BALL
Ball Corporation
$57.43
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 128.1% above fair value
You pay
$57.43
Bear
$18.55
Fair
$25.18
Bull
$31.80
Bear
$18.55
-67.7%
$2.65 × 7x
Fair
$25.18
-56.2%
$2.65 × 10x
Bull
$31.80
-44.6%
$2.65 × 12x
Adjust Assumptions
9.5x
2.65$
Key Value Driver
Through-cycle normalized EPS ($2.65)
Implied Market Multiple
21.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (23 analysts)
$72.60
Divergence from AlphaVal
65%
Summary
Using 7-year normalized EPS of $2.65 at a 10x cycle multiple, the base-case value is $25.18 per share. P/TBV cross-check: 254.8x.
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 254.8x 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 $72.60 (from 23 analysts). Our estimate is 65% 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