89.5% above fair value
You pay
$80.86
Bear
$33.69
Fair
$42.68
Bull
$51.67
Bear
$33.69
-58.3%
$1.40 × 18x + net cash
Fair
$42.68
-47.2%
$1.40 × 22x + net cash
Bull
$51.67
-36.1%
$1.40 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.40)
Implied Market Multiple
57.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $107.00 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $42.68 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 133.0x 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 $107.00 (from 13 analysts). Our estimate is 75% 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