CRUS
Cirrus Logic, Inc.
$150.36
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 25.6% above fair value
You pay
$150.36
Bear
$94.10
Fair
$119.70
Bull
$145.29
Bear
$94.10
-37.4%
$5.52 × 12x + net cash
Fair
$119.70
-20.4%
$5.52 × 16x + net cash
Bull
$145.29
-3.4%
$5.52 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($5.52)
Implied Market Multiple
27.2x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $169.00 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $119.70 per share.
Warnings
Recent profits ($7.84/share) are 42% above the mid-cycle average ($5.52). Buying based on peak profits is the most common mistake with boom-and-bust businesses.
Price-to-book value of 4.5x 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 $169.00 (from 22 analysts). Our estimate is 39% 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