CRUS
Cirrus Logic, Inc.
$136.97
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Moderate
·
Conviction
Overvalued
Trading 15.2% above fair value
You pay
$136.97
Bear
$93.45
Fair
$118.86
Bull
$144.28
Bear
$93.45
-31.8%
$5.52 × 12x + net cash
Fair
$118.86
-13.2%
$5.52 × 16x + net cash
Bull
$144.28
+5.3%
$5.52 × 20x + net cash
Key Value Driver
Through-cycle normalized EPS ($5.52)
Implied Market Multiple
24.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $165.67 from 22 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $118.86 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 4.1x 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 $165.67 (from 22 analysts). Our estimate is 38% 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