CDRE
Cadre Holdings, Inc.
$29.06
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 28.9% above fair value
You pay
$29.06
Bear
$17.80
Fair
$22.55
Bull
$27.29
Bear
$17.80
-38.7%
$0.90 × 18x + net cash
Fair
$22.55
-22.4%
$0.90 × 22x + net cash
Bull
$27.29
-6.1%
$0.90 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($0.90)
Implied Market Multiple
32.3x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $44.33 from 9 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $22.55 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 58.1x 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 $44.33 (from 9 analysts). Our estimate is 61% 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