COL
Rockwell Collins, Inc.
$141.04
Cyclical & Capital-Intensive
70%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 67.9% above fair value
You pay
$141.04
Bear
$66.30
Fair
$83.98
Bull
$101.66
Bear
$66.30
-53.0%
$4.42 × 18x + net cash
Fair
$83.98
-40.5%
$4.42 × 22x + net cash
Bull
$101.66
-27.9%
$4.42 × 26x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.42)
Implied Market Multiple
31.9x
Summary
Using 7-year normalized EPS of $4.42 at a 22x cycle multiple, the base-case value is $83.98 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