BLBD
Blue Bird Corporation
$73.89
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 137.4% above fair value
You pay
$73.89
Bear
$25.05
Fair
$31.13
Bull
$37.20
Bear
$25.05
-66.1%
$1.32 × 7x + net cash
Fair
$31.13
-57.9%
$1.32 × 10x + net cash
Bull
$37.20
-49.7%
$1.32 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.32)
Implied Market Multiple
55.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $87.75 from 12 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $31.13 per share.
Warnings
Recent profits ($3.88/share) are 193% above the mid-cycle average ($1.32). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 12.0x 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 $87.75 (from 12 analysts). Our estimate is 81% 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