BZH
Beazer Homes USA, Inc.
$33.04
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 46.0% below fair value
You pay
$33.04
Bear
$44.89
Fair
$61.21
Bull
$77.54
Bear
$44.89
+35.9%
$4.53 × 14x + net cash
Fair
$61.21
+85.3%
$4.53 × 18x + net cash
Bull
$77.54
+134.7%
$4.53 × 22x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.53)
Implied Market Multiple
7.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $41.00 from 21 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $61.21 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.
Wall Street's average price target is $41.00 (from 21 analysts). Our estimate is 66% above 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