CTA-PA
EIDP, Inc.
$53.61
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 199.3% above fair value
You pay
$53.61
Bear
$13.96
Fair
$17.91
Bull
$21.86
Bear
$13.96
-74.0%
$1.58 × 7x + net cash
Fair
$17.91
-66.6%
$1.58 × 10x + net cash
Bull
$21.86
-59.2%
$1.58 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($1.58)
Implied Market Multiple
33.9x
Summary
Using 7-year normalized EPS of $1.58 at a 10x cycle multiple, the base-case value is $17.91 per share. P/TBV cross-check: 6.7x.
Warnings
Price-to-book value of 6.7x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
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