BECN
Beacon Roofing Supply, Inc.
$124.17
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 21.4% above fair value
You pay
$124.17
Bear
$79.52
Fair
$102.24
Bull
$124.96
Bear
$79.52
-36.0%
$5.68 × 14x
Fair
$102.24
-17.7%
$5.68 × 18x
Bull
$124.96
+0.6%
$5.68 × 22x
Adjust Assumptions
18.0x
5.68$
Key Value Driver
Through-cycle normalized EPS ($5.68)
Implied Market Multiple
21.9x
Summary
Using 7-year normalized EPS of $5.68 at a 18x cycle multiple, the base-case value is $102.24 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.
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